In recent years, the regulatory framework and enforcement practice in the area of pharmaceutical advertising in China have been evolving at a very quick speed, which, on the one hand, continuously explores a way to balance the interests of pharmaceutical companies and the public safety concerns，while, on the other hand, causes confusion over regulatory compliance among pharmaceutical companies.
This confusion partially results from the overlapping laws and non-unified examination standards. Pharmaceutical advertising in China is not governed by a single law or regulation, but a series of overlapping laws and regulations, including the Advertising Law of the People’s Republic of China (the “Advertising Law”), the Drug Administration Law of the People’s Republic of China (the “Drug Administration Law”), the Anti-unfair Competition Law of the People’s Republic of China, etc. Following the amendment to the Advertising Law in 2018, the Drug Administration Law was also comprehensively amended in 2019 after years of discussion.
On the operational level, the regulation and supervision of pharmaceutical advertising largely rely on dispersed regulations promulgated by relevant regulatory bodies, including the Interim Measures for the Administration of Internet Advertising, Measures for the Examination and Approval of Drug Advertisements, Criteria for Censoring Pharmaceutical Advertisements, etc.
On 24 December 2019, the State Administration for Market Regulation (SAMR) issued the Interim Measures for Administration of Examination on Advertisements of Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes, (the “Interim Measures”), integrating the administrative measures on advertisement examination of what is commonly known as “Three Products and One Device” in one regulation.
Regulatory Developments in Pharmaceutical Advertising
In March 2018, the 13th National People's Congress approved institutional reform, which marks the eighth large-scale government restructuring since China implemented the reform and opening-up policy in the late 1970s. As part of the institutional reform, China established a new full-ministerial-level government agency: the State Administration for Market Regulation (SAMR), which has become a powerful regulatory authority with the duty to oversee the supervision and management of market order, drug and food safety, product quality, unfair competition and commercial bribery, and intellectual property protection matters in general. The SAMR replaces the State Council in overseeing the newly re-organised NMPA. In the past, the former CFDA (now known as NMPA) was responsible for reviewing and approving the pharmaceutical advertisements, while the former State Administration for Industry and Commerce (now known as SAMR) was responsible for supervising pharmaceutical advertisements.
Under the above background, and in need of a unified standard for pharmaceutical advertisement review, after three rounds of consultation for public comments, the Interim Measure was finally promulgated by the SAMR at the end of 2019, to take effect as of 1 March 2020. The Interim Measures not only align with the amendments made to the Advertising Law and Drug Administrative Law, but also aim to address realistic problems incurred in the regulatory practice in past years.
Optimising Review and Approval Procedures
With the reform of “separating operating permits from business licences”, the Interim Measures stipulates that, when applying for the pharmaceutical advertisements, the applicant will only need to submit the Application Form, sample advertisement, identity certificate, drug registration certificate, drug authorisation, drug label and documentation relating to the intellectual property involved in the advertisement. Certain redundant materials under the current standard will no longer be required.
The Interim Measures also simplify the contents that pharmaceutical advertisements must contain. According to the Interim Measures, advertisements for drugs must contain the contraindications, adverse reactions and advertisement approval number. For non-prescription drugs, the advertisements must clearly mark the non-prescription logo (over-the-counter or OTC), and the warning “please consult the instruction or a pharmacist before purchase and use”. For prescription-only drugs, the advertisements must clearly state the words “this advertisement is intended for medical and pharmaceutical professionals only”. Drug advertisements are no longer mandatorily required to contain the name of the drug manufacturer, the drug registration certificate and other information that the consumers can learn themselves by simply checking the advertisement approval number.
The Interim Measures further stipulate that the advertisement approval number should be valid during the validity term of the drug registration certificate, recordal certificate or manufacturing licence, whichever is the shortest. Where the above certificates do not specify the validity period, the advertisement approval number shall be valid for two years. at most, as opposed to the one-year validity period under the original standards. The purpose of these changes is to provide convenience for pharmaceutical enterprises and to avoid repetitive applications due to the short validity terms of advertisement approval numbers.
In 2018, the Circular on Effective Scrutiny Review over Advertisements for Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes issued by SAMR already started to promote online processing for pharmaceutical advertising application in a general guiding manner. In this instance, the Interim Measures go a step further to specifically stipulate that advertisement applications can be filed either on-site or via express, fax, email, or online government service platform.
According to the Interim Measures, the advertisement examination authority should complete the examination within ten days since the acceptance of application, and if the application is approved, it should disclose to the public the information relating to the advertisement application within ten days via its official website or other convenient means of access.
Adopting Strict and Rigorous Scrutiny Standards
According to the Drug Administration Law and the Advertising Law, the contents of pharmaceutical advertisements must be consistent with those in the instructions approved by the drug regulatory authority under the State Council. The Interim Measures further stipulate that where the drug name, indications, pharmacological action of the drug or other contents are involved in the advertisement, the description of this information shall not exceed the scope of the drug instruction. For dietary supplements, the Interim Measures makes it clear that the advertisement for dietary supplements should not indicate any functions of disease prevention or treatment.
