When a newly registered pharmaceutical/medical device product is launched in China, the pharmaceutical/medical device companies are motivated to provide certain sample products or demonstration products (“Evaluation Products”) free of charge to Chinese health care organizations (“HCOs”) and/or health care professionals (“HCPs”) for evaluation purpose. On one hand, the Evaluation Products could help the HCPs better understand how the new product functions in practice and whether it is suitable for their patients. On the other hand, as each Evaluation Product is provided by pharmaceutical/medical device companies to HCOs/HCPs free of charge, and the HCOs may in return purchase the products from the Evaluation Product providers, the provision of the Evaluation Products provided to HCOs/HCPs may be suspected as a form of commercial bribery. Does this mean the Evaluation Products should not be provided in China?
I. What is forbidden under the Chinese law?
As the healthcare industry is strictly supervised by Chinese government, the pharmaceutical/medical device companies should be cautious about the Evaluation Product arrangement and to avoid the Evaluation Products being deemed as commercial bribes provided to HCOs/HCPs, given that to provide anything of value to HCOs/HCPs in order to seek transactional opportunities or competitive advantages is forbidden under the PRC law.
According to the Anti-unfair Competition Law (the “AUCL”), business operators shall not bribe, by offering money or goods or by any other means, any of the following entities or individuals, in order to seek transactional opportunities or competitive advantages: (a) any employee of the counterparty to a transaction; (b) any entity or individual entrusted by the counterparty to a transaction to handle relevant affairs; or (c) any entity or individual that makes use of power or impact to influence a transaction.
The HCOs and HCPs may fall into the scope of the above-mentioned entities or individuals on a case-by-case basis in practice in China. Besides, the Evaluation Products could be deemed as something of value under the AUCL. However, the provision of the Evaluation Products may not necessarily result in providing commercial bribery, because the purpose of providing the Evaluation Products should be to enable the HCPs to become familiar with the products and thus to better serve the patients, instead of seeking transactional opportunities or competitive advantages for the provider.
Having said that, if the fact reflects that an Evaluation Product provider obtains any product order from the HCOs/HCPs after providing the Evaluation Products, it may cause doubts in the eyes of the government authorities as to whether the Evaluation Product provider offers commercial bribery to the HCOs/HCPs. In particular, if the Evaluation Product is a medical device and the HCO may use such device free of charge for a long period of time, while the HCO purchases medical consumables suitable for such device during the period of time, then it may be deemed as a typical model of commercial bribery in the medical device industry in China.
II. Whether there are any legal implications for the Evaluation Products under Chinese law?
There is no PRC law expressly regulating whether and how the pharmaceutical/medical device companies are allowed to provide the Evaluation Products to HCOs and HCPs. Instead, certain industrial code of conduct expressly states that it is permissible to provide the Evaluation Products to HCOs under certain circumstances. These industrial standards reflect the current industrial practice for the provision of the Evaluation Products in China.
For example, the Pharmaceutical Industry Compliance Management Practices (PIAC/T 00001-2020) issued by China Pharmaceutical Industry Association and effective on February 26, 2021, which is a recommended (with no binding force) industry standard for both pharmaceutical companies and medical device companies in China, stipulates that the pharmaceutical companies and medical device companies may provide HCOs with a small amount of Evaluation Products in order to enable the HCPs to become familiar with the products and thus to better serve the patients. However, certain rules should be followed, including but not limited to:
- the Evaluation Products should expressly be marked as “sample products” to prevent the Evaluation Products from being resold or otherwise used;
- the Evaluation Products should be attached with the product particulars;
- the Evaluation Products can only be received by HCOs and their authorized departments instead of by any individual HCP;
- the provision of the Evaluation Products should neither induce the patients to use the product, nor induce the HCPs or HCOs to prescribe, recommend, promote or use any product, or to promise to do any of the aforementioned;
- the Evaluation Products should be provided to meet the minimum quantity principle, e.g. no more than the minimum amount necessary for the HCPs to become familiar with such product;
- the Evaluation Products should be delivered by the qualified service providers;
- the use of the Evaluation Products should be limited to the approved indications;
- the company should establish proper SOPs and have adequate control over the application, delivery, acceptance and all other processes of the Evaluation Products, and keep relevant record and documentation; and
- the Evaluation Products should not be used for any patent aid program (i.e. the program in order to enable certain patients (e.g. the patient who cannot receive timely medical treatment due to his/her poor financial situation) to receive enough and efficient medical treatment).
Besides, the RDPAC Code of Practice 2019 issued by China Association of Enterprise with Foreign Investment R&D-Based Pharmaceutical Association Committee which is applicable to the relevant pharmaceutical company members and the Code of Ethics on Interactions with Health Care Professionals in China issued by the China Board of AdvaMed and revised effective on January 1, 2017 which is applicable to the relevant medical device company members also contain similar rules on the provision of the Evaluation Products.
Conclusion
In summary, provision of the Evaluation Products may not necessarily result in commercial bribery in China. It is advisable for the pharmaceutical/medical device companies to have a proper agreement with the HCOs before providing the Evaluation Products showing that the HCOs/HCPs have their sole discretions from medical perspective on whether to use or not (without any commitment or obligation to use) the product after using the Evaluation Products. Such Agreement could be helpful to prove the purpose of the provision of the Evaluation Products. Besides, the pharmaceutical/medical device companies shall keep proper records and documentation for the provision of the Evaluation Products, in particular, the documentation to prove the provision of the Evaluation Products is for the sole purpose of enabling the HCPs to become familiar with the products.
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