LSHC Horizons Brochure 2024 - Flipbook - Page 66
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | APAC
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Life sciences beware as China tackles health care corruption
The Chinese government began a crackdown
on corruption in the health care sector in
2023. Government authorities, including
criminal and civil enforcement agencies in
charge of overseeing health care, released
joint statements on tackling corruption
risks. Investigations and penalties followed.
Hundreds of hospital heads were probed
– many were stripped of public positions
and imprisoned. Both multinational and
domestic life science companies were
implicated, for example, receiving dawn raids
or inquiries from government authorities.
Besides uprooting corruptive misconduct, the
campaign also aims to reduce medical costs
and stimulate consumption in light of a slowing
post-COVID economic recovery because
corruption, such as unnecessary tests and
prescriptions, can drive up medical bills and
inflate prices for consumers.
According to the National Health Commission,
the campaign covers the entire industrial chain,
including production, distribution, sales, and
usage. Targets of this anti-corruption campaign
include (1) industrial or academic associations’
transfers of improper benefits, disguised
as academic conferences and donations, to
health care professionals, and (2) health
care companies, distributors, and medical
representatives giving kickbacks to health care
professionals and tampering with the bidding
and procurement process.
Calvin Ding
Partner
Shanghai
Under People’s Republic of China (PRC) laws,
bribery can trigger administrative liabilities
and expose individuals and companies to
criminal penalties, if certain thresholds are
met. The newly passed 12th amendment to
Criminal Law, which will take effect from 1
March 2024, increases penalties for bribery
givers, especially for bribes that involve sectors
such as social security and health care.
Beyond PRC law, life sciences companies,
given their high number of touchpoints with
government officials worldwide, face potential
liability under various countries’ laws,
including but not limited to the U.S. Foreign
Corrupt Practices Act (FCPA) and the UK
Bribery Act. Cross-border collaboration among
governments worldwide further poses serious
challenges for life sciences companies. It’s
critical for multinationals to view anti-bribery
and corruption issues as more than solely an
FCPA concern.
The government’s crackdown on corruption
together with the wider world’s increasing
anti-bribery and corruption efforts create an
uncertain outlook. Multinationals should be alert
to the administration’s efforts when issues are
identified and brace themselves for potentially
major international investigations. Anti-bribery
and corruption enforcement regimes in many
jurisdictions emphasize self-disclosure in
exchange for leniency. While the benefits of
voluntary self-disclosure are somewhat clear,
for example, the decision whether to selfdisclose is often less so. This further underlines
the need to develop and maintain a rigorous,
multidimensional compliance program.
Gejaa T. Gobena
Partner
Washington, D.C.
Serene Shen
Associate
Shanghai
