The rules and regulations of e-commerce sales of products in the field of big health

Rules and regulations for e-commerce sales of products in the field of health (I)

Author: Gao Jun Qiao Jiao

Recently, the Department of E-Commerce of the Ministry of Commerce released the "China E-commerce Report 2019", which summarized the development, development characteristics and future development trends of China's e-commerce in 2019. Even in the context of the slowdown in the world economy, the mainland's e-commerce is still showing a positive trend: the scale is large, with the national e-commerce transaction volume reaching 34.81 trillion yuan; the structure is excellent, rural e-commerce has entered the stage of large-scale and professional development, and cross-border e-commerce has become an important direction for the transformation and upgrading of foreign trade; new models, big data, small programs and other technologies are widely used, and live broadcast e-commerce, social e-commerce and other models have deepened innovation. [1] With the deepening and development of the e-commerce industry, more and more production enterprises, sales enterprises, and entrepreneurial individuals have taken the "new retail" model of e-commerce sales as an important channel for their product promotion and sales expansion.

At the beginning of 2020, due to the impact of the new crown epidemic on the world, the "stay-at-home economy" has developed strongly again. The demand for big health products and e-commerce sales have further entered people's field of vision, and the e-commerce platform for such products has also provided an effective and convenient "protective umbrella" for the masses in the response to the severe epidemic. During the Spring Festival in 2020, the demand for online consultation, home health management, and sports and fitness exploded. According to relevant data [2], the overall monthly activity of the medical service industry is about 30 million, and among the top 5 APPs with year-on-year growth rate, Dingdang Fast Medicine, Keruitai Q Medicine, Beijing Registration Network, Lilac Doctor, and Jianke Online Pharmacy increased by 190.9%, 189.1%, 182.8%, 173.1%, and 154.4% year-on-year respectively. At the same time, pharmaceutical e-commerce platforms have become more and more important ways for consumers to snap up protective equipment such as masks, disinfectants, gloves, alcohol, and preventive and antiviral drugs. [3]

From the perspective of legal compliance and industry practice, this article will take drugs, medical devices, and health food as the starting point, starting from three parts: the current situation of e-commerce sales of big health products, the current laws and regulations in mainland China, and the compliance hot issues of e-commerce marketing of big health products, and preliminarily expound and analyze the main compliance risks faced or potential under the e-commerce sales model of products in the big health field, and briefly put forward compliance-related suggestions.

The first part of the current situation of e-commerce sales of big health products

From the perspective of product categories and transaction objects, e-commerce sales in the field of big health are mainly concentrated in three categories: drugs, medical devices and health foods. These big health products either rely on e-commerce sales platforms or establish online self-operated businesses to jointly build a complete industrial chain of e-commerce services for big health products. As they see the golden period of the development of the big health e-commerce industry, some business giants have also taken advantage of the trend, such as Wahaha Group, which officially launched its e-commerce platform "Kangli" in Hangzhou in May 2020 to lay out and focus on sales in the field of big health. [4]

According to the statistics of the Ministry of Commerce, the market size of pharmaceutical e-commerce in mainland China reached 97.8 billion yuan in 2018, a year-on-year increase of 32.7%. [5]

In terms of medical device e-commerce sales, since 2018, it has been subdivided and mainly concentrated in the five product markets of home treatment [6], home rehabilitation [7], home monitoring [8], home health care [9] and home physiotherapy [10]. The current ratio of the scale of the household medical device market to the size of the pharmaceutical market in mainland China is about 1:3, and the statistics of iiMedia Data Center [11] show that in 2020, the proportion of household medical devices represented by the three highs treatment, walking aids, and ventilators is prominent, accounting for as much as 24% in the B2C end, second only to Western medicine.

In terms of e-commerce sales of health care products, as of 2019, the market size of health care products reached about 222.7 billion yuan, and it is expected to exceed 330 billion yuan in 2021. [12] At the same time, many internationally renowned first-line international health care product brands are popular among Chinese consumers. However, due to the many obstacles in its development path in China, including import policies and domestic qualification supervision, such as Australia brands Blackmores and Swisse; International brands such as Japan brand FANCL are still mainly sold through online channels.

