China Compliance Update: Life Sciences — Summer 2026

In the first half of 2026, anti-corruption enforcement in the life sciences industry remained a major focus for China’s regulators. The life sciences sector also saw important developments in data security, public procurement, and management of sales representatives. This Advisory summarizes these developments and outlines compliance considerations for the new environment.

Enforcement Focus for 2026

On June 8, 2026, China’s National Health Commission (NHC), together with 13 other government authorities,¹ published the 2026 Work Priorities for Rectifying Misconduct in the Field of Pharmaceutical Purchase and Sales and Medical Services (the Work Priorities, 2026年纠正医药购销领域和医疗服务中不正之风工作要点). The Work Priorities focus on recurring issues identified in recent years and set out regulatory expectations in 11 areas, including procurement, pricing, medical data, medical insurance, and delivery of healthcare services.

Medical Data Governance and Scientific Research Activities

For the first time, Article 5 of the Work Priorities elevates medical data security to a standalone priority. The Work Priorities call for strengthened, end-to-end oversight of medical data, including enhanced mechanisms for data use review and accountability, and explicitly prohibit the unauthorized disclosure, sale, or use of medical data. These measures are intended to reinforce protections for patient privacy and personal information.

The same provision also highlights increased scrutiny of scientific research activities for improper transfers of value. As discussed in our April 2026 Advisory, in March 2026, the National Healthcare Security Administration (NHSA) published a case study of an unannounced inspection of an investigator-initiated study (IIS) and discussed irregularities, including payments to Healthcare Professions (HCPs) that appeared to lack clinical value, additional IISs relating to the same drug with vague or overly broad clinical designs, and potentially questionable study deliverables. In the Work Priorities, regulators have further signaled a focus on misconduct involving the use of third parties to transfer improper benefits to HCPs under the guise of legitimate research. This emphasis suggests that authorities are expanding their focus beyond direct interactions between healthcare companies and HCPs to encompass more complex, indirect arrangements, including clinical trials and IIS.

HCP Conduct

Article 6 of the Work Priorities signals continued regulatory focus on HCP conduct. Regulators will target unauthorized multi-site practice, external consultations conducted without the required institutional approvals, and the use of academic activities as channels for the transfer of improper benefits. The Work Priorities also call for the continued implementation of the Nine Criteria for Honest Practices by Staff of Medical Institutions (医疗机构工作人员廉洁从业九项准则) and related professional conduct requirements.

Medical Device Procurement

Article 7 of the Work Priorities signals continued regulatory focus on government procurement of medical devices. Regulators will target procurement-related misconduct, including improper intervention by key decision-makers, the splitting of projects to circumvent public tender requirements, bid specifications tailored to favor specific suppliers, and other forms of bid-rigging. Authorities also emphasized enforcement against suppliers engaging in license lending, sham transactions, and commercial bribery.

Consistent with enforcement against “rat race competition” in other industries, the Work Priorities also call for resolution of the issue of abnormally low-priced bids in the public procurement of medical products and the issue of overdue payments owed by hospitals to suppliers. These priorities likely reflect regulators’ efforts to maintain a healthy and sustainable business environment in the life sciences industry.

Financial and Tax Compliance

Article 8 of the Work Priorities reflects enhanced regulatory attention to financial and tax-related misconduct, with particular emphasis on the medical device sector. The provision calls for coordinated and targeted enforcement of practices such as the falsification or alteration of tax invoices,² issuance or acceptance of false tax invoices, and concealment of income to evade tax obligations. Notably, regulators will track entities that accept false tax invoices and enhance the credit evaluation mechanism in the medical device sector. These developments suggest that companies may face increased scrutiny not only of their internal financial controls, but also of tax invoices and financial documentation received from their distributors, vendors, and other third parties.

Medical Insurance Fund Integrity

Article 9 of the Work Priorities underscores a continued focus on safeguarding the integrity of funding for China’s state-run medical insurance program through regulation of medical practices and the appropriate use of insurance funds. Regulators will continue to standardize diagnosis, treatment, and billing practices, while strengthening oversight and addressing key deficiencies in the management of the insurance program.

Misconduct by Industry Associations

Article 10 of the Work Priorities highlights concerns around the practices of healthcare industry associations, such as the lending of their qualifications to other entities, organization of meetings and operation of publications, business outsourcing, sponsorships, donations, and other forms of cooperation, which may be used to obtain improper benefits.

Medical Aesthetics

Article 10 also signals continued regulatory focus on the medical aesthetics sector. Regulators will target a range of industry misconduct, including the provision of medical aesthetic services without the required qualifications, the operation of “fast-track” training programs for minimally invasive medical aesthetic procedures, and false or misleading commercial marketing practices.

Targeted Enforcement Actions

The Work Priorities indicate that regulators will continue to rely on targeted enforcement campaigns and multi-agency investigations to address compliance risks across the healthcare sector. Specified areas of focus include tax-related misconduct in the medical device industry, medical practices, and the use of medical insurance funds. Regulators will also continue conducting targeted reviews of medical ethics and professional conduct, hospital inspections, and investigations into abnormal hospitalization expenses.

Administrative Measures for Medical Representatives

On April 28, 2026, the National Medical Products Administration (NMPA), together with six other central authorities, jointly issued the Administrative Measures for Medical Representatives (the Measures, 医药代表管理办法), which will take effect on August 1, 2026. The Measures are the final version of a draft that was published for public comment in late 2024. The Measures replace prior regulations issued in 2020 and represent a significant update to the regulatory regime for pharmaceutical sales representatives.

