China Compliance Update: Life Sciences — Spring 2026

In 2026, Chinese regulators have continued their focus on anti-corruption enforcement in the life sciences industry. In addition to long-standing priorities, such as fraud against China’s state-run medical insurance program, regulators appear to be paying greater attention to investigator-initiated studies and patient programs in 2026. This Advisory summarizes recent regulatory developments and enforcement actions.

Medical Insurance Fraud: Enforcement and Regulatory Developments

Statistics issued by Chinese regulators in 2026 show that fraud against the state-run medical insurance program remained a primary focus of both administrative and criminal enforcement:¹

• The National Healthcare Security Administration (NHSA), which is responsible for the state-run medical insurance program, reported on March 16, 2026 that 3,776 cases involving medical insurance were jointly investigated by the NHSA and police, and 10,357 criminal suspects were arrested. In addition, 1,626 entities (e.g., hospitals and pharmacies) were verified to have engaged in medical insurance fraud, and a total of RMB 34.2 billion (US$4.75 billion) of medical insurance funds were recovered.
• The Supreme People’s Court (SPC) reported that a total of 1,433 criminal cases relating to medical insurance fraud were adjudicated in 2025. These cases implicated 2,807 individuals and represented a year-on-year increase of 24%.
• The Supreme People’s Procuratorate (SPP) reported that a total of 5,256 individuals were prosecuted in 2025 for crimes relating to the state-run medical and social insurance programs. 

In February, the NHSA published the Implementing Rules on the Regulations on Supervising and Administering the Use of Medical Insurance Funds (Implementing Rules, 医疗保障基金使用监督管理条例实施细则), which came into effect on April 1, 2026. The Implementing Rules clarified the requirements of the Regulations on Supervising and Administering the Use of Medical Insurance Funds (Regulations, 医疗保障基金使用监督管理条例), which came into effect on May 1, 2021, providing detailed procedures and guidelines for regulators to carry out enforcement actions. Like the Regulations, the Implementing Rules focus on potential misconduct by individuals and institutions who utilize state-run medical insurance funds, such as patients, hospitals, and pharmacies.

Also in February, the NHSA released the Notice on Strengthening the Supervision of Medical Insurance Funds in 2026 (Notice, 国家医疗保障局关于做好2026年医疗保障基金监管工作的通知), which sets forth an array of regulatory approaches for tackling misconduct relating to medical insurance. The Notice discusses multiple measures to reduce medical insurance fraud, including enhancing the use of electronic tracking systems (such as UIDs) to prevent the illegal resale of products purchased with medical insurance funds, and strengthening unannounced inspections of the use of medical insurance funds. The NHSA also published case studies of unannounced inspections, which will be discussed in detail below.²

Corporate Liability and Cooperation Credit

In March and April, the NHSA published several case studies of enforcement actions relating to bribery in the health care industry. Although some of the cases showed fact patterns familiar from prior NHSA case studies, such as manufacturers’ sales representatives or distributors’ personnel paying kickbacks to HCPs in return for sales and collection of HCPs’ prescription data, a few points stood out:³

In one case, a distributor was fined RMB 250,000 (US$35,714) for bribery by an entity after its actual controller was found to have paid kickbacks to multiple HCPs at two hospitals. This may signal an increased focus by Chinese regulators on bringing charges against corporations.

In a second case, the NHSA noted that although two pharmaceutical manufacturers were both found to have paid bribes to an HCP, the companies’ level of cooperation affected their penalties. Both companies had “credit evaluations” performed by the Qinghai Health Security Administration. One company proactively corrected its misconduct and remedied the negative impact of its misconduct before its credit evaluation was finalized and therefore did not receive any penalty. The second company failed to take remedial action, received a credit evaluation result of “Seriously Dishonest,” and was debarred from public procurement in Qinghai Province for three years. This case is notable in part because it shows that the NHSA is actively enforcing the updated credit evaluation system according to the revisions published in May 2025.⁴ This case also demonstrates one of the key elements of the May 2025 update, that companies can avoid negative credit evaluations and the resulting penalties by proactively remediating misconduct.

Chinese regulators are also taking increasingly aggressive measures to enforce the credit evaluation system throughout the supply chain. Manufacturers may be subject to credit evaluations not only for their third parties’ misconduct, but the misconduct of their third parties’ contractors and vendors, as shown by a model case published by the NHSA in January 2026.⁵

These regulatory trends demonstrate the importance of companies carefully monitoring their distributors and other third parties, and taking timely remedial action if any misconduct is found.

