Pharmaceutical advertising presents a dilemma for regulatory authorities responsible for the scrutiny review of drug advertisements. On one hand, pharmaceutical advertising is an important source of information about drugs for the general public and even healthcare professionals. On the other hand, inappropriate advertising can lead to mis-prescription and misuse of drugs and cause severe safety and public health concerns.

In view of the importance to balance between scrutiny review to ensure the accuracy and truthfulness of pharmaceutical advising and encouraging pharmaceutical advertising as a valuable source of information, regulatory authorities in China constantly adjust the regulatory framework and enforcement practice in this field, which makes regulation on pharmaceutical advertising one of the fastest-changing areas.

China adopts a strict prior approval scheme for all drug advertisements and a blunt ban on direct-to-customer advertising for prescription-only drugs. However, due to vague and incomplete laws and regulations, government resource constraints and relatively light penalties, enforcement has been relatively lenient at the operational level.

According to Article 59 of the Drug Administration Law, pharmaceutical advertising in China is generally subject to prior approval from drug regulatory authorities, whether for prescription-only medicines or over-the-counter (OTC) medicines. Relevant materials should be submitted to the competent drug regulatory authorities of the province, autonomous region or municipality where the drug manufacturer, or in case of imported drugs, the drug importer, is located. For non-local pharmaceutical advertisements, ie those to be published in a place other than the place of the drug manufacturer or the drug importer, a recordal should be filed with the local drug regulatory authority.

The main requirement on the substantive contents is that pharmaceutical advertising must be true and legitimate and be consistent with the specifications approved by the drug regulatory authorities. Pharmaceutical advertising to the general public must contain the generic name of the advertised drug, the approval number of the advertised drug, the advertisement approval number, the name of the drug manufacturer or distributor, contraindications and possible adverse reactions, etc. In addition, prohibited statements include comparisons with other drugs from the aspects of safety or efficacy, information relating to cure rates or effectiveness or assertions or guarantee about efficacy and safety, etc.

Like most industrial countries, China bans direct-to-customer advertising for prescription-only drugs because of safety and public health concerns over such advertising’s influence on ordinary consumers. Advertisements on prescription drugs are limited to certain medical and pharmaceutical professional journals that are specially designated by two departments under the State Council – the National Health Commission and the National Medical Product Administration. OTC drug advertisements are permitted on any kind of media available to the general public, after obtaining prior approval from the competent drug regulatory authorities as described above.

In December 2018, the State Administration for Market Regulation (SAMR) issued the Circular on Effective Scrutiny Review over Advertisements for Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes (“Circular"), urging regulatory authorities to adopt the most strict and rigorous scrutiny standard for advertisements for drugs, medical devices, dietary supplements and foods for special medical purposes (collectively, “Three Products and One Device").

Overall, advertisements for Three Products and One Device must introduce product information to the general public in a true, scientific and accurate manner and their way of presentation and effects of publicity cannot mislead the general public. Specifically speaking, such advertisements cannot contain any assertion about or guarantee to the functions, effects or safety of the advised products, cannot be recommended or certified by spokesman endorsement, and cannot be released in a disguised way by introducing knowledge about health or healthcare.

The Circular also requires regulatory authorities to optimise review and approval procedures to provide more convenient and efficient services for pharmaceutical advertising applicants. The specific reformatory measures include adjusting the record-filing method for non-local release of drug advertisements, shortening review period for medical device advertisements, promoting online processing and simplifying supporting documents, etc.

Adjusting the record-fling method for non-local publication of drug advertisements was first proposed by the Circular on Promoting the Reform of “Separating Operating Permits and Business Licenses" Across the Country issued by the State Council in September 2018, and was incorporated into the recent amendment to the Measures for the Examination of Drug Advertisements promulgated and in force on 21 December 2018.

Under the adjusted record-filing method, the drug advertisement regulatory authorities shall prepare a letter of notification and commitment, provide the pharmaceutical advertising applicant with a sample text and advise the applicant of all record-filing conditions and required materials at one stroke. If the applicant meets the requirements and submits complete materials, its pharmaceutical advertisements shall be put on record on the spot. The establishment of a cross-region information-sharing mechanism is also discussed, which enables different regulatory authorities to share the information about the pharmaceutical advertisements in the examination process.

In 2016, the Interim Measures for the Administration of Internet Advertising was enacted to regulate online advertisements, which explicitly prohibits advertisements for prescription-only medicines on the internet. In addition, pharmaceutical advertising on the internet is also subject to the general rules applicable to all online advertising. For instance, paid search advertisements must be clearly distinguished from ordinary search results. Online advertisements in the form of pop-ups or other forms must be clearly marked with a “Close" button such that people who are not interested in these advertisements will be able to close them by a single click.

In February 2018, the SAMR issued a Notice on Specialized and Consolidated Rectification on Online Advertisements, calling for focused regulation and enforcement campaigns targeting at deceptive and illegal internet advertisement. The campaign focuses on internet mediums that have powerful social influences and extensive coverage, including portals, search engines, e-commerce platforms, mobile terminals and new media accounts.