The Measures tighten the requirements for sales representatives’ qualifications and impose new compliance obligations on sales representatives, market authorization holders (MAH), and contract sales organizations (CSO). While the Measures only apply to the pharmaceutical sector, the NMPA has announced that similar regulations for the medical device and medtech sector are forthcoming. For further analysis, see our Advisory on China’s Administrative Measures for Medical Representatives.

The public disclosure mechanism established by the Measures may already be in use. Media reports indicate that on August 4, 2026, the national medical representative filing platform published its first disclosed violation since the Measures took effect, a finding that a sales representative had conducted academic promotional activities at a healthcare institution without first completing the required filing process. This listing, however, does not appear to be shown on the platform at the time of writing.

Interpretation (II) on Corruption and Bribery: Impact on Healthcare

On April 10, 2026, the Supreme People’s Court (SPC) and the Supreme People’s Procuratorate (SPP) jointly issued the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Corruption and Bribery (II) (Interpretation (II), 关于办理贪污贿赂刑事案件适用法律若干问题的解释（二）), which took effect on May 1, 2026. This is the first major update to judicial guidance on this law in a decade. For further analysis, see our China Compliance Update: Anti-Corruption — Spring 2026.

Interpretation (II) has three key implications for life sciences companies:

1. Designates healthcare as a “public-interest sector” with correspondingly lower thresholds for criminal liability (RMB 100,000 (US$14,286) for individuals, RMB 200,000 (US$28,571) for entities). Under China’s regulatory regime, lower levels of corrupt misconduct may be punished under the Anti-Unfair Competition Law, which is an administrative law. Interpretation (II) lowers the threshold at which corrupt misconduct in the life sciences sector will be punished criminally, rather than administratively.
2. Lowers the thresholds for criminal liability for bribery of employees of private hospitals to bring them into line with the thresholds for public HCPs.
3. Creates a clearer path to corporate liability by attributing employees’ corrupt misconduct to their employer if the illicit gains benefit the employer and the payment(s) were approved by senior management.

2026 NHSA Unannounced Inspections

On May 14, 2026, the NHSA formally launched the 2026 unannounced inspections into the use of the national medical insurance fund. On July 9, 2026, the NHSA reported that in the first half of 2026, the NHSA had conducted unannounced inspections in all provinces of China, inspecting 2,926 medical institutions, and identifying RMB 1.16 billion in suspected noncompliant use of medical insurance funds. The 2026 inspections focus on areas with elevated risks of misusing medical insurance funding, high-risk therapeutic areas including orthopedics, hemodialysis, and laboratory testing, and institutions with major indications of noncompliance.

In addition to focusing on misuse of the public medical insurance fund, the NHSA identified issues with investigator-initiated studies and public procurement process in prior unannounced inspections. See our China Compliance Update: Anti-Corruption — Spring 2026 for further analysis of the case studies published by the NHSA for prior unannounced inspections.

NHSA Alert on Expert Recommendations in VBP Programs

On July 7, 2026, the NHSA published an alert concerning improper interference with centralized volume-based procurement (VBP). During the selection of products for the twelfth round of national drug procurement, a multinational pharmaceutical company submitted a purported “expert recommendation letter” bearing the signatures of 78 doctors from 31 hospitals in an attempt to influence the selection process. The NHSA found that more than 80% of the signatures were falsified or obtained under false pretenses, including signatures forged by company sales personnel, copied from other materials, or attributed to non-existent HCPs. Some genuine signatures had reportedly been obtained under the guise of “after-sales follow-up” or “research questionnaires.” The NHSA warned companies not to interfere with centralized procurement through unlawful or non-compliant means. The NHSA did not state whether the implicated company was penalized.

This is the first time that the NHSA has issued a public notice regarding issues with expert recommendations. Manufacturers participating in China’s centralized procurement programs frequently collect recommendations from clinical experts in support of their applications.

Enforcement Case Studies

In the first half of 2026, the NHSA published three enforcement case studies. All three cases show that regulators are actively utilizing the updated credit-evaluation mechanism promulgated in June 2025³ as a penalty for commercial bribery in the life sciences sector.

Takeaways

As Chinese regulators continue to prioritize enforcement across multiple facets of the life sciences industry, companies operating in China should proactively assess their compliance posture. 

1. Anti-corruption enforcement in the life sciences sector remains a major focus for regulators. Companies should continue to look closely at high-risk areas such as sponsorships or donations to healthcare organizations, academic conferences and medical education programs, and HCP engagements such as consulting arrangements and speaker programs. These arrangements should be supported by legitimate business or academic needs, appropriate approvals, fair-market-value assessments, and adequate documentation.
2. Medical insurance fraud remains another area of enforcement focus. With the launch of the NHSA’s 2026 unannounced inspection program, we expect to see more enforcement cases and potentially increased scrutiny on manufacturers relating to public procurement and interactions with public hospitals and HCPs.
3. Regulators are also paying close attention to other areas, including medical data security, scientific research activities, medical device procurement, financial and tax compliance, and medical aesthetics.
4. Companies should review their compliance training programs and policies and procedures to ensure they are aligned with regulators’ changing priorities.
5. Increasing enforcement against companies for their distributors’ misconduct highlights the importance of strong third-party due diligence and monitoring programs.

* Xuan Chen contributed to this Advisory. Xuan is employed as a China Associate in Arnold & Porter’s Shanghai office.

© 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.