In fact, the misrepresentation and exaggeration of the function of dietary supplements has been one of the most common offenses in pharmaceutical advertising regulations. Last year, domestic healthcare giant Quanjian was under investigation for inappropriate promotional activities. Led by this high-profile enforcement case, starting on 8 January 2019, the SAMR initiated a joint action to rectify illegal promotional activities in the specific field of dietary supplements, especially the assertion of treatment effects in the advertisements. During the action, more than 30,000 cases were investigated with a total value of CNY137 billion involved and a total fine of CNY10 billion. Most of these cases involved misrepresentation in the advertisements. Recently, on 8 January 2020, the Quanjian case came to a close, resulting in a penalty of CNY1 billion for the company and a term of imprisonment of nine years for the legal representative for organising and leading pyramid selling.
In the meantime, in reference to the Advertising Law and other rules and regulations on the prohibitive contents of the advertisements of “Three Products and One Device”, the Interim Measures have listed the prohibited contents in an integrated manner, avoiding any discrepancy in different regulations. Specifically speaking:
pharmaceutical advertisements shall not use the image or name of governmental department or its officer, military unit or its member, or use the military equipment or facilities in the advertisement;
pharmaceutical advertisements shall not use the image or name of scientific research institution, industry association or expert, scholar, doctor, pharmacist, clinical dietitian, patient to recommend or endorse the product;
pharmaceutical advertisements shall not, without any scientific basis, express or imply that the drug can apply to all diseases, symptoms or people, or that the drug is indispensable in daily life or curing disease.
pharmaceutical advertisements shall not contain expression which could cause the general public to have unnecessary worry or panic about their health condition or the disease they are suffering from, or cause misunderstanding that not using the promoted drug may attract or worsen any disease;
pharmaceutical advertisements shall not contain the words “safe”, “safe, non-toxic, non-side effect”, or express or imply the ingredients are “natural” and therefore the safety is guaranteed;
pharmaceutical advertisements shall not contain inducing contents such as “sell well”, “rush to purchase”, “use for trial”, “family essential”, “free cure”, “free donation”, etc, comprehensive assessment such as being “appraised”, “ranked”, “recommended”, “appointed”, “selected”, “awarded”, etc, guarantees such as “refund if no effect”, “insured by insurance company”, etc, or contents that encourage arbitrary or excessive use of drugs, dietary supplements or foods for special medical purposes; and
Pharmaceutical advertisements shall not contain the contents involving the name, address, contact details, clinic items, treatment methods of medical institution or in connection with medical service contents such as free medical consultation, medical consultation hotline, or the information on providing special outpatient service.
To sum up, the Interim Measures adopt a strict, substantive standard on the review of pharmaceutical advertising, but the procedural requirements are lenient in order to provide convenience for pharmaceutical enterprises.
Enforcement Trends and Representative Cases
To implement the “Four Strictest” Requirements (ie, the strictest standard, strictest regulation, strictest punishment and strictest accountability) for food and drug safety raised by President Xi Jinping, the Supreme People’s Procuratorate, SAMR and NMPA jointly promulgated the Special Action Plan for the Implementation for “Four Strictest” Requirements for Food and Drug Safety on 17 October 2019, which reflects relevant authorities’ attitude to carry out strict enforcement in the field of foods and drugs. As a matter of fact, the enforcement actions in 2019 demonstrated a trend of strict enforcement and this trend is expected to continue into 2020.
Pharmaceutical Advertising without Approval and Mandatory Contents
At the end of 2019, the SAMR announced several typical enforcement cases involving illegal advertising, among which a particular case drew public attention due to the large fine and the established reputation of the product. During a popular talk show, a domestic pharmaceutical company published an advertisement for its Mometasone Furoate Gel, an OTC drug, by having actors state that the product relieves itching and possesses colorless, odorless and refreshing qualities. However, this advertisement was not approved by the advertising examination authority in advance. In addition, the advertisement did not clearly mark the contraindications and side-effects, nor did it display the words “please consult the instruction or a pharmacist before purchase and use”. As a result, the pharmaceutical company received a fine of CNY900,000 for its illegal advertising conduct, which is a relatively high penalty when compared with similar enforcement cases.
Misrepresentation of Medical Effects in Combination with other Violations
Similar to the Quanjian case, a listed company published an advertisement for its dietary supplement on its official website, online store and social media profile, stating that the product plays an ancillary role in preventing tumor metastasis and recurrence. In addition, this company published advertisements for an OTC drug, of which the contents were inconsistent with the drug authorisation, and the company also published an advertisement for prescription-only drugs. The company was eventually fined for several material breaches of drug advertising regulations. It is worth mentioning that the market value of this listed company has significantly dropped (more than 70% at the end of 2019) when compared to its peak in 2017.
E-commerce Platform Fined for not Stopping Illegal Advertising Activity
Nowadays, online platforms have become a common and convenient form shopping for the public. However, while the platform provider enjoys the convenience of business, it must also assume more obligations. In one of the above-mentioned cases, a seller published an advertisement claiming that its products have certain effects that lead to improvement of liver function and bone regeneration, which constituted a misrepresentation and exaggeration of treatment function for non-drug products. However, this case is special in that the online platform was punished as it “knows or should know” about the illegal advertising activities but took no actions to stop them as a platform service provider.