Unannounced NHSA Inspections: Investigator Initiated Studies and Public Procurement

As noted above, in February and March 2026 the NHSA published three case studies of unannounced inspections. Although the NHSA did not disclose what, if any, action was taken as a result of these inspections, these case studies provide valuable insights into the regulators’ focus in conducting these enforcement actions.

• Clinical Trials. One case study discussed an Investigator Initiated Study (IIS) using a drug covered by China’s state-run medical insurance program. A significant increase in the drug’s sales at the hospital where the IIS was carried out drew NHSA inspectors’ attention. The inspection subsequently identified irregularities with the IIS: 
  • The pharmaceutical company paid HCPs for services that appeared to lack clinical value.
    • The IIS was designed for each patient to have follow-up visits once every two months for two years, for a total of 12 follow-up visits. However, the IIS was also designed to study late-stage cancer patients who were expected to survive 3-4 months. No patient completed any follow-up visits. 
    • It appears that no useful clinical data was generated from the IIS. The NHSA inspector did not identify any published work product relating to this IIS, and the clinical data generated from the IIT did not appear to have been utilized to obtain approval for additional indications.
    • Despite these issues, the manufacturer still paid the HCPs’ service fees relating to the IIS. 
  • IIS relating to the drug accounted for 25% of the total contemporaneous IIS undertaken by the hospital. Many of the other IIS relating to this drug had vague or broad clinical designs.
  • The pharmaceutical company had previously invested heavily in clinical trials relating to the drug but did not appear to have produced a proportionate number of academic publications, nor were these prior trials used to support applications for new indications.
• Public Procurement. Two of the other case studies related to procurement issues. 
  • In one case, the inspector discovered that an individual engaged in bid rigging by setting up multiple pharmaceutical distributors and using these entities to participate in a hospital tender. Some of these distributors were found to be shell companies, and their legal representatives were found to have almost no substantive responsibilities.
  • In the second case, the inspection discovered that during the tendering process, HCPs’ evaluations of the medical consumables under consideration for procurement were manipulated to favor manufacturers who had a “long-standing cooperative relationship” with the hospital.
    • The original ratings of the consumables appeared to have been modified multiple times. 
    • The HCPs who participated in the tender evaluation recalled that the HCP who led the process indicated that they should “prioritize” one manufacturer.

Enforcement: Patient Programs, Disease Awareness, and Industry Associations

A January administrative decision published by the Shanghai Administration for Market Regulation is notable for targeting HCPs’ participation in a disease awareness program.

• A consulting company was engaged by a pharmaceutical company to provide a patient health management platform and carry out disease awareness activities. As part of this work, the consulting company invited HCPs who had prescribed the pharmaceutical company’s product to lecture at disease awareness activities and paid service fees to the HCPs.
• The AMR found that when carrying out the patient program, 18 disease awareness activities did not take place. The consulting company nevertheless paid service fees totaling RMB 25,000 (US$3,472) to HCPs for these activities. 
• The consulting company was found to have provided improper benefits to HCPs and was fined RMB 100,000 (US$13,889).

This case stands out from the majority of published AMR enforcement matters, which typically relate to sales personnel or third parties providing benefits to HCPs in return for sales, HCPs’ participation in promotional activities, and sponsorships. Following on the August 2025 enforcement actions against employees of a pharmaceutical company for improper operation of the company’s patient assistance programs,⁶ this case may indicate that Chinese regulators are paying increased attention to the operation of patient programs, including disease awareness programs.

The first quarter of 2026 has also seen multiple enforcement actions targeting academic and industry associations, including multiple high-ranking officials from national and provincial associations in the healthcare industry having been placed under investigation. For example, the CCDI announced on February 6, 2026 that the Vice General Secretary of the China Association For Pharmaceutical Equipment, Qianhe Di (遆倩鹤), is being investigated for serious violations of laws and regulations. These enforcement actions appear to reflect efforts to actively implement the January 14, 2026 Announcement of the Fifth Plenary Session of the 20th Central Commission for Discipline Inspection of the Communist Party of China ( 中国共产党第二十届中央纪律检查委员会第五次全体会议公报), which stated in part that in 2026, the CCDI will “further rectify corruption in key areas including finance, state-owned enterprises, energy, education, academic and industry associations, development zones, and bidding (深化整治金融、国企、能源、教育、学会协会、开发区和招标投标等重点领域腐败).”

These enforcement actions show the need for companies operating in China to ensure that all public-facing activities, including patient programs, maintain a high level of compliance, and underscore the need for companies to conduct adequate due diligence and monitoring on their partnerships with academic associations.

For questions on this or any other subject, please reach out to the authors or any of their colleagues in Arnold & Porter’s Life Sciences or White Collar Defense & Investigations practice group.

*Zhewen Zhang contributed to this Blog.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.