With the introduction of some regulations on online transactions of drugs and medical devices in the second half of 2017, to the 2018 "E-commerce Law" and the recent release of the "Measures for the Supervision and Administration of Online Transactions (Draft for Comments)" issued by the State Administration for Market Regulation, more and more producers, operators, and sellers are paying more and more attention to the compliance of e-commerce channel business behaviors, in order to seek long-term and long-term Stable and healthy in the market.

Part 2 The current regulatory system for e-commerce sales of big health products in mainland China

After preliminary analysis, the author concludes that the current legal and regulatory system for e-commerce sales of big health products in mainland China mainly focuses on two levels: one is for the channels and channels of sales, that is, there are strict regulatory requirements for the channel of e-commerce sales; The second is to pay attention to the different dimensions of e-commerce sales, and carry out multi-angle and multi-level regulatory requirements for the business qualifications, quality control, and external publicity required for the sale of big health products.

In terms of sales channels, the e-commerce sales of big health products are mainly constrained by other relevant laws and regulations such as the E-Commerce Law, the Administrative Measures for Internet Drug Information Services, the Interim Provisions on the Examination and Approval of Internet Drug Trading Services, and the Measures for the Supervision and Administration of Online Sales of Medical Devices. In addition, in order to better implement the E-Commerce Law, the Measures for the Supervision and Administration of Online Transactions (Draft for Comments) was issued on October 20, 2020, and even at the stage of soliciting comments, in terms of its provisions, the supervision, management and legal liabilities of online transaction operators and online trading platform operators have been sorted out in more detail, so as to further regulate online transaction behavior and e-commerce business activities.

For the different dimensions of sales, the overall structure is also scattered due to the multifaceted factors involved. From the aspect of business qualifications, "holding a certificate" and "shining for industry and commerce"; In terms of strict quality control of "food and drug safety is no trivial matter", the Drug Administration Law, Food Safety Law, Product Quality Law, Tort Liability Law, and even the Criminal Law have gradually increased the degree of control and punishment from civil, administrative, and criminal liability; In terms of external publicity, led by the Advertising Law, refined by the Interim Measures for the Review and Administration of Advertisements for Drugs, Medical Devices, Health Foods, and Formula Foods for Special Medical Purposes (hereinafter referred to as the "Measures for the Extensive Review of Three Products and One Device"), and then self-restrained by industry norms such as the Code of Conduct for Online Live Streaming Marketing, corresponding regulatory requirements have been put forward to varying degrees for current hot forms and difficult issues such as "online live broadcasting" and "anchors bringing goods".

The specific current laws and regulations are shown in the following table:

Sources of Law	The name of the file	Released
law	People's Republic of China Drug Administration Law	2019.8.26(Implemented 2019.12.01)
Food Safety Law of the People's Republic of China	2015.4.24
E-Commerce Law of the People's Republic of China	2018.8.31(Implemented 2019.01.01)
Product Quality Law of the People's Republic of China	2018.12.29
Tort Law of the People's Republic of China[13]	2010.7.1
Criminal Law of the People's Republic of China	1997.10.1 (Revised in 2017)
Advertising Law of the People's Republic of China	2018.10.26
Administrative Regulations	Regulations on the Supervision and Administration of Medical Devices	2017.5.4
Regulations for the Implementation of the People's Republic of China Food Safety Law	2019.10.11(Implemented 2019.12.01)
Departmental regulations	Measures for the Administration of Drug Business Licenses	2017.11.17
Measures for the Supervision and Administration of Medical Device Business	2017.11.17
Measures for the Administration of Food Business Licenses	2017.11.17
Measures for the Administration of Internet Drug Information Services	2017.11.17
Interim Provisions on the Examination and Approval of Internet Drug Trading Services	2005.10.25
Measures for the Supervision and Administration of Online Sales of Medical Devices	2017.12.20
Interim Measures for the Review and Administration of Advertisements for Drugs, Medical Devices, Health Foods, and Formula Foods for Special Medical Purposes	2019.12.24(Implemented 2020.03.01)
Guiding Opinions of the State Administration for Market Regulation on Strengthening the Supervision of Online Livestreaming Marketing Activities (Draft for Comments)	2020.7.29
Measures for the Supervision and Administration of Online Transactions (Draft for Comments)	2020.10.20
Industry norms	Code of Conduct for Webcast Marketing	2020.6.24

