State Administration for Market Regulation: national investigation of pharmaceutical industry commercial bribery will be conducted from May to October.
On May 17th, the State Administration for Market Regulation issued Announcement of Conducting Key Action on Anti-Unfair Competition Law Enforcement [No. 4 of 2018].
Nationwide Investigation of Pharmaceutical Commercial Bribery
On April 10th, the organizations directly under the State Council decided to carry out key action on anti-unfair competition law enforcement in the whole country from May to October 2018. The law enforcement action focuses on network transactions, rural markets, medicine, education and other industries and fields.
It will focus on the outstanding issues that have high degree of social attention, reflect strong market confusion and commercial bribery issues.
Focused Areas and Key Actions are Locked
The key investigation of commercial bribery in pharmaceutical industry: pharmaceuticals (medical devices) purchase and sale, public enterprises and public institutions and relevant industries and fields that cover wide ranges and are closely related to the people's livelihood.
Behaviors for key investigation: bribe the staff of transaction counterparty by use of property or other means, the unit or individual who is entrusted to handle relevant affairs by transaction counterparty, and the unit or individual who uses the authority or influence to influence transaction, etc., seeking the transaction opportunity or the competitive advantage.
The five-month centralized treatment began. To investigate the commercial bribery in pharmaceutical industry, the following aspects are highlighted according to the cases published by the industry and commerce department:
Key I: CSO Company of Illegal Promotion
In December 2017, the Shanghai Administration for Industry & Commerce Inspection Corps announced a copy of “written decision of administrative penalty” for NT Medical Information Consultant (Shanghai) Co., Ltd..
In the process of drug promotion and sales, NT’s drug substitution fee promotes the sales of drugs. The fees were cashed in the form of conference sponsor, department gathering and presents giving by on-the-job medical representatives after they were paid in the name of “service fee”, “promotion fee” and so on. Finally, it was characterized as commercial bribery.
It is known that the company is the main body established in mainland China to promote the sale of drugs and promote the sale of self-produced drugs and agent drugs through its own and associated companies, i.e. CSO Company.
At the same time, Chiesi Pharmaceutical (Shanghai) Co., Ltd. was punished by Shanghai Administration for Industry & Commerce for the purpose of inviting hospital doctors to travel in the process of conducting academic conferences. This is also a CSO company.
Key II: Obtain the Exclusive Distribution Right of Hospital Medicines and Consumables by Conveying Benefits
In July 2017, it was reported on China Consumer Journal that a case of commercial bribery was investigated by Luoyang Administration for Industry and Commerce. A commercial company in Luoyang signed a 10-year “mutual benefit” agreement with the hospital based on the condition of bearing hospital loan interests.
According to the agreement, the hospital would no longer purchase drugs and consumables from any other third party within the validity period.
Finally, Luoyang Administration for Industry and Commerce decided that the agreement on exclusive distribution of medicines and consumables signed by the commercial company and the hospital excluded the right to fair competition from other suppliers, belonging to bribery and suspected crimes.
Key III: Concealed Payment Method of Pharmaceutical Companies
In December 2017, Shanghai Administration for Industry & Commerce issued administrative penalty information that Bristol-Myers Squibb paid over RMB 50,000, the business class airfare to and from London, United Kingdom, to the department director of the target hospital during the drug sales process.
During the period, the department purchased six kinds of drugs with the total value of RMB 720,000 from this company. When the illegal act of unfair competition was found, except that the illegal gains were confiscated and a fine was imposed.
It is learned that in the current market first-line promotion, most enterprises largely lower the “rebates” for each box of medicine to doctors. Foreign-funded pharmaceutical enterprises even eliminate the rebate sales at the company level. If the drug agents choose to cash the fees out of pressure, that is the individual behavior.
On the bright side, the method of opening the way with extra rebates is not the main stream, but it still exists in more concealed way in a certain period. This is also the objective of this centralized treatment.
Enterprises are required to self-check and self-correct first
At the same time, the State Administration for Market Regulation requires the operators to seriously carry out self-checking and self-inspection, and consciously correct the illegal acts in the operation process; In addition, once the market confusion, commercial bribery, false propaganda and other behaviors that violate Anti-Unfair Competition Law are found, it is welcome to report complaints to local industry and commerce and market supervision and administration departments.
