In recent years, there has been an uptick in interest in the Chinese market from licensors based predominantly in the U.S., Canada, Europe, and South Korea. Factors encouraging the in-licensing of products to China include access to a large pharma market with huge growth potential as well as the availability of a large participant population and the ability to organize large scale clinical studies.
But with the ultimate goal of commercialization, companies considering transactions often have questions on how the Chinese regulatory system can impact distributing or promoting their current (and future) medical products in China. Knowledge of some of the most essential current rules governing drug and medical device marketing activities for companies already operating in, or interested in entering, the Chinese market can provide a strategic advantage for negotiations and advancing their business interests in the region.
Layers of complexity
When it comes to commercializing and promoting pharmaceutical products and medical devices, China1 has proven to be one of the most lucrative, but also one of the most heavily regulated markets. The medical device sector in China is also currently undergoing a far-reaching anti-corruption drive, adding further pressure on the sector. Initially adopted in 1994 and further amended in 2015, 2018, and 2021 (the frequency of the changes suggesting it was struggling to keep pace with changes in the market), the People’s Republic of China Advertising Law2(PRC Advertising Law) applies to all types of commercial advertisement activities. More specifically, it requires the contents of advertisements for drugs or medical devices to be reviewed by the relevant authorities before publication.
Under the PRC Drug Administration Law3 (DAL), any drug advertisement must receive prior approval by the competent provincial-level government and can only be based on the package insert pre-approved by the industry regulator, the National Medical Products Administration (NMPA). For medical devices, advertisers must follow the Regulation for Supervision and Administration of Medical Devices4 (RSAMD) and obtain an “approval serial number” for the advertisement of a medical device. Such “approval serial number” is issued only after the contents of the advertisement have been examined by local NMPA, and any subsequent alteration of the content will require re-application for approval.
In addition to the PRC Advertising Law, DAL, and RSAMD, there are several other regulations, some specific to the industry and others that apply to advertising more generally, that companies interested in distributing or promoting medical products in China should be aware of. Online advertisements give rise to additional considerations and layers of complexity.
Agencies and applicable laws
With China’s overhaul of its government departments only recently having drawn to a close, a brief explanation of the regulatory landscape in China may be helpful in setting the scene here. At a high level, laws that regulate the medical and pharmaceutical industries are passed by China’s legislature, either during the annual meetings of the National People’s Congress (NPC) held in March, or by the Standing Committee of NPC during their bimonthly or ad hoc meetings. These laws are then implemented and enforced by the State Council, China’s cabinet, and/or departments under the State Council. The State Council also has power to issue implementing regulations for laws, which, as administrative regulations, rank above departmental rules but below laws in the hierarchy of laws in China. Departments under the State Council may promulgate their own lower-level departmental rules. Under the State Council, the State Administration for Market Regulation (SAMR) is the market regulator that oversees all types of commercial advertising activities, while NPMA, the Chinese equivalent of FDA, is tasked with overseeing the promotion and advertising of drugs and medical devices.
Laws and regulations
China does not have a single, unified law that specifically addresses and governs the advertising and promotion of drugs or medical devices. Instead, the applicable rules are scattered across a relatively wide set of laws and regulations, which can be found at both the national level and the local level. In addition to those statutory rules, there are codes of practice that apply to the advertising of medicines or medical devices conducted by members of certain industry associations, such as the No. T/PIAC 00001-2020 Pharmaceutical Industry Compliance Management Practices5issued by the China Pharmaceutical Industry Association that became effective on February 26, 2021. This makes it quite challenging to assemble the whole picture.
For drugs, the main pieces of legislation include:
The Drug Administration Law Implementation Regulations, issued by the State Council on 2 March 2019 and effective from the same date;
Review and Management of Advertisements for Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes Interim Measures (the Pharma Ad Review Rules) issued by SAMR on 24 December 2019 and effective from the same date;
Internet Drug Information Services Administrative Measures, issued by NMPA on 17 November 2017 and effective from the same date;
Medical Advertisements Administrative Measures (Medical Ad Measures), issued by SAMR and the Ministry of Health on 10 November 2006 and effective from 1 January 2007.