The campaign was carried out during the entire year of 2018. In November 2018, a meeting was held to review the above rectification campaign. According to the statistics disclosed at the meeting, a total of 13,665 cases were rectified in the first three quarters of the 2018 and a total amount of RMB200 million was confiscated. The meeting also pointed out that with the E-commerce Law coming into force, similar campaigns are expected in 2019.

The Internet Plus Action was first initiated in 2015 by the State Council. In July 2015, the State Council released the Guiding Opinions on Actively Promoting the Internet Plus Action Plan (the “Internet Plus Action Plan"). The Internet Plus Action aimed to achieve rapid and high-quality economic growth and industry development by taking advantage of China’s Internet innovation achievements to drive deep and comprehensive integration between the Internet and all industry sectors. Among other aspects, the Internet Plus Action Plan also discusses the objective of promoting a new mode of online healthcare services.

Subsequently, in 2016, the State Council promulgated the Outline of the “Healthy China 2030" Plan. The Healthy China 2030 Plan combines the idea of “Internet Plus" with the healthcare services and discusses “Internet Plus Healthcare" to a more detailed degree. As reflected in the Healthy China 2030 Plan, the Chinese government aims to build a centralized, authoritative and interconnected population health information platform to regulate and promote the “Internet Plus Healthcare" service.

In 2018, the State Council further promulgated the Opinions on Promoting the Development of the Internet Plus Healthcare, which specifically focuses on promoting health services using Internet technologies. Among others, the Internet Plus Healthcare encourages better sharing of health information, improving hospital management and services, and strengthened oversight of medical services and data safety.

All the policies discussed above along with other various stimulus have promoted the development of all forms of online healthcare services in China in the recent years. The Internet technologies are involved in the healthcare industry at a deeper level, in all kinds of forms such as online health consultation, tele-medicine, online hospital, medical treatment AI, health information system, etc. However, because most policies are at a very high level and lack supporting rules and regulations at the operational level, the rapid development of internet healthcare services has also produced some problems specific to the Internet era.

According to the Measures for the Supervision and Administration of Drug Distribution promulgated in 2007, prescription-only drugs are prohibited from being directly sold to the general public over the Internet. With the purpose of getting away from potential administrative penalties, some e-commerce platforms adopt an alternative way as follows: they will exhibit the information of prescription-only drugs online and publish disclaimers such as “for exhibition purposes only" on the website. If a patient is interested in purchasing prescription-only drugs from the e-shop, he or she must first submit a prescription online to the seller’s pharmacist for examination. After all the steps are completed, the off-line drug stores operated by the seller will dispatch the prescription-only drugs to the consumer. In this way, the seller is arguably not selling prescription drugs through the internet. However, it remains a question as to whether the above drug selling activities should be subject to pharmaceutical advertising rules.

In November 2017, the former China Food and Drug Administration (now reorganized as the National Medical Products Administration) published the Measures for the Supervision and Administration of Selling Drugs Online (Draft for Comment) to seek public comments. In this draft, it is proposed that websites selling drugs to individual consumers shall not release any information about prescription-only drugs through the Internet. If this draft Measures finally takes effect, information about prescription-only drugs can no longer be provided online.

It is worth noting that the above provision proposed in Measures for the Supervision and Administration of Selling Drugs Online (Draft for Comment) does not distinguish information sharing and advertising, but rather prohibits any types of information about prescription-only drugs from being provided online, regardless of whether it constitutes drug advertising or not. The main difference between information sharing and advertising is the intent to promote sales. Generally speaking, if the information contains introductory contents regarding the pharmaceutical products or healthcare services, it is more likely to be recognized as an “advertisement". Nevertheless, the line between information sharing and advertising is blurred, causing difficulties to distinguish them in practice.

With the rapid development of internet technologies, it can be anticipated that there will be new forms of internet healthcare services in the future. The legislation will inevitably fall behind the rapidly changing economic and social industries. As discussed above, the rules on providing drug information online are not very clear in current regulations and future changes in the same aspect are also hard to predict. Therefore, companies should closely monitor the legislative trends and enforcement practice for compliance purposes.

Several Chinese laws and regulations of general application provide general anti-bribery rules that may apply to pharmaceutical companies and healthcare professionals or healthcare institutions, including but not limited to, the Criminal Law, the Anti-Unfair Competition Law and the Interim Provisions on Prohibition of Commercial Bribery.

The Anti-Unfair Competition Law was newly amended in 2017. As stipulated under Article 7 of the Anti-Unfair Competition Law, one party to a commercial transaction cannot bribe the employees of the counterparty to the transaction, the entities or individuals entrusted by the counterparty to handle relevant matters in the transaction, or other entities or individuals that have the power to influence the transaction, in order to seek an opportunity to or competitive advantage in the transaction.

Before the 2017 amendment to the Anti-Unfair Competition Law, discount given to the counterparty sometimes used to be directly regarded as commercial bribery in practice. This is because both the previous 1993 Anti-Unfair Competition Law and the Interim Provisions on Prohibition of Commercial Bribery promulgated by the State Administration for Industry and Commerce to implement the 1993 Anti-Unfair Competition Law prohibit one party from giving rake-offs off-the-book to the counterparty to a transaction.

