China's New Draft Administrative Measures for Management of Medical Representatives

On November 28, 2024, China’s National Medical Products Administration (NMPA, 国家药品监督管理局), China’s equivalent of the U.S. Food and Drug Administration, issued the Draft Administrative Measures for Management of Medical Representatives for public comment (the Draft Management Measures, 医药代表管理办法) in conjunction with six other government agencies. The Draft Management Measures were issued for public comment, with a deadline of December 13, 2024.

Although the Draft Management Measures’ title references medical representatives, i.e., sales representatives, their content is much broader, providing substantive requirements for and restrictions on the conduct of Marketing Authorization Holders (MAHs), healthcare institutions, and healthcare providers (HCPs). Once effective, the Draft Management Measures will replace the previous Administrative Measures for Management of Record-Filing for Medical Representatives (Trial Version) (the Record-Filing Measures, 医药代表备案管理办法(试行), which have been in effect since December 1, 2020. The Draft Management Measures are consistent with recent regulations issued for and enforcement trends in China’s healthcare industry, including the Draft Compliance Guidelines for Healthcare Companies to Prevent Commercial Bribery Risks released on October 11, 2024.

Overview

The Draft Management Measures contain five main sections:

1. General Principles (总则, Articles 1-7), providing the applicable scope of the Draft Management Measures, definitions of key terms, and basic obligations for drug MAHs, healthcare institutions, and various government authorities. Notably, the measures are only directed at Medical Representatives engaged in the promotion of pharmaceuticals, excluding personnel promoting medical devices or other healthcare products from their scope. That said, other, prior regulations have been initially rolled out for pharmaceuticals and later extended to the medical device space. Medical device and medtech companies would be well-advised to view the Draft Management Measures as a preview of coming regulations.
2. Management of MAHs (药品上市许可持有人管理, Articles 8-11), providing the requirements and prohibitions for MAHs when recruiting and supervising medical representatives, including the qualifications for medical representatives.
3. Management of Record-Filing for Medical Representatives (医药代表备案管理, Articles 12-17), providing the requirements on record-filing for medical representatives, including the information for submission and record-filing procedures.
4. Management of Medical Representatives’ Academic Promotion of Drugs (医药代表药品学术推广管理, Articles 18-25), providing the requirements for medical representatives, healthcare institutions, and HCPs with respect to the academic promotion (学术推广) of pharmaceuticals. These provisions focus on anti-corruption concerns.
5. Supervision and Management (监督管理, Article 26-33), providing penalties and risk control measures for potential misconduct by medical representatives, MAHs, and healthcare institutions, with a focus on joint enforcement by various government agencies.

New Requirements and Prohibitions

Compared with the Record-Filing Measures currently in effect, the proposed Draft Management Measures provide more comprehensive requirements for multiple sectors of the healthcare industry, not only medical representatives, but also MAHs, healthcare institutions, and even government agencies. The Draft Management Measures also reflect Chinese regulators’ continuing focus on anti-corruption and increasing the efficiency of enforcement measures. We have summarized key changes from the Draft Management Measures below and prepared a Chinese-language comparison of the Record-Filing Measures and Draft Management Measures.

The Draft Management Measures add multiple new requirements for the conduct of Medical Representatives, MAHs, and healthcare organizations, including hospitals and pharmacies:

• A requirement that MAHs should require medical representatives to sign compliance commitment letters (合规承诺书) along with their labor contracts as part of the hiring process. Medical representatives’ failure to comply with their commitment letters would then result in their termination. (Article 9)
• New requirements relating to medical representatives’ academic qualifications, professional experience, and professional knowledge. (Article 10)
• New prohibitions on MAHs employing medical representatives who are unqualified, or who have a record of commercial bribery. (Article 11)
• New requirements that expand the information to be submitted by the MAHs on the record-filing platform for medical representatives to now include their national identification numbers, educational or job qualifications, sales territories, and compliance commitment letters. (Article 14)
• New requirements for healthcare institutions to set up internal departments to record and supervise the academic promotion of drugs by medical representatives. (Article 21)
• New prohibitions on medical representatives collecting individual HCPs’ prescription data, providing improper benefits to HCPs and/or persons closely tied to HCPs (such as family members or close friends), violating patients’ privacy rights, and engaging in off-label promotion. (Article 23) The Draft Management Measures also add corresponding requirements for healthcare institutions as well. (Article 24)
• New obligations for MAHs and healthcare institutions in the event that medical representatives violate the measures (Article 25):
  • MAHs shall promptly correct medical representatives’ behavior, or terminate the medical representatives in cases of serious misconduct.
  • Healthcare institutions shall actively file reports of medical representatives’ misconduct on the record-filing platform, and this information will be shared with regulators.

New Enforcement Measures

The Draft Management Measures establish a formal mechanism for joint enforcement by the NMPA, the Ministry of Public Security (MPS), the State Administration of Market Regulation (SAMR), and other related government agencies, with a particular focus on commercial bribery. (Articles 26-28, 31-32)

Under the Draft Management Measures, government agencies will be formally required to share information about potential misconduct with other government agencies that have jurisdiction over the misconduct. For example, if the NMPA identifies information relating to commercial bribery during its routine inspection of a hospital, it will share the information with the SAMR or MPS for further investigation. When other government agencies identify bribery-related misconduct by medical representatives, they will notify NMPA of the medical representatives’ identities as well. If evidence of commercial bribery or other misconduct is found, there will be penalties for not only medical representatives, but also the related MAH and healthcare institution(s):

• For medical representatives, potential penalties may include public disclosure on the MAH’s website and the record-filing platform, and limitations on their professional promotion.
• For MAHs and healthcare institutions, potential penalties may include public disclosure of noncompliant conduct and increased supervision and inspection. MAHs may also be debarred from public procurement programs, while healthcare institutions may be cut off from access to China’s public medical insurance reimbursement system.

The Draft Management Measures also encourage the public to actively report potential misconduct by medical representatives and MAHs, and encourage industry associations and other organizations to develop industry standards or codes of practice. (Articles 29-30) This parallels the NMPA’s recent publication of draft guidelines for a whistleblower program targeting the healthcare industry.

Remaining Ambiguity

The Draft Management Measures also contain some areas that may be further clarified when the final regulations are issued or in future guidance. For example, under the current draft, MAHs are responsible for supervising medical representatives, while in practice medical representatives may be employed by distributors, contract sales organizations, or other entities. As noted above, the current draft prohibits MAHs from employing any medical representative with a history of engaging in commercial bribery. It is unclear, however, whether such history is based only on public records, such as criminal or administrative penalties, or if this includes non-public information, such as companies’ internal discipline records.

For questions on this or any other subject, please reach out to the authors or any of their colleagues in Arnold & Porter’s Life Sciences or White Collar Defense & Investigations practice group.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.