For medical devices, the applicable laws and regulations include the Pharma Ad Review Rules and the Medical Ad Measures, but also include the following:
Medical Device Advertising Administrative Measures, issued by SAMR on August 8, 1992 and effective from 1 October 1992.
In addition to regulations specific to pharmaceuticals and medical devices, some regulations address advertising activities more generally. These include, among others:
The PRC Advertising Law;
The Internet Advertising Administrative Measures (Internet Advertising Measures), issued by SAMR on 25 February 2023 and effective from 1 May 2023;
People’s Republic of China Anti-unfair Competition Law, last revised by the Standing Committee of NPC on 23 April 2019 and effective from the same date;
People’s Republic of China Consumer Rights and Interests Protection Law (Consumer Protection Law), last revised by the Standing Committee of NPC on 25 October 2013 and effective from 15 March 2014;
People’s Republic of China Criminal Law, last revised by NPC on 26 December 2020 and effective from 1 March 2021.
Under the PRC Advertising Law, “advertising” is broadly defined as commercial activities for which goods dealers or service providers use certain media formats to, directly or indirectly, promote the goods or services they sell.
Under a now-repealed former rule, any advertisement published through any media or in any form that contains the drug name, drug indications or other content related to the drug should be considered a “pharmaceutical advertisement.” Furthermore, “medical device advertisements” are defined to cover a wide range of activities, including advertisements published through any media or in any form regarding instruments, equipment, devices, appliances, implants, materials, and related items used for the diagnosis, treatment, prevention of human diseases, regulation of human physiological functions or replacement of human organs.
Despite the wide scope and ambiguous nature of those definitions, it is generally understood that commercials/advertisements of products should be distinguished from merely displaying product information, i.e., displaying product ingredients, side effects, and so forth, on a company website, official WeChat account or business premises without more, and this interpretation is supported by the Internet Advertising Measures, which came into effect on 1 May 2023.
From an enforcement perspective, based on the guidelines issued by local SAMR in certain locales, even if they reference a drug or medical device, the following types of advertisement will not, in principle, be deemed “pharmaceutical advertisements” or “medical device advertisements”:
The advertisement only mentions the name of the product, in which case, the content of such advertisement does not need to be reviewed.
The advertisement only contains a factual description and introduction of the product not going beyond the extent needed to protect a consumer’s right to know correct information about the product.
The advertisement only sets out health and wellness knowledge related to the product.
The advertisement only promotes the general application of innovative products and services in the health care sector.
However, while simply providing information does not constitute advertising, Chinese law specifically prohibits advertising “in a disguised form”, i.e., information about products that is proximate to or is closely associated with advertising or commercial content. Distributors or advertisers need to adopt additional precautions to ensure (i) they do not advertise their products when setting out health or wellness knowledge about the product; and (ii) the health or wellness knowledge is displayed separately from information containing their address, contact information, purchase link, and product details.
There are four main participants in the process for creating and disseminating a drug or medical device advertisement in China: advertisers, advertising agents, advertisement publishers, and advertisement spokespersons.
Advertisers are typically drug or medical device manufacturers or distributors who, in order to promote the sales of their products, design, produce, and publish advertisements either by themselves or by retaining advertising agents to do so.
While advertisers are responsible for the truthfulness of the contents of an advertisement, advertising agents and publishers are also required to examine relevant supporting documents and verify the advertisement content pursuant to applicable laws and regulations. This imposes quite a heavy compliance burden on these actors and essentially means that if the advertisement proves to contain false content, they will be drawn into the liability circle. Advertising agents are prohibited from providing design or representation services in relation to an advertisement containing non-compliant content or with insufficient supporting materials, thereby putting pressure on agents either not to accept non-compliant or insufficiently documented mandates or to push advertisers to rectify.
Advertising agents and publishers are legally required to disclose their fee standards and payment methods. For advertisement publishers, they are also required to provide advertisers with truthful materials after the publication, such as coverage rates, viewing rates, click through rates and circulation.
In recent years, China has seen its fair share of scandals involving celebrity spokespersons promoting low-quality products, thereby triggering a public outcry. As a result, China now bans advertising spokespersons/brand ambassadors from making recommendations or testimonials on products they have not used. This restriction on actual use limits the scope of their activities with respect to targeted pharmaceutical or specialized medical device products.