Part 3 Compliance hotspots and key points of e-commerce marketing of big health products

1. Improve the requirements for business qualifications and fully apply for the filing of Internet sites

Although it is more and more widely accepted to sell big health products through e-commerce, while pursuing sales, the issue of "qualification" has become the first threshold for sharing the cake of the industry. On the one hand, based on the particularity of the big health products themselves, for special types of products such as drugs, medical devices, and health foods, which are directly related to life, health and safety, because there is no face-to-face communication and introduction link in e-commerce sales, it is unknown which products are sold to which consumers, and it is difficult to control, so it is necessary to establish stricter business license qualification requirements for them to control the risks that may be bringed; On the other hand, since the sales channel is an e-commerce marketing model relying on the Internet, if producers, operators, and sellers build their own platforms (such as websites, apps, etc.), they need to complete the comprehensive filing qualifications of the sales platform.

(1) Sales products: their own business qualifications

Whether it is the E-Commerce Law or the Measures for the Supervision and Administration of Online Transactions (Draft for Comments), all types of operators of e-commerce transactions shall continue to publicize the registration information of their market entities in a prominent position on the Home or main page of their websites, the so-called "industrial and commercial illumination". For the main body of e-commerce sales of big health products, whether it is borrowing a third-party platform or building an operation platform on its own, it will also be publicized as the administrative license information, actual address, and contact information related to the business registered as a market entity. Specifically:

1. Business license

In the context of the general supervision of administrative licensing in the mainland, the main body selling big health products also needs to obtain different business licenses according to different categories: for example, the "Drug Business License" is required to operate drugs; If different types of medical devices are sold separately, they should meet the qualification regulatory requirements of "Class I do not use, Class II filing, and Class III licensing". At present, the medical devices that are more frequently traded in e-commerce are mainly Class I and Class II household medical devices; For another example, health food is still a subcategory of food in the final analysis, and the sale of health food, whether it is carried out online or offline, requires a "Food Business License". Of course, for the health food itself, it is necessary to obtain the "blue hat" (health food mark) qualification first.

2. Other Qualification Requirements

Since the sale of big health products is carried out through e-commerce channels, in addition to the general business qualifications, it should also obtain the qualifications related to Internet transactions.

(1) Those who sell drugs and medical devices through the Internet shall obtain the "Internet Drug Information Service Qualification Certificate" and the "Internet Drug Trading Service Qualification Certificate"

According to the Measures for the Administration of Internet Drug Information Services, the service activities of providing drug (including medical devices) information to Internet users through the Internet are Internet drug information services, and the Internet Drug Information Service Qualification Certificate shall be obtained. According to the Interim Provisions on the Examination and Approval of Internet Drug Trading Services, e-commerce activities that provide drug trading services (including medical devices, packaging materials and containers in direct contact with drugs) through the Internet are Internet drug trading services, and the Internet Drug Trading Service Qualification Certificate shall be obtained.

(2) Provisions for the filing of special industries for drugs and medical devices

Regardless of whether it is a self-built website or a third-party platform, for entities that conduct e-commerce drug sales, according to the provisions of the People's Republic of China Drug Administration Law (2019 Revision), they shall file with the drug regulatory department of the provincial people's government where they are located. For the main body selling medical devices, it shall handle the online sales of medical devices with the drug regulatory department for the record in accordance with the provisions of the Measures for the Supervision and Administration of Online Sales of Medical Devices.

