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On July 21, 2023, the National Health Commission, together with the Ministry of Education, the Ministry of Public Security, the National Audit Office, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Market Regulation, the National Healthcare Security Administration, the National Administration of Traditional Chinese Medicine, the National Administration of Disease Control and Prevention, and the National Medical Products Administration, jointly held a video conference to deploy the one-year nationwide centralized rectification of corruption in the pharmaceutical sector. On July 25, new clauses were added to the provisions on the crime of offering bribes in the draft Amendment to the Criminal Law (XII) which was deliberated for the first time, specifying that heavier punishment shall be imposed on those who offer bribes in sectors including education and medical care. On July 28, the Central Commission for Discipline Inspection of the Communist Party of China and the National Supervisory Commission also convened a mobilization meeting to arrange for discipline inspection and supervision organs to cooperate in carrying out the nationwide centralized rectification of corruption in the pharmaceutical sector. The meeting pointed out that efforts in discipline enforcement and law enforcement shall be intensified, with focus on leading cadres and personnel in key positions. It is required to adhere to the principle of investigating both bribe takers and bribe givers, pool resources to investigate and handle a number of corruption cases in the pharmaceutical sector, so as to form a powerful deterrent effect. On August 2, multiple provinces including Guangdong, Zhejiang, Hainan and Hubei successively issued notices, requiring centralized rectification of corruption-related chaos in the pharmaceutical sector across their respective provinces. The anti-corruption campaign in the pharmaceutical sector has entered a new stage.

According to incomplete statistics, a total of 179 hospital presidents and Party secretaries across China have been placed under investigation since 2023. In July, in a rare occurrence in the pharmaceutical and healthcare sector, two board chairmen, namely the chairman of Winning Health and the chairman of Sailun Biotechnology, were also placed under investigation. As a result, a large number of professional medical forums have been postponed or suspended. A well-known third-class Grade A hospital in Guangxi has issued a circular requiring the refund of "lecture fees" received over the past five years, which has once again brought the issues of lecture fees and conference fees into the spotlight. The impact of the "lecture fee refund" initiative may gradually expand, affecting not only the conduct of hospitals and doctors, but also the budgets of pharmaceutical representatives, product sales performance, career development of pharmaceutical representatives, and even the R&D decision-making of relevant enterprises. Among all relevant risks arising from the above developments, the most critical ones are criminal legal risks.

Due to the particularity of China's medical system, the duties and relationships among hospitals, their functional departments and staff of such departments are usually complicated, which cannot be simply encompassed by the three provisions set forth in the *Judicial Interpretation on Commercial Bribery*. For instance, in some cases, the perpetrator holds the dual status of both medical personnel and public official, and the entire activity during which the act of seeking personal gains is committed also bears the dual attributes of "medical practice" and "public duty". In addition, given the professional and technical nature of medical personnel, there are also issues such as whether they have taken advantage of their positional convenience in academic exchanges. Under such circumstances, how to accurately apply corresponding charges has become the top concern of the prosecution, the defense and the tribunal during the trial of a large number of medical-related duty crime cases.

Defense Points for Misdemeanor: The actor only utilizes professional skills related to his/her profession as a doctor, rather than the power to manage public affairs associated with official functions and powers. He/She is engaged in technical service work and falls into the category of non-state functionaries, and thus commits the Crime of Acceptance of Bribes by Non-State Functionaries.

【Brief Facts of the Case】

Wang Mou, male, member of the Communist Party of China (CPC), is Director of the Cardiology Department of a public hospital in a certain city. In May 2019, Wang Mou accepted the entrustment of Zhou Mou, a pharmaceutical representative of Pharmaceutical Company A, and assisted the company in successfully winning the bid during the procurement of medical devices by the Cardiology Department of the aforesaid hospital. In June of the same year, Wang Mou received 50,000 yuan given by Zhou Mou. In August 2019, Wang Mou accepted the entrustment of Zhang Mou, a pharmaceutical representative of Pharmaceutical Company B. When diagnosing and treating patients with cardiac diseases, under the circumstance that a variety of similar alternative drugs were available, he only prescribed drugs of Pharmaceutical Company B or prescribed more of such drugs. In September of the same year, Wang Mou received 50,000 yuan given by Zhang Mou.

