China’s national healthcare regulator recently published new rules that may provide useful guidance for pharmaceutical or medical device companies to enhance compliance controls over sponsorship and donations to healthcare entities, although these companies are not the direct targets of the new regulations.
On 20 October, the National Health and Family Planning Commission (NHFPC) published the Administrative Measures on Accepting Donations for Public Welfare by Healthcare Entities (for Trial Implementation).
The new rules apply to donations between foreign or domestic entities and individuals as donors, and healthcare and family planning entities (healthcare entities) as donees. The donees include healthcare institutions, social public welfare associations, foundations and other charitable social organizations that are supervised by the NHFPC and its local counterparts.
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1″ ihc_mb_template=”2″ ]
The new rules, with revisions to earlier rules on healthcare donations, provide an endorsement of their legitimate purposes, and also impose new requirements on the acceptance, utilization and supervision of donations in the healthcare sector.
The new rules prohibit a donation in the following scenarios:
- It is connected with commercial activities;
- It appears to raise a suspicion of being unfair competition and commercial bribery;
- It is linked with procurement of services or goods;
- It is attached with rights and claims for economic interests, intellectual property rights, scientific research results or industry data or information;
- It includes materials that are not compliant with national standards and requirements for quality and environmental protection;
- The donation has a political purpose or other ideological inclination;
- It harms public interests or other citizens’ legitimate rights and interests;
- It involves any solicitation, imposed charges or disguised imposed charges; or
- It causes any conflict of interest issue for supervision and enforcement work of the donee.
Other important restrictions introduced by the new rules include that donors are in principle required to remit cash donations through bank transfer. Healthcare entities are prohibited from charging a management fee from donations for their staff’s salaries and welfare, except that non-profit making organizations or non-enterprise entities may do so in accordance with explicit arrangements in the donation agreement.
Scope and purpose
A donation is defined as “public welfare support and assistance in the form of funds or property” provided to healthcare entities “voluntarily and not for return”. Thus, in addition to charitable donations, sponsorship and grants can fall into this definition and be subject to the new donation rules.
The new rules endorse donations and sponsorship provided to healthcare entities for the following purposes: 1) training, academic activities or scientific research; 2) reducing expenses for medical treatment; 3) public healthcare service and education; 4) public infrastructure and equipment for healthcare entities; and 5) other not-for-profit activities.
[/ihc-hide-content]
Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com