(2) Sales channels: Filing of the qualifications of the operators of the e-commerce platform

From the perspective of data compliance in terms of external qualifications, e-commerce platforms for big health products should fully apply for the relevant filing of Internet websites according to the service content they provide and the form of their own platforms.

1. ICP filing

In order for consumers to browse and select the corresponding products, some producers, operators, and sellers have set up their own sales websites to publish information on drugs, medical devices, and health foods on the platform. Since the published information belongs to the "information publishing platform and delivery service" under the "B25-Information Service Business" in the Classification Catalogue of Telecommunications Services, and therefore belongs to the "non-commercial Internet information service", the operator of the platform is required to go through the regular ICP filing.

2. EDI certificate

If the platform not only publishes the relevant information of the big health products to be sold, but also provides transaction services, it belongs to the "data processing and transaction" under the "Classification Catalogue of Telecommunications Services", and needs to obtain a value-added telecommunications business license (hereinafter referred to as the "EDI certificate") of "B21 - Online Data Processing and Transaction Processing Business".

Therefore, if you publish information and carry out sales business, e-commerce websites and apps, such as Taobao and 1Yao.com, need to obtain ICP filing and EDI certificate at the same time.

3. Public security network filing

For operators of online trading platforms, according to Order No. 33 of the Ministry of Public Security, the e-commerce trading website of big health products shall apply for online filing with the public security organ (network security department) at the place of residence within 30 days from the date of opening.

4. Application filing

If the e-commerce transaction of a big health product is to engage in related services through an application app, etc., then the operator of the application platform also needs to file with the provincial CAC within 30 days of the launch of the business in accordance with the relevant requirements of the Provisions on the Administration of Mobile Internet Application Information Services.

2. Regulate the collection, use, and storage of personal information

Not long ago, a consumer on a fast-moving consumer goods e-commerce platform said that he received a call from "customer service", in which the other party confirmed the customer's identity and the content, date, and delivery address of the purchased goods. Subsequently, these "customer service" tricked the victim consumer into opening the QQ sharing screen and obtaining the bank card password in the name of product problems and mistakenly listing the consumer as an agent who needed to cancel, or simply induced the consumer to make a payment to "unbind the agent" and "get back the compensation". The victim consumer reported the case to the public security organ and questioned the data leakage of the user of the e-commerce platform. Later, it was learned that there was more than one e-commerce platform suspected of user data leakage, and many well-known e-commerce platforms were not spared.

Due to the particularity of the industry, the e-commerce sales of big health products will come into contact with consumers' personal health and medical information in their daily operations. For example, to buy drugs through some drug trading platforms, you need to fill in your age, medical condition, and even real-name registration when purchasing prescription drugs. Therefore, the collection and use of relevant information should comply with strict compliance standards for data protection and information security.

First of all, the norms and principles of personal information collection and use (such as the principle of minimization, the principle of necessity, etc.) should be complied with, and the basic rights of consumers as health and medical information subjects (such as the right to deletion, the right to correction, etc.) should be ensured. Special attention should be paid to the fact that this information enjoys a higher standard of protection as personal sensitive information, and follows the principles of express consent, clear purpose, openness and transparency, one source for all, and minimum sufficiency. Secondly, in terms of storage and transmission, our country generally adopts the model of "local storage + transmission evaluation". That is, the health and medical information collected in China shall be stored in China, and the health and medical information without security assessment and approval shall not be transmitted abroad in principle. Thirdly, if the website and APP sold by the e-commerce of big health products are hosted to a third party for operation and maintenance, attention should also be paid to the compliance of the circulation of health and medical information to prevent legal risks in the disclosure or sharing of relevant information caused by the improper behavior of the third-party supplier.

In practice, for entities selling e-commerce products of big health products, they should establish and improve a special internal data security protection system, improve relevant internal systems and standard operating procedures, comprehensively and meticulously update the privacy protection policies on websites or mobile applications, and build an efficient and sound internal compliance team for data security protection, so as to protect the company's data security to the greatest extent and ensure the company's healthy and long-term development.