【Case Analysis】

In light of the present case and the provisions of the *Opinion on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Commercial Bribery*, when Wang Mou was responsible for the procurement of medical devices for the Department of Cardiology, he fell into the category of "state functionaries in medical institutions". He accepted the entrustment of Zhou Mou, a medical representative of Pharmaceutical Company A, assisted the company in successfully winning the bid, and received 50,000 yuan from Zhou Mou, which constitutes the crime of accepting bribes. When Wang Mou provided diagnosis and treatment services for patients suffering from heart diseases, he was classified as "medical personnel in medical institutions" rather than a state functionary. He accepted the entrustment of Zhang Mou, a medical representative of Pharmaceutical Company B, took advantage of the positional convenience of prescribing medicines to only prescribe or over-prescribe medicines manufactured by Pharmaceutical Company B for patients, and received 50,000 yuan from Zhang Mou, which constitutes the crime of accepting bribes by non-state functionaries, and shall be subject to combined punishment for multiple crimes. (Source: Working Committee for Discipline Inspection and Supervision of Tianjin Municipal Organs)

Points of Innocence Defense: The act concerned does not embody the essence of power-for-money transactions, nor has the actor taken advantage of his or her official position, and therefore does not constitute the crime of accepting bribes.

【Brief Facts of the Case】

From June 2012 to February 2015, Defendant Gu Moumou, during his tenure as Director of the Endocrinology Department of Dalian Port Hospital and member of the Pharmaceutical Affairs Committee of the aforesaid hospital, took advantage of his official position, gave lectures to in-service doctors of the hospital at venues including the doctor's office of the Endocrinology Department of Dalian Port Hospital, and under the name of "lecture fees", successively received undue benefits of RMB 13,700 from Bayer HealthCare Co., Ltd., RMB 3,600 from Sanofi (Beijing) Pharmaceutical Co., Ltd., and RMB 101,300.20 from Novo Nordisk (China) Pharmaceutical Co., Ltd., totaling RMB 118,600.20, and secured interests for the above-mentioned companies. One day before the case was uncovered, Defendant Gu Moumou turned over RMB 10,000 of the received lecture fees to the Discipline Inspection Department of Dalian Port Hospital. During the trial of the case, Defendant Gu Moumou returned the remaining illegal gains.

【Judicial Gist】

Gu Moumou's act of accepting paid invitations to deliver lectures inside and outside hospitals does not constitute the crime of accepting bribes. "Securing benefits for another" as prescribed for the crime of accepting bribes refers to the actor taking advantage of his position to seek various benefits for the bribe-giver. Although the pharmaceutical representative stated that inviting Gu Moumou to give lectures could maintain the product sales of the pharmaceutical company, Gu Moumou's lecture delivery is mainly based on his status as an expert and scholar in the field of endocrine disease treatment. During the negotiation and lecture delivery process, he did not promise to, implement or fulfill the entrusted requests put forward by the pharmaceutical enterprise. The lectures mainly cover theoretical knowledge of endocrine diseases, and the attendees are not exclusively doctors of the hospital where Gu Moumou serves, so the lectures cannot directly increase or maintain the sales volume of specific drugs. The lectures shall be deemed as academic exchange activities in nature, which cannot reflect the essential feature of power-for-money transaction that defines the crime of accepting bribes. Meanwhile, the remuneration received by Gu Moumou for the lectures does not obviously exceed the normal market price, which does not violate the principle of equivalent exchange. The entire lecture delivery process embodies his own intellectual achievements, and does not fall into the category of acts that cover up underlying power-for-money transactions under the guise of token transactions, nor is it an act conducted in exchange for his performance of official duties. Therefore, although Gu Moumou's paid lecture act violates the internal regulations of the hospital, it does not fall into the circumstance of taking advantage of his position to seek benefits for the pharmaceutical enterprise, and does not constitute the crime of accepting bribes. Source: Judgment (2017) Liao 02 Xing Zhong No. 256

Against the current situation where hospital presidents, department directors and other relevant personnel are being investigated in succession, and pursuant to the principle of simultaneous investigation of both bribe-giving and bribe-taking, while bribe recipients are suspected of crimes such as the Crime of Acceptance of Bribes and the Crime of Acceptance of Bribes by Non-State Functionaries, bribe givers are usually suspected of crimes including the Crime of Giving Bribes, the Crime of Giving Bribes to Non-State Functionaries, and the Crime of Offering Bribes by a Unit. For pharmaceutical representatives, once they are involved in criminal risks, the units they are affiliated with may implement risk isolation at the earliest possible time. Under such circumstances, it is of vital importance to ascertain whether the crime involved by the individual employee constitutes the Crime of Giving Bribes to Non-State Functionaries or a unit crime, and whether it constitutes the Crime of Giving Bribes or the Crime of Offering Bribes by a Unit. A brief overview of some crimes that relevant personnel may be suspected of committing is provided as follows:

【Crime of Giving Bribes to Non-State Functionaries】

Article 164 Whoever, for the purpose of seeking illegitimate benefits, gives money or property to any staff member of a company, enterprise or other unit, if the amount involved is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined; if the amount involved is huge, shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined.

Whoever gives property to a foreign public official or an official of an international public organization for the purpose of seeking illegitimate commercial benefits shall be punished in accordance with the provisions of the preceding paragraph.