The newly amended Anti-Unfair Competition Law keeps the stipulation that a company may give a discount to the counterparty or a commission to the middleman, as long as such discount or commission is truthfully recorded in both the provider and the recipient’s accounting books, while deleting the stipulation that rake-offs given off-the-book to the counterparty to a transaction constitutes commercial bribery.

While some commentaries interpret such amendment as requiring enforcement authorities to give comprehensive consideration to recorded information in accounting books, real intent of the parties, possible impact on third party’s interests and other factors, instead of directly determining discount or rebates as commercial bribery, there is a split view on the actual effects of such amendment. After all, the Interim Provisions on Prohibition of Commercial Bribery still remains effective as of today, and the enforcement authorities may still follow the stricter old pattern within a short time

In addition, it is worth noting that this exception only applies to a business entity in the capacity of the counterparty and the middleman but does not extend to individuals involved in the transaction. Therefore, as healthcare professionals can be regarded as employees of the counterparty or individuals that have the power to influence the transaction, the “discount" provided to the healthcare professionals personally is still prohibited.

According to the statistics released by the National Medical Products Administration (NMPA), during 2017, a total of 8,774 illegal drug advertisements were transferred to local Administration for Industry and Commerce for further investigation and handling; 389 drug advertisement approvals were revoked. These statistics demonstrate a significant increase compared with the 7,067 cases of illegal drug advertisements transferred and the 29 instances of drug advertisement approvals revoked in 2016. In addition, the year of 2018 also witnessed several high-profile enforcement actions in the field of pharmaceutical advertising.

In March 2018, a controversial drug arrest ignited public outrage in China. Although the parties to this case have settled, this has become a landmark case for in the field of drug advertising.

It all started in December 2017, when a doctor published an article in his social media accusing a popular medical liquor of being “poison from heaven." He also warned that the supposed curative effects of the ingredients said to be used in the medical liquor were unclear at best, and some could even be dangerous for elderly people.

The medical liquor in question is Hongmao Medicinal Liquor, a popular brand of traditional Chinese medicine. Most advertisements on this product target at elderly people, describing the product as an effective treatment for joint pain and cardiovascular diseases. It was previously listed as a national brand and is the main export of Liangcheng City in Inner Mongolia.

Shortly thereafter, the manufacturer Hongmao Pharmaceuticals complained to the police that the doctor’s article was deceptive and intended to maliciously harm the company’s reputation and, due to its wide distribution, the company has suffered from tremendous economic losses. The doctor was then arrested by Inner Mongolia police from his home in Guangzhou Province and imprisoned 2,300 km away in the company’s headquarter in Inner Mongolia for three months.

Although the doctor’s article did not get public attention at first, news about his detention sparked uproar in Chinese social media. In fact, the company had been fined for over 2,600 violations of advertising rules by multiple local regulatory authorities and the sales of the product were suspended more than ten times for false and exaggerated advertising.

Facing great pressure from medical community, legal community, news media and general public, relevant government departments eventually intervened in April. On April 16, the NMPA confirmed Hongmao Medical Liquor was approved as a non-prescription drug in 2003 and had 137 reports about adverse events from 2004 to 2017. The NMPA ordered the local food and drug administration in Inner Mongolia to request the company to explain the reasons for various administrative sanctions for false advertising and explain the efficacy and safety of the product. It also requested the local food and drug administration to reexamine the company’s approved advertisements to ensure they are consistent with the approved drug instructions and do not mislead the consumers.

On 17 April 2018, the local procuratorate cited lack of evidence, returned the case to the public security bureau for further investigation and decided to change the criminal compulsory measures taken. The doctor was then released from jail on bail.

A month later, on 17 May 2018, the doctor published an apology to the company on social media, and the company responded by issuing a statement accepting his apology an hour later and saying they will withdraw the lawsuit filed against him. Although the case was finally settled, public concerns and discussions about pharmaceutical advertising are still ongoing.

Not long after the Hongmao case, another similar case came into the public’s eye via social media, which led to a high-profile enforcement action against a domestic healthcare giant named Quanjian Group.

In December, a social media article saying that, under the influence of Quanjian’s advertisements, a four-year-old girl died of cancer three years ago, after giving up regular medical treatment and switching to use Quanjian’s health products instead. It turned out that Quanjian’s so-called “health products" do not have any treatment functions and Quanjian also misrepresented and exaggerated the treatment functions of other products and services.

The girl’s father filed a lawsuit against Quanjian in 2015, requesting the court to hold Quanjian liable for the girl’s death. However, the court held that he failed to prove Quanjian was responsible for false advertising and ruled in favour of Quanjian.

This newly published article redrew public’s attention to this case. Currently, Quanjian is under investigation by a joint governmental investigation team of the government and is accused of several serious violations of medical and advertising regulations, including misrepresentation of treatment functions of its products. Several individuals including the legal representative of the company are under criminal detention.