Preview of the next issue: Due to space limitations, we will analyze and interpret product quality, advertising, and cross-border e-commerce retail-related compliance issues in the next part, so stay tuned.

[Note]

1. Source: Information Office, Ministry of Commerce, People's Republic of China, http://www.mofcom.gov.cn/article/ae/sjjd/202006/20200602978887.shtml

2. Source: 2020 Home Economy Insight Report, Financial Sector Website, https://author.baidu.com/home?from=bjh_article&app_id=1573162320060777

[3] Source: Compiled by Qianzhan Industry Research Institute

[4] Source: Economic Daily News Client

[5] Source: 2020 White Paper on the Development of China's Pharmaceutical E-commerce, Department of Market Order, Ministry of Commerce, People's Republic of China Yiou Think Tank, https://www.iyiou.com/intelligence/report709.html

[6] Household therapeutic equipment mainly refers to household oxygen concentrators, home ventilators, nebulizers, vision therapy instruments, hearing aids, sleep therapy instruments, etc.

[7] Home rehabilitation equipment mainly refers to home treadmills, grip machines, yoga balls, etc.

[8] Household monitoring equipment mainly refers to electronic thermometers, blood glucose meters, electronic blood pressure monitors, etc.

[9] Household health care equipment mainly refers to cupping machines, scraping boards, beating massage hammers, etc.

[10] Household physiotherapy equipment mainly refers to electrotherapy machines, phototherapy instruments, specific electromagnetic wave therapy instruments, etc.

11. Source: iiMedia Data Center, https://www.iimedia.cn/c1020/70009.html

[12] Source: iiMedia Research, 2019-2020 China Health Products Industry Research Report

[13] The Civil Code will come into force on 1 January 2021. Among them, on the basis of inheriting the Tort Liability Law, the tort liability system is improved in combination with judicial interpretation and practical experience.

Rules and rules for e-commerce sales of products in the field of health (II)

Author: Gao Jun Qiao Jiao

At the beginning of 2020, due to the impact of the new crown epidemic on the world, the "stay-at-home economy" has developed strongly again. The demand for big health products and e-commerce sales have further entered people's field of vision, and the e-commerce platform for such products has also provided an effective and convenient "protective umbrella" for the masses in the response to the severe epidemic. During the Spring Festival in 2020, the demand for online consultation, home health management, and sports and fitness exploded. According to relevant data [1], the overall monthly activity of the medical service industry is about 30 million, and among the top 5 APPs with year-on-year growth rate, Dingdang Fast Medicine, Keruitai Q Medicine, Beijing Registration Network, Lilac Doctor, and Jianke Online Pharmacy increased by 190.9%, 189.1%, 182.8%, 173.1%, and 154.4% year-on-year respectively. At the same time, pharmaceutical e-commerce platforms have become more and more important ways for consumers to snap up protective equipment such as masks, disinfectants, gloves, alcohol, and preventive and antiviral drugs. [2]

From the perspective of legal compliance and industry practice, this article will take drugs, medical devices, and health food as the starting point, and start from three parts: the current situation of e-commerce sales of big health products, the current laws and regulations in mainland China, and the compliance hot issues of e-commerce marketing of big health products.

3. Strictly control product quality and protect the life, health and safety of consumers

In June 2019, the Xintai Municipal Procuratorate of Shandong Province filed a criminal attached civil public interest lawsuit against a case involving food and drug safety, and the court sentenced the defendant Chen to five years in prison for the crime of producing and selling fake and shoddy products, and ordered him to pay punitive damages of more than 80 yuan, and apologized to the public in the national media. Chen and others bought fake and shoddy capsules such as "glycerin capsules", food trademarks, medicine bottles, etc., rented a space, and hired several locals to start the so-called "money-making plan" without obtaining the qualifications to produce and sell food and health products. From March 2016 to January 2018, this "three-no" small workshop produced dozens of fake and shoddy health products such as "astaxanthin", "fumin" and "kidney treasure". Subsequently, Chen and others boasted and exaggerated the role of these fake and shoddy health care products, claiming that they had health care and treatment effects on a variety of diseases, and sold them all over the country through the Internet, QQ, and Taobao sales, and the amount involved amounted to more than 80 yuan. [3]