Where an entity commits the crimes specified in the preceding two paragraphs, the entity shall be fined, and the persons directly in charge and other directly responsible persons of the entity shall be punished in accordance with the provisions of the first paragraph.

Any briber who voluntarily confesses his bribery act before being prosecuted may be given a mitigated punishment or be exempted from punishment.

【Crime of Offering Bribes】

Article 389 Whoever, for the purpose of seeking illegitimate benefits, gives money or property to a state functionary, commits the crime of offering bribes. Whoever, in economic transactions, in violation of state regulations, gives money or property to a state functionary where the amount involved is relatively large, or in violation of state regulations, gives rebates or service fees to a state functionary under various names, shall be deemed to have committed the crime of offering bribes and punished accordingly.

Where a person gives money or property to a state functionary as a result of being extorted and does not obtain any unjustified benefits, such act shall not be deemed as bribery.

【Punishment for the Crime of Offering Bribes】

Article 390 Whoever commits the crime of giving bribes shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also be fined; where any person seeks illegitimate interests by committing the crime of giving bribes, if the circumstances are serious, or heavy losses are caused to the interests of China, he shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall also be fined; if the circumstances are especially serious, or especially heavy losses are caused to the interests of China, he shall be sentenced to fixed-term imprisonment of not less than ten years or life imprisonment, and shall also be fined or be sentenced to confiscation of property.

Whoever commits bribery may, if he voluntarily confesses his bribery act before being prosecuted, be given a lighter or mitigated punishment. If the crime is relatively minor, he plays a key role in cracking a major case, or he performs major meritorious services, he may be given a mitigated punishment or be exempted from punishment.

【Crime of Offering Bribes to Units】

Article 391 Whoever, for the purpose of seeking illegitimate benefits, gives property to state organs, state-owned companies, enterprises, public institutions or people's organizations, or, in economic transactions, violates state provisions by giving kickbacks or service fees under various names, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined.

Where a unit commits the crime as mentioned in the preceding paragraph, the unit shall be fined, and the persons directly in charge and other persons directly responsible for the crime shall be punished in accordance with the provisions of the preceding paragraph.

【Crime of Giving Bribes by a Unit】

Article 393 Where an entity gives bribes for the purpose of seeking illegitimate benefits, or violates state provisions to give kickbacks or service fees to state functionaries, if the circumstances are serious, the entity shall be sentenced to a fine, and the persons directly in charge and other directly responsible persons of the entity shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also be fined. Where the illegal gains obtained through bribery are owned by individuals, they shall be convicted and punished in accordance with the provisions of Articles 389 and 390 of this Law.

For the list of the aforesaid charges, the most intuitive difference is demonstrated in the circumstances of offering bribes to state functionaries: where an employee offers bribes on his/her own, the maximum penalty for the crime of offering bribes is life imprisonment; where the act is determined as constituting the crime of offering bribes by a unit, the persons directly in charge and other directly responsible persons shall be subject to a maximum penalty of fixed-term imprisonment of not more than five years. As for the crime of offering bribes to non-state functionaries, the threshold for placing a case on file and initiating prosecution for individual bribes committed by employees is not less than RMB 30,000, while the threshold for placing a case on file and initiating prosecution for bribes offered by a unit is not less than RMB 200,000.

Being subject to the will of the unit and the benefits accruing to the unit are the two necessary conditions for the determination of unit crime. The will of the unit shall be determined comprehensively in light of the nature of the unit and its organization and management mechanism. The formation of the will of the unit is mainly divided into the following categories: 1. Collective decision of the unit, which is usually decided or recognized by the decision-making body of the unit in accordance with the decision-making procedures of the unit. 2. Decision made by the person in charge of the unit or the actual controller, with the relevant benefits accruing to the unit. A long-term implied practice formed in judicial practice shall also be recognized as the will of the unit. The attribution of benefits to the unit is the key element for determining unit bribery. Where the interests of the briber, especially the personal interests of the person in charge of the unit or the actual controller are highly commingled with the interests of the unit, the unit shall no longer be deemed as a qualified subject under the Criminal Law of China, and the relevant act shall not be determined as unit bribery.

Once criminal risks are involved, it is recommended that relevant personnel directly consult professional criminal lawyers and carry out the following acts under the guidance of professional lawyers: For natural persons exposed to the aforementioned criminal risks, the prerequisite that must be fulfilled is to clarify the scope of liability they shall bear, then strive for the recognition of statutory circumstances such as voluntary surrender and meritorious service, supplemented by the act of returning illicit gains, so as to obtain a suspended sentence or non-prosecution; For institutions exposed to the aforementioned criminal risks, it is recommended to give priority to corporate compliance specifications.