Appendix: Announcement on Conducting Key Action of Anti-unfair Competition Law Enforcement Issued by State Administration for Market Regulation
[No. 4 of 2018]
Newly revised Anti-Unfair Competition Law has been implemented on January 1st, 2018. The State Administration for Market Regulation decided to carry out key action on Anti-Unfair Competition Law enforcement in the whole country from May to October 2018, to fully implement the spirit of the 19th National Congress of the Communist Party of China, further promote the implementation of Anti-Unfair Competition Law and create a fair competition market environment. The law enforcement action focuses on network transaction,
rural market, medicine, education and other industries and fields, centers on treating outstanding issues that have high degree of social attention and reflect strong market confusion, issues like commercial bribery, false propaganda and network-related unfair competition, to maintain fair competition market order, safeguard the legitimate rights and interests of operators and consumers.
I. Focus on investigation of market confusion, infringement of trade secrets and other violations of intellectual property rights and unfair competition and strengthen the protection of property rights.
Legal basis: Regulations of Article 6, 9, 18 and 21 of Anti-Unfair Competition Law
Key areas: strengthen the protection of business secrets of industry leaders, well-known trademarks, time-honored brands and technology-intensive companies. Focus on market confusion, false propaganda and other behaviors in rural market, urban and rural joint “large set” and other regions, with emphasis on daily necessities, department store supplies, and liquor commodities and so on.
Key behaviors: the behavior of using others’ same or approximate identification such as product name, packaging and decoration which have certain influence without authorization; Unauthorized use of an enterprise name (including short name, brand, etc.) which has a certain influence; Use the registered trademark of another person as the name of the enterprise, mislead the public, and constitute the act of unfair competition.
II. Focus on investigation of commercial bribery in medicine and education, to purify market environment
Legal basis: Regulations of Article 7, 19, etc. of Anti-Unfair Competition Law
Key areas: drugs (medical devices) purchase and sale, education, public enterprises and public institutions and other industries and fields covering a wide range and closely related to people's livelihood.
Key behaviors: To bribe the staff of transaction counterparty by using property or other means, the unit or individual who is entrusted to handle the relevant affairs by the transaction counterparty, the unit or individual who uses the authority or influence to influence the transaction, so as to obtain the transaction opportunity or the competitive advantage.
III. Focus on investigation of false propaganda behaviors in the internet field, to maintain fair competition order
Legal basis: Article 8 and 20 of Anti-Unfair Competition Law
Key areas: “Scalping and scrambled letters” in the internet field, false commodity or business operator's credit rating, false propaganda behavior in direct selling field, and false propaganda behavior in the field of health care products.
Key behaviors: false or misleading commercial propaganda, cheating and misleading consumers made by the operators on the performance, function, quality, sales status and user evaluation of their commodities. The behavior that an operator assists other operators in making false or misleading business propaganda by organizing false transactions
IV. Strengthen social co-governance and build a fair and orderly market competition environment
In the production and operation activities, operators shall abide by the principles of voluntary, equal, fair and honesty and the laws and commercial ethics. The operators should enhance the protection consciousness of their own intellectual property. When the acts of unfair competition are found, they should take full advantage of the legal arms to protect their legitimate rights and interests. The operators should also carry out self-checking and self-inspection, consciously correct the illegal act in the operation process, do business according to law, and operate in good faith.
The industry organizations should give full play to the important role in promoting the development of industry norms, and establish and improve the industry self-discipline conventions and professional ethics guidelines. They should strengthen the self-discipline of the industry, guide and standardize the competition of the members according to law and maintain the market order.
Welcome all walks of life and consumers to report to local industry and commerce and market supervision and administration departments the complaints about market confusion, commercial bribery, false propaganda, unfair award sales, commercial defamation, infringement of trade secrets, internet unfair competition and other suspected violations of Anti-Unfair Competition Law, to strengthen social supervision and social co-administration and create a fair and just business environment.
State Administration for Market Regulation
May 14th, 2018