(1) The intensity of legislation and law enforcement has been continuously strengthened

As the saying goes, "food and drug safety is no trivial matter", the safety and health of food and drugs are not only related to the health ecology of the industry of product quality, but more importantly, to the life and health safety of the people. In recent years, the revision and promulgation of laws and regulations in some countries are enough to prove that the punishment of food and drug safety in the mainland legal supervision system is increasing.

In October 2019, the Supreme People's Procuratorate held a press conference and said that from January 2018 to September 2019, procuratorates across the country approved a total of 5,299 arrests and 8,401 people and prosecuted 12,601 cases and 20,513 people for four crimes: producing and selling counterfeit drugs, producing and selling shoddy drugs, producing and selling food that does not meet safety standards, and producing and selling toxic and harmful food; It is recommended that administrative law enforcement organs transfer 3,259 cases of 3,669 people suspected of the above crimes; Supervised the public security organs to file 1,332 cases and 1,552 people. At the press conference, the Supreme People's Procuratorate issued the "Work Plan for Special Actions for the Implementation of the "Four Strictest" Requirements for Food and Drug Safety by the National Procuratorial Organs, Market Supervision Departments, and Drug Regulatory Departments. The special action was carried out nationwide from September 2019 to December 2020, and will focus on investigating and prosecuting food and drug safety violations and crimes committed through the Internet, e-commerce platforms, social media, TV shopping columns, etc., insisting on cracking down strictly in accordance with the law, and "punishing people" for illegal and criminal acts. On November 26, 2019, the State Administration for Market Regulation also issued the Interim Measures for the Administration of Product Quality Supervision and Random Inspections (effective from January 1, 2020), specifically adding online sampling to strengthen the supervision and random inspection of the quality of products sold by e-commerce platforms. It can be seen from this that the determination and strength of the national judicial, procuratorial and competent administrative organs to resolutely implement the strictest requirements for food and drug safety issues.

(2) Basic civil, administrative, and even criminal liability

For end consumers, once a certain quality problem occurs in the big health products purchased through the e-commerce platform, there are two main entities that need to bear the brunt: first, product producers and e-commerce operators; The second is the platform side. Depending on the severity of the circumstances, the offender may be fined, the license revoked, or the industry banned, or criminal liability, up to the death penalty.

For producers and e-commerce operators of drugs, medical devices and health foods, whether in accordance with the Product Quality Law, Food Safety Law, Drug Administration Law, Regulations on the Supervision and Administration of Medical Devices, or in accordance with the Tort Liability Law and the Tort Liability Part of the Civil Code, the E-Commerce Law, the Measures for the Supervision and Administration of Online Transactions (Draft for Comments), the Criminal Law, etc., as producers and e-commerce operators of big health products, The quality of the product itself should be responsible. At the same time, attention should also be paid to the authenticity of the product's outer packaging labeling and should meet the relevant specific standards.

As far as the platform party is concerned, if it knows or should know, or cannot prove that it does not know that the goods sold on the platform do not meet the requirements for protecting the safety of persons and property, and fails to take necessary measures, the platform operator cannot avoid being jointly and severally liable. Therefore, for special commodities related to the life and health of consumers, such as big health products, the operators of e-commerce platforms should be diligent and conscientious in the supervision of the qualifications and sales of the operators on the platform, implement strict audit obligations and safety guarantee obligations, build a guarantee system related to product quality, and actively, correctly and reasonably use the special quality control system of big health products, such as drugs and medical devices, such as adverse event reporting systems and product recall systems. Avoid causing products with quality problems to continue to circulate among consumers and produce more unnecessary tragedies.

