Chinese Government Agencies Publish Action Plan Signaling Further Increased Enforcement in the Healthcare Industry
Early this year, nine Chinese government agencies, including China’s National Health and Family Planning Commission (“NHFPC”), National Development and Reform Commission (“NDRC”), and the China Food and Drug Administration (“CFDA“), jointly issued a document setting out an “action plan” detailing further steps in the regulation of the Chinese healthcare industry in 2014. Highlights are:
- Hospital Procurement. Chinese government agencies will make continuous efforts to lower prices of drug and device products which are presumed to be “falsely high.” Toward this end, new mechanisms will be explored in the centralized procurement system currently applicable to public hospitals in China. Proposals under consideration include procurement with minimum volume commitments and single-source procurements. The current restriction on post-procurement price re-negotiation will likely remain applicable to public hospitals.
- Regulatory Approval. CFDA will enhance its regulation and oversight of clinical studies, adding more technical personnel to support review and approval of drug and device products.
- Drug Distribution. Drug distribution companies in China are required to implement and comply with the newly-issued Good Supply Practices (GSP). More inspections and enforcement are expected, especially with respect to invoicing practices.
- Quality. All drug manufacturers in China are required to comply with the 2010 Good Manufacture Practices (GMP) by the end of 2015. CFDA will continue GMP certifications and increase drug GMP enforcement. CFDA will develop new GMP standards for medical device products. Increased inspections are expected on manufacturers and distributors of sterile and implant device products.
- Price Controls. Favorable pricing policies will be developed for innovative drugs. In addition, industry can expect more monitoring of, and investigations into, ex-work prices, costs and import prices of drug products. Price controls on high value implant devices are also contemplated.
- Anti-bribery Enforcement. Enforcement against commercial bribery in the healthcare sector will continue, not only as to companies, but also hospitals and healthcare professionals. More coordination among enforcement agencies is called for.
Although the action plan is written in somewhat broad terms, it unmistakably signals increased vigilance and enforcement plans for this year.
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