In January 2017, China’s State Council announced that the medical representative (MR) profession would be subject to two new requirements. One requirement was that all MRs must be registered on a government website to be able to conduct drug promotional activities, and the other was that MRs may not undertake “drug sales responsibilities.” In August, the Shanghai Food and Drug Association issued a draft regulation on MR registration to implement the State Council’s requirement, and a few other provinces and cities have followed suit. These regulations have drawn close attention from drug companies in China.

On December 19, 2017, the China Food and Drug Administration and the China National Health & Family Planning Commission (NHFPC) jointly issued a draft regulation on MR registration for public comment, entitled Rules on Registration of Medical Representatives (for Trial Use). This regulation, though titled as a MR “registration” document, contains a broad set of requirements relating to the MR profession. Drug and medical device companies in China should closely monitor the legislation’s progress and implementation.

I. Summary of Key Requirements

Below is a summary of the key requirements of the draft CFDA regulation.

1. Definition: The regulation defines “medical representatives” as professionals that engage in the “delivery, communication and feedback of drug information.” Therefore, the entire sales force of drug companies appears to be covered by this definition, no matter what titles the companies may use for sales force personnel.

2. Registration platform: The registration will be completed on a CFDA-administered website, the so-called “registration platform,” which may be run by a non-governmental organization with CFDA’s authorization. The registration is free.

3. MAHs as ultimate responsible party: The regulation holds Market Authorization Holders (MAH) ultimately responsible for the registration of MRs (including the accuracy of registration information) that they employ or “authorize.” Drug manufacturers must issue authorization documents to MRs employed by third-party companies (such as CSOs, licensing-out partners, co-promotion partners, distributors, etc.) that promote their drugs, and drug manufactures are responsible for their registration.

4. MR qualification requirements: MRs must meet certain qualification requirements by holding either: a two-year junior college degree or higher, with a major in life sciences, pharmaceuticals or chemistry;1or a two-year junior college degree or higher with a major in other areas, but with two years of experience in the pharmaceutical industry.

5. Registration information for publication: MAHs must provide a comprehensive set of information in order to register the MRs. 2 All such information will be made available to the public, except that the MRs’ national ID numbers will be redacted.

6. Training requirements: MAHs are required to provide comprehensive training to MRs, which must cover topics such as laws and regulations, professional ethics, pharmaceutical knowledge and product knowledge. Importantly, MAHs are responsible for the training of any third-party sales force that they “authorize.”

7. Hospital prior approval for “academic promotion”: The regulation lists a few types of permissible activities through which MRs may interact with physicians. More importantly, the regulation requires that MAHs must obtain hospitals’ prior approval or agreement before MRs may conduct any “academic promotion” activities targeting physicians, either inside or outside of the hospitals.

8. No “drug sales responsibilities”: The State Council’s prohibition on MRs undertaking “drug sales responsibilities” has drawn significant concern because its meaning is vague and may potentially give the government the power to regulate companies’ internal management of MRs. Unfortunately, the draft CFDA regulation simply repeats the State Council’s prohibitive language and does not provide any further clarification or implementation detail.

9. No direct sponsorship to physicians: The regulation prohibits MRs from providing donations, sponsorships or grants to individual physicians or internal departments of hospitals. The real impact of this prohibition, however, seems limited, because in reality it is the drug companies – not MRs – that provide donations, sponsorships or grants, while the prohibition in the regulation – at least on its face – only applies to MRs, not companies.

10. Behavioral requirements for MAHs and MRs: The regulation contains a set of behavioral requirements for MAHs and MRs, such as a prohibition on the collection of prescription amount data. These requirements have been set forth in previous regulations and are not new.

11. Penalties: The regulation contains a general penalty clause for MAHs, which requires the “registration platform” (i.e., the organization that runs the registration website) to notify the credit management authorities or other competent authorities of misconduct by MAHs. In case of misconduct by MRs, the regulation requires MAHs to put the MRs on a one-month, full-time mandatory training program.

 [1]The regulation contains a full, detailed list of the recognized majors.

 [2]Required registration information consists of: (1) name, gender and photograph of the MR; (2) degree, major and work experience in the pharmaceutical field; (3) National Identification Number of the MR; (4) start and end dates of the employment contract or the authorization; (5) the MR’s status of completion of trainings (including training subjects and training time); (6) the type or category of the drugs that the MR is responsible for promoting; (7) the name of the MAH, its Social Credit Code and the name of its Legal Representative; and (8) the MAH’s certification on truthfulness of all registration information.

 [3]The permissible activities are: (1) communicating in-person at medical institutions; (2) organizing academic conferences or lectures; (3) providing academic materials; (4) communicating through the internet or conference calls; and (5) other activities agreed to by medical institutions.

II. Observations

First, the Shanghai FDA’s draft MR registration regulation caused widespread concern because it contained very harsh penalties, i.e., individual MRs and also all MRs of a company might be de-registered – and therefore lose their jobs – for violations. In comparison, the penalty clause in the CFDA draft regulation is much more lenient. If the CFDA regulation becomes the national rule, and the Shanghai regulation does not become effective, the consequences of inadvertent violation will be much more manageable for companies.

Second, although the CFDA regulation is entitled “rules for registration” of MRs, it contains requirements much broader than registration, such as MR qualifications, MR training, sponsorships and activities around hospitals, and even prohibition against MRs “exaggerating or misleading on (drug) efficacy” during communications with physicians (which may lead to enforcement against off-label promotion). Companies should pay close attention to these additional requirements to ensure compliance.

Third, the fundamental principle of the regulation is that MAHs are strictly liable for the registration and behavioral compliance of the MRs that they employ and authorize. Therefore, drug manufacturers should work closely with their promotional partners to ensure compliance with these requirements. For example, if this regulation becomes final, drug manufacturers will have the obligation to ensure the accuracy of the registration information of the MRs of their licensing partners and provide trainings to them, as well as manage their business activities. Companies may need to adjust their current licensing deals and possibly reevaluate the desirability of such deals in the future.

The comment period of the CFDA draft regulation ends on January 19, 2018. We encourage drug companies in China to continue to monitor the development of the CFDA regulation as well as the local regulation in Shanghai, and to participate in industry efforts to submit comments. We have prepared a bilingual version of the CFDA regulation. Please contact Li Lei (lei.li@sidley.com) if you would like a copy.