Fourth, pay attention to the advertising of e-commerce sales of big health products

For most e-commerce sales entities of drugs, medical devices, and health foods, it is inevitable that they often release relevant promotional information about products when selling. However, the compliance of external publicity and advertising content is ignored by many commercial entities because the penalties are generally small. On January 8, 2019, due to the incident caused by the direct selling company Quanjian Company, the State Administration for Market Regulation, together with 13 departments including the Ministry of Industry and Information Technology, the Ministry of Public Security, and the Ministry of Civil Affairs, issued the "100-day Action Plan for Joint Rectification of "Health Care" Market Chaos, and decided to carry out a 100-day 100-day joint rectification of "health care" market chaos nationwide from January 8. In October of the same year, the 14th meeting of the Standing Committee of the 13th National People's Congress held a joint group meeting, and the Supreme People's Procuratorate and the Supreme Court stated that they would focus on rectifying the false promotion of health products in TV shopping advertisements, and then strengthen the supervision and law enforcement of the compliance of health food in health products.

At the end of December 2019, the "Measures for the Extensive Review of "Three Products and One Machine" was promulgated, which made more systematic and comprehensive provisions on the content standards, review procedures, and legal responsibilities of advertisements published by drugs, medical devices, and health foods sold by e-commerce in big health products, and optimized and integrated the requirements of the previous "three products and one device" scattered in various individual rules. "Strict" review, strive to achieve strict content standards, and strictly review the "three products and one machine" advertisement; The "lenient" procedure, in accordance with the principle of convenience and efficiency, further optimizes all the working procedures for advertising review, and reduces the burden on advertising applicants, including: streamlining supporting materials, compressing the time limit for review, extending the validity period of the advertisement approval number, making it public to facilitate public inquiries, and implementing online handling.

According to the statistics of administrative penalties for e-commerce sales advertisements of big health products from 2019 to the present, the main reasons for punishment are as follows: First, the published advertisements have not undergone advertising review and have not obtained the advertising approval number. Due to the particularity of Sanpin Yiji products, the release of relevant advertisements, regardless of through any channel, must be reviewed by advertising. In addition, there are strict restrictions on the content of advertisements, whether it is drugs, medical devices or health foods, the content of advertisements shall not exceed the content of the instructions approved by the relevant national authorities or the approved registration certificates and filing certificates. For health foods, it is absolutely not allowed to involve disease functions and therapeutic functions. Second, the published advertisements do not indicate the content that should be prominently marked. For example, advertisements for drugs should be conspicuously marked with contraindications and adverse reactions, advertisements for prescription drugs should also prominently indicate "This advertisement is for medical and pharmaceutical professionals only", and advertisements for non-prescription drugs should also prominently indicate the non-prescription drug label (OTC) and "Please purchase and use according to the instructions of the drug or under the guidance of a pharmacist". Advertisements for medical devices recommended for personal use shall be conspicuously marked with the words "Please read the product instructions carefully or purchase and use under the guidance of medical personnel". If there are contraindications or precautions in the medical device product registration certificate, the advertisement shall be conspicuously marked with "see the instructions for details of the contraindications or precautions". Advertisements for health food shall state that this product cannot replace medicine, prominently indicate that "health food is not a drug and cannot replace medicine to treat diseases", and prominently indicate the health food logo, suitable groups and unsuitable groups. In addition to highlighting the "obvious" characteristics, this kind of "conspicuous indication" should also be maintained as "continuous" when selling on e-commerce platforms. Third, the advertisements published by e-commerce sales of big health products contain assertions of safety and functionality that do not meet the requirements of the Advertising Law, such as the use of advertising terms such as "safe, no toxic side effects", "very significant efficacy", "effective rate of more than 95%", "often drink xx health wine, no waist soreness, no weak legs, and less night".