Given the lack of a comprehensive law coupled with rapid shifts in advertising channels and formats, it is challenging to keep track of all the regulatory requirements applicable to the advertising of drugs or medical devices in China. We have summarized below the key (non-exhaustive) requirements, of which any international pharmaceutical company marketing or promoting products in China should be aware.
All drug and medical device advertisements must be submitted to local NMPA for pre-vetting and approval before release. The validity period of the approval is the shorter of (i) the validity period of the product registration certificate, (ii) the validity period of the record-filing certificate and (iii) the validity period of the product manufacturing permit. If none of (i), (ii) and (iii) specify the validity period, the advertising approval is valid for two years.
The advertisement must display the approval serial number in a prominent place.
Advertisements must be truthful, lawful, and free from false or misleading content.
Special categories of drugs, such as narcotics, psychotropic substances, therapeutic toxins and radioactive drugs, chemical precursors for drugs, as well as medicines and medical devices used in the treatment of drug withdrawal cannot be advertised.
- Advertisements cannot contain any information beyond that approved in the product registration documents, i.e., package insert or instruction book.
Advertisements cannot contain any of the following:
Assertions or guarantees of efficacy or safety;
Statements of recovery rates or efficacy rates;
Comparisons with the efficacy or safety of other medicines or medical instruments;
Use of advertising spokespersons to make recommendations or give testimonials;
Names or images of state organs, state organ staff, military organizations, military personnel, or use of military equipment, facilities, and so forth;
Names or images of scientific research organizations, academic institutions, industry associations, or experts, scholars, physicians, pharmacists, clinical nutritionists, patients, and so forth for purposes of making recommendations or testimonials;
Superlatives, or words and expressions like “safe”, “safe, non-toxic and with no side-effects”, and “minor toxic side-effects”; or express or implied statements that the ingredients are “natural”, thus ensuring safety;
Content that induces purchases such as “hot sellers”, “rush to buy or use on a trial basis”, “family must-have”, “free treatment”, “free gifts”, “will refund if ineffective”, “insured by insurance companies”, and so forth; and
Other content prohibited by laws or regulations.
Advertisements cannot be placed in mass media aimed at minors.
Direct-to-consumer advertising of prescription drugs is prohibited.
Advertisements must clearly indicate contraindications and adverse reactions.
Advertisements for prescription drugs can only be featured in medical and pharmaceutical journals jointly designated by NMPA and the administrative department in charge of health under the State Council.
Advertisements for prescription drugs must be conspicuously labeled with “this advertisement is provided solely to be read by medical and health care professionals”.
Advertisements for non-prescription drugs must clearly display the OTC mark and must be conspicuously labeled with “purchase and use this product in accordance with the instructions or as directed by a pharmacist”.
- Advertisements recommending the personal use of a medical device must conspicuously state “please carefully read the instruction booklet or purchase and use as directed by medical personnel”.
- If there are contraindications or precautions in a medical device’s registration documents, the advertisement’s text must conspicuously indicate “Carefully read the instructions for contraindications and precautions”.
Unique to China
There are several areas of pharmaceutical and medical device promotion regulation that are unique to China or have received additional regulatory scrutiny, thus necessitating further focus from industry participants. Below are four examples.
In China, there is a type of advertisement called “medical advertisement”, which is distinct from a “pharmaceutical advertisement” or a “medical device advertisement”. The main difference lies in that a “medical advertisement” can only be published by a medical institution (e.g., a hospital) to promote the institution and/or its medical services.
Medical advertisements are subject to a different suite of rules, such as the medical institution must obtain a Medical Advertisement Review Certificate from the competent branch of the Ministry of Health (not NMPA) and the certificate is valid only for one year.
While China’s cosmetic medicine market has been growing at a higher rate than the global market generally, the most frequently reported issue has been false advertising. Against this background, on 1 November 2021, SAMR issued law enforcement guidelines6 which categorize cosmetic medicine advertising as medical advertising, with a view to cracking down on advertisements in the cosmetic surgery industry. Under the guidelines, cosmetic medicine advertisers must obtain a license to advertise their products or services and are prohibited from creating advertisements causing anxiety over people’s appearance or disguising advertisements in the form of interviews or reports.
