The Shanghai Municipal Health Commission—with the Shanghai Municipal Medical Insurance Bureau and the Shanghai Municipal Administration of Traditional Chinese Medicine—issued a new regulation on April 7, “Implementation Rules for the Nine Principles for Integrity Practices for Staff of Medical Institutions in Shanghai” (New Regulation). This New Regulation serves as a detailed local guideline for the national regulation, known as the "Nine Principles for Integrity Practices for Staff of Medical Institutions," issued by the National Health Commission, the National Medical Insurance Administration, and the National Administration of Traditional Chinese Medicine in 2021.

The New Regulation outlines specific prohibited behaviors for medical institutions and HCPs, signaling continued scrutiny of corruption-related conduct in the healthcare sector by Chinese authorities. It also raises compliance requirements for healthcare companies operating in Shanghai.

Below is a summary of some key highlights of the New Regulation:

1. STRICTER REQUIREMENTS FOR HOSPITAL VISITS

The New Regulation introduces stricter requirements for the visits of HCPs by medical representatives of healthcare companies and HCPs' receptions of such representatives. The visit and reception activities must adhere to the requirements of "Three Fixes" (fixed timing, fixed location, and fixed persons) and "Four Haves" (have reservation, have agenda, have record, and have monitoring). In the previous regulation issued by Shanghai authorities in 2017 (2017 Regulation), only Three Fixes and "One Have" (have record) were required.

While the 2017 Regulation required monitoring in "key areas within healthcare facilities," the latest New Regulation suggests monitoring the visit and reception process (pending clarification from the authorities).

Should this interpretation prove accurate, medical representatives of healthcare companies will need to exercise greater caution in ensuring compliance when visiting and interacting with HCPs.

2. PROHIBITION ON IMPROPER PRESCRIPTION DATA COLLECTION

HCPs and healthcare company employees are strictly prohibited from collecting or sharing prescription or usage data without authorization from medical institutions. Fabricating or collecting medical cases for personal gain is also strictly forbidden.

3. PROHIBITION ON COLLECTION, USE OR DISCLOSURE OF PATIENT INFORMATION

Protecting patient privacy is emphasized, with strict prohibitions on unlawfully collecting, using, or disclosing patient information for non-medical purposes.

4. REITERATION AND REFINEMENT OF PROHIBITIONS ON COMMERCIAL BRIBERY AND KICKBACKS

The New Regulation reiterates and specifies prohibitions on various forms of kickbacks, banquets, reimbursements, and entertainment activities between HCPs and healthcare companies, which include but are not limited to the following:

• Prohibition of accepting kickbacks in any form, including cash, gifts, securities, and payment vouchers, from healthcare companies and their distributors
• Prohibition of participating in or accepting arrangements, organization, or payment of fees for banquets, gifts, tourism, learning, inspections, fitness, or other entertainment activities
• Prohibition of implying, coercing, soliciting, or receiving benefits in the procurement and use of medical products
• Prohibition of healthcare companies and their distributors reimbursing expenses that should be paid by medical institutions and their staff to their relatives or other related individuals
• Prohibition of participating in promotional activities for medical products with the condition of recommendation, procurement, supply, or use of such products
• Prohibition of soliciting or accepting commercial bribes in the construction of infrastructure, scientific research activities, information system construction, etc., from healthcare companies, their agents, or distributors

5. PROHIBITIONS ON IMPROPER REMUNERATION

Several forms of benefits, including using positions for personal gain, fabricating academic lectures, promoting products for profit, and accepting donations for undue benefits, are strictly prohibited. Specifically, these include without limitation the following:

1. Prohibition of accepting benefits through means such as fabricating academic lectures or receiving remuneration significantly exceeding the lecture remuneration standards recommended by industry associations
2. Prohibition of profiting from illegal live streaming sales by exploiting one's position or identity
3. Prohibition of placing promotional materials and QR codes with promotional or fee-charging functions for external pharmaceuticals, consumables, equipment, and nursing supplies inside the hospital without authorization
4. Prohibition of using one's position to seek personal gains from prescription of medicine, laboratory tests, and other special examination services.
5. Prohibition of recommending specific manufacturers’ medical products to patients in any form.
6. Prohibition of promoting products for profit for healthcare companies during the process of providing medical services.

6. PROHIBITIONS ON FRAUDULENT UTILIZATION OF SOCIAL INSURANCE FUNDS

The New Regulation requires that medical institutions and HCPs legally and reasonably utilize medical insurance funds and ensure transparency in medical services to avoid fraudulent activities related to insurance claims.

7. STRINGENT SELF-INSPECTION & REPORTING, AND ACCOUNTABILITY MECHANISMS

Additionally, the Shanghai regulatory authorities not only outline specific prohibitions on various forms of misconduct but also emphasize the adoption of mechanisms of HCPs’ self-inspection and self-reporting, enforcement authorities’ routine inspection, and serious handling of violation—specifically the following:

• Medical institutions and HCPs are mandated to conduct rigorous self-inspections, focusing on issues including but not limited to commercial kickbacks, insurance fraud, over-diagnosis, improper acceptance of donations, breach of patient privacy, and illegal profiteering. Any identified problems must be promptly rectified and violations must be reported for investigation.
• The enforcement authorities will be tasked with integrating the requirements under the New Regulation into their routine supervision and inspection of medical institutions. Social supervision will also be strengthened, with mechanisms in place for complaints, verification, investigation, and feedback to ensure thorough scrutiny of reported issues.
• Strict accountability measures will be further enforced, with assessments of medical institutions and HCPs incorporating compliance with the regulations. Those found in violation will face consequences ranging from performance assessment discredit or disciplinary to administrative or criminal legal action, depending on the severity of the offense.

Given these stringent measures, it is foreseeable that HCPs and medical institutions will proceed with greater caution in their future dealings with healthcare companies. In order to safeguard themselves, HCPs may be more inclined to disclose instances of bribery, undue influence, or other unlawful behavior by healthcare companies or their employees during the self-reporting process. Therefore, it is crucial for healthcare companies to well understand these regulations and ensure compliance both for themselves and their employees.

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