Since 5 January 2023, when China’s Central Commission for Discipline Inspection (CCDI) published a resolution saying it would fight a tough and protracted war against bribery and corruption, deeper “special rectification work” on corruption has begun in several sectors of the economy including healthcare, social security and elderly care services. A few months later, 14 Government departments including the National Health Commission (NHC) issued the Notice on the Key Points for Correcting Unhealthy Practices in the Field of Pharmaceutical Purchase and Sales and Medical Services in 2023, which strengthens investigations of all forms of bribery committed by pharmaceutical companies, distributors, sales representatives, hospitals, and other participants in pharmaceutical and medical services.
Nation-wide rectification work under the Notice has four phases with various highlights in each phase.
This rectification work has now been in progress for several months and its key features are now clear: Ambition and focus, alliances and coordination and long-term impact. Deloitte focuses on the market responses and trends, proposes key execution points and profound analysis on the establishment of compliance mechanisms, to help industry players establish full and effective compliance systems.
The following are excerpts from the key points of the article:
In August, outpatient volume decreased by a slight 8%, medical consumption fell by 16%, and there was a 12% decline in surgical procedures, indicating a drop in national clinical volume since the start of the rectification period. The volume of marketing events, a typical promotion activity for pharmaceutical and medical device companies, fluctuated between July and October.
Based on the analysis of industry marketing activities, notable trends can be found:
The acceleration of centralized anti-corruption rectification has raised higher requirements for the compliance mechanisms, including:
Comprehensiveness (Breadth)
When working with partners in the pharmaceutical ecosystem and value chain, companies should comprehensively monitor and timely review compliance risks. They should also strengthen monitoring and prevention of key risks in different partnership models.
On the other hand, companies should strive for more comprehensive internal compliance systems and embed compliance requirements into their business systems through measures such as setting up compliance committees and establishing compliance monitoring responsibilities for business processes.
Professionalism (Depth)
Companies should formulate special mechanisms for self-checking, self-training, self-monitoring, and rectification based on their business models and strategies.
Accuracy (Precision)
Risk prevention and self-correction through accurate risk location can improve the efficiency and efficacy of compliance. On top of comprehensive, dedicated, and effective compliance controls, companies should use digitally enabled big data to establish effective behavior indicators and build prediction models to monitor abnormal behavior accurately and effectively.
Compliance and resilience are key to long-term development. With tightened pharmaceutical regulation, pharmaceutical companies must urgently construct comprehensive and effective corporate systems to facilitate compliant business operations.