In China, a type of institution-to-institution quasi-advertising activity that involves scientific information exchange is also known as “academic promotion”. There are special rules governing the conduct of academic promotion.
As a general rule, academic promotional activities can only be undertaken by registered medical representatives who are professionals acting on behalf of a marketing authorization holder (MAHs) by conveying, communicating, or collecting feedback information about drugs. Specifically, MAHs can instruct medical representatives to (i) create plans and strategies for the promotion of medical products; (ii) transmit medical product information to health care providers (HCPs); (iii) assist HCPs in using medical products; and (iv) collect feedback on the clinical use of the products and information regarding supply and demand at hospitals.
Permitted academic promotion activities include (i) in-person meetings with HCPs at medical institutions, (ii) organizing academic meetings and lectures, (iii) providing academic materials, (iv) communications through the internet or telephone, and (v) other activities agreed to by medical institutions. Nonetheless, medical representatives must obtain consent from the medical institution in question before they carry out academic promotion with HCPs at such institution.
It is important to note that academic promotion is not a sales activity. Hence, medical representatives cannot perform drug sales, such as collecting payments or dealing with purchase/sales invoices. Additionally, they are forbidden from (i) misleading HCPs about the use of drugs, (ii) exaggerating or misleading HCPs about a drug’s curative effects, (iii) concealing a drug’s known adverse effects; and (iv) concealing adverse event information from HCPs. However, the potential for academic promotion to spill over into sales promotion is obvious, and it would appear that ultimately sales is the end game for academic promotion, otherwise there is little incentive for MAHs to do it.
China’s market regulator places strong emphasis on the requirement that an advertisement must be easily identifiable as such by potential customers. This explains why in Chinese social media people often see the characters for advertisement “广告” showing up when scrolling through the feed. This is in response to “disguised” advertisements, which camouflage or bury endorsements or commercial promotion of products within television broadcasts. For example, in 2019, a popular Chinese talk show television program named “Tu Cao Da Hui” promoted the Compound Dexamethasone Acetate Cream through stand-up comedians sharing their personal experiences. As a result, it was fined RMB0.9 million (about US$130,000) by SAMR in Shanghai.
This rule was recently emphasized again by the Internet Advertising Measures which stipulate that it is prohibited to use means such as health or wellness explanations to indirectly publish advertisements for medical care, pharmaceuticals, medical devices, health foods, and special foods for medical purposes.
Prevalence of social media advertising
Livestreaming is one of the most popular channels in China where products or services are promoted or advertised. Though China does not ban marketing drugs (OTC) or medical devices on social media platforms, just as with other types of promotional activities, promoting drugs or medical devices on the Internet would require pre-examination and approval. For detailed analysis regarding internet advertising, please refer to our note published at https://www.engage.hoganlovells.com/knowledgeservices/news/chinas-new-internet-advertising-measures-to-take-effect-on-1-may-2023/.
China has ramped up the enforcement of pharmaceutical and medical device advertising regulations in the past few years and has gradually increased the penalties imposed on non-compliant advertisers, advertising agents and publishers. That said, much remains to be done to ensure consumers are adequately protected, particularly from those seeking to push the boundaries with advertisements packaged as something else.
At the same time, various new forms of promotional activities have sprung up which are blurring the lines between educational sharing and commercial promotion. These include writing scientific articles to introduce health knowledge while name-checking specific products, engaging in pay-per-click marketing, and providing monetary incentives to encourage consumers to leave positive reviews. Given the heightened enforcement environment (notably in relation to procurement of medical devices using corrupt means) and depleted local finances due to spending on COVID-19 protection measures, ensuring compliance within the highly regulated pharmaceutical industry should be a key focus for both domestic and multinational companies operating in China. Cultural norms reflected in the law may vary quite considerably from one jurisdiction to another, e.g., it is common to see pharma advertisements on television in the US which include “knocking copy” comparing the advertised product unfavorably to a competitor, which is not permitted in China. Another challenge for foreign companies in China is adapting to the fact that legislation in China is not consolidated, such that different regimes apply to different products and there are separate rules on Internet advertising as compared to traditional media and so forth.