m88 casino review Inevitable Path to Compliance for Healthcare Companies in China

Introduction

Commercial bribery is m88 casino review focus of regulation and enforcement in m88 casino review pharmaceuticals and medical devices (“healthcare”) industry in China. In recent years, m88 casino review Chinese government has issued multiple regulations and opinions progressively setting forth m88 casino review “spiral-rise” requirements for integrity in m88 casino review healthcare industry. With increased regulations year on year, healthcare companies need to stay alert to m88 casino review risk of commercial bribery during business operations in China.

Typical Arrangements Potentially Involving Commercial Bribery

CSO committing commercial bribery

Healthcare companies generally sell and promote drugs and medical devices through contract sales organisations (CSOs). Since CSOs undertake m88 casino review sales process on behalf of healthcare companies, some healthcare companies believe that m88 casino reviewy can exploit m88 casino review CSO as a “scapegoat”, so that m88 casino review CSO will be held responsible for any commercial bribery that occurs during m88 casino review sales process. In practice, however, even if commercial bribery is committed by a CSO and m88 casino review healthcare company is not directly involved in it, if evidence shows that m88 casino review healthcare company failed to substantively review whem88 casino reviewr expenses incurred by m88 casino review CSO were legally compliant, m88 casino review regulatory authorities may find that m88 casino review healthcare company behind m88 casino review CSO ignored or tacitly supported m88 casino review bribery and m88 casino reviewy may “pierce m88 casino review veil” of m88 casino review CSO to directly penalise m88 casino review healthcare company.

Sponsoring of academic conferences

Sponsoring academic conferences is a common way for healthcare companies to enhance m88 casino reviewir brand influence. Leading healthcare companies regularly sponsor hospitals or societies to host domestic and international academic conferences and invite specific or unspecified doctors to participate. Some of m88 casino reviewse academic conferences may be sponsored in such a way as to conceal illicit transfer of benefits. This m88 casino reviewrefore needs to be judged on a case-by-case basis.

“Some academic conferences may be sponsored in such a way as to conceal illicit transfer of benefits.”

When determining whem88 casino reviewr sponsorship of an academic conference is a commercial bribe, m88 casino review main factors to consider are whem88 casino reviewr m88 casino review expenses incurred for sponsorship of m88 casino review conference are reasonable and whem88 casino reviewr m88 casino review sponsorship is likely to bring undue competitive advantage to m88 casino review healthcare companies involved. Specifically, if m88 casino review lecture fees for an academic conference are too high, excessive catering and accommodation arrangements are made, unnecessary travelling is involved, or m88 casino review sponsorship is paid directly to m88 casino review participants’ personal accounts, m88 casino review conference could be seen as a means to transfer illicit benefits; and if a healthcare company causes product promotional content to be included in m88 casino review conference materials, it might be suspected of using m88 casino review conference to advertise its products to participants and seek unfair competitive advantage.

Bundle sales of consumables and reagents

If healthcare companies launch medical devices in medical institutions for free, or at low cost through retention-of-title sale, lease at low price or om88 casino reviewr ways, in an effort to bundle sales of consumables and reagents, such transaction will usually be treated as commercial bribery through an illicit transfer of benefits.

Giving and taking kickbacks

If healthcare companies secretly give improper off-m88 casino review-books benefits to doctors or medical institutions through cash, in kind or om88 casino reviewr means, or offer money in m88 casino review name of “research fees”, “promotion fees”, etc, such action will be considered as commercial bribery.

Major Penalties for Commercial Bribery

According to m88 casino review Drug Administration Law, m88 casino review Anti-Unfair Competition Law, and om88 casino reviewr relevant laws and regulations setting forth m88 casino review administrative penalties, healthcare companies that engage in commercial bribery will have m88 casino reviewir illegal income confiscated and be fined by m88 casino review regulatory authorities. If m88 casino review circumstances are serious, m88 casino review business licence of a healthcare company, m88 casino review drug approval certificate of m88 casino review relevant drug, m88 casino review drug production licence or m88 casino review drug business licence might be revoked. If an individual employee of a healthcare company engages in commercial bribery and m88 casino review individual’s conduct is unrelated to m88 casino review healthcare company, m88 casino review regulator may directly punish m88 casino review individual employee without penalising m88 casino review healthcare company.

“Bribes to medical personnel by individuals which exceed RMB30,000, or by corporations which exceed RMB200,000, would meet m88 casino review threshold for criminal investigation.”

Commercial bribery can even lead to criminal liability for m88 casino review relevant personnel. In general, bribes to medical personnel by individuals, which exceed RMB30,000, or by corporations, which exceed RMB200,000, would meet m88 casino review threshold for criminal investigation, and m88 casino review relevant healthcare companies, persons directly in charge, and persons directly responsible could be held criminally liable.

If m88 casino review medical personnel is regarded as a “state functionary”, bribes between RMB10,000 and RMB30,000 made by individuals, or bribes between RMB100,000 and RMB200,000 made by corporations, may also constitute a criminal offence under specific circumstances, such as bribing not less than three persons. Whem88 casino reviewr m88 casino review medical personnel should be regarded as a “state functionary” is a complex issue, and if m88 casino review bribe is offered in exchange for m88 casino review medical personnel’s abuse of official powers, m88 casino review medical personnel is likely to be treated as a “state functionary”.

“Healthcare companies that have identified red flags suggesting commercial bribery within m88 casino review company are advised to keep a close eye on this...”

In addition to administrative and criminal penalties, if healthcare companies or m88 casino reviewir agents are listed in m88 casino review adverse records of commercial bribery, m88 casino reviewy will be prohibited from selling drugs, medical devices or medical consumables to certain state-funded institutions in m88 casino review same province for two years. Such prohibition will become nationwide if healthcare companies and/or agents are listed in m88 casino review adverse records more than twice within five years.

Compliance Advice

To mitigate m88 casino review risk of commercial bribery penalties, it is recommended that healthcare companies take measures to improve m88 casino reviewir compliance systems. In m88 casino review case of external CSOs or third-party agencies hired for marketing activities, it is advisable for healthcare companies to conduct compliance investigations in advance and substantively review m88 casino review marketing activities materials to avoid “piercing m88 casino review veil” penalties.

In terms of internal governance, healthcare companies should adopt an anti-bribery policy, require employees to sign an integrity pledge, and conduct regular anti-bribery training to implement m88 casino review compliance requirements. Healthcare companies that have identified red flags suggesting commercial bribery within m88 casino review company are advised to keep a close eye on this and, if necessary, initiate an internal investigation.

Conclusion

m88 casino review healthcare industry has a comparatively high incidence of commercial bribery and is also under m88 casino review close scrutiny of m88 casino review regulatory authorities. Healthcare companies that have committed commercial bribery will not only be subject to administrative and criminal penalties, but m88 casino reviewir market access for drugs, medical devices and medical consumables will also be negatively affected.

It is m88 casino reviewrefore essential for healthcare companies to establish a comprehensive anti-commercial bribery compliance system. Specialist law firms handle a variety of legal matters in m88 casino review healthcare industry, including plenty of regulatory compliance matters regarding pharmaceuticals, medical devices, human genetic resources, etc; and many have experience in establishing regulatory compliance systems for clients in om88 casino reviewr industries, such as, real estates and construction, automotive, shipping, machinery and equipment, food and beverage sales, etc.