In addition to the above common punishment reasons, some big health products also use new forms such as pop-ups, screen opening, banners, etc., when selling e-commerce, so this kind of advertising should also distinguish whether it is interference or integration, and set up a one-click close function in strict accordance with the requirements of laws and regulations, so as not to affect the normal use of the network by users.

As mentioned above, advertising compliance has not been the focus of e-commerce sales compliance, but the enforcement efforts of the national competent authorities have been continuously strengthened, from the previous "passive law enforcement" to "active law enforcement". Failure to manage the compliance of internal advertisements will not only lead to administrative penalties, but the relevant information will also be publicized to the public in the national enterprise credit information publicity system, which will have a negative impact on the goodwill and social credit rating of advertisers selling drugs, medical devices, and health food e-commerce. At the same time, due to the promotion of administrative incentives by the state, more attention should be paid to social supervision from professional anti-counterfeiters, competitors and consumers.

Five

Regulate advertising compliance and "spokesperson" conduct in online livestreaming marketing

In the past two years, the rapid rise of online self-media has given birth to many online public figures. Because these Internet celebrity anchors and KOLs rely on hundreds of thousands or millions of netizens at every turn, "bringing goods" has become a popular and effective way of economic development in the new era, and has become an economic growth point that has risen instead of falling during the epidemic. Many producers and operators of big health products have also promoted the development of their online sales business through third-party anchor agencies (such as MCNs, etc.) or directly connected with online celebrity anchor KOLs to promote the development of their online sales business with the sales model of "bringing goods". However, due to various reasons, anchors often give free play when "bringing goods", introducing and recommending products in live broadcasts, or exaggerate some content for commercial purposes, which is likely to lead to improper promotion of products in live broadcast activities, which may deceive or mislead consumers.

A Shanghai trading company entrusted the anchor to advertise its company's health food xx chicken essence in the form of online live broadcast, and the anchor advertised in the live broadcast of a live broadcast platform: "xx chicken essence has a little slimming effect". After investigation, the chicken essence belonged to imported health food, and it was punished by the competent authority without the review of the advertising content by the advertising review authority. In another example, a Shanghai biotechnology company was punished by the competent authority for its behavior of guaranteeing the safety of the oral liquid it operated in the form of live broadcast advertisements, indicating that it contained anti-inflammatory, infertility treatment and other effects, clearly indicating that its ingredients were "natural" and implying that it was necessary to protect health. E-commerce sales entities of big health products should also pay attention to the various regulatory requirements under the online live streaming marketing model.

From the Provisions on the Administration of Internet Live Streaming Services issued in November 2016 to the Code of Conduct for Online Live Streaming Marketing and the Guiding Opinions of the State Administration for Market Regulation on Strengthening the Supervision of Online Live Streaming Marketing Activities (Draft for Comments) issued in June and July 2020 respectively, various regulatory requirements have been put forward for platform operators, commodity operators, and online anchors themselves. For the online live broadcast marketing of drugs, medical devices and health foods, in addition to the compliance requirements for qualifications, product quality and external publicity discussed earlier in this article, the main focus is to strictly regulate the review and release of advertisements, strictly regulate the content of live broadcast promotion, and strictly regulate advertising endorsements. For medicines, medical devices, and health foods, on the one hand, advertisements for relevant products must not be published in the form of online live broadcasts without advertising review, and the product introductions during live broadcasts must not violate the prohibitions in the Advertising Law, but also contain assertions indicating efficacy and safety; Cure rate or response rate must not be stated; It is not to be compared with other similar products. In addition, the live broadcast publicity and introduction of health food shall not involve disease prevention and treatment functions; Claiming or implying that it is necessary for the protection of health, etc. On the other hand, the anchor makes recommendations and certifications for medicines, medical devices, and health foods in his own name or image during the live broadcast, and the content of the live broadcast is mostly recognized as a commercial advertisement, and it is very likely that the anchor itself will be recognized as an "advertising spokesperson" under the Advertising Law by the competent authority. Then, according to the relevant provisions of the Advertising Law, for advertisements for drugs, medical devices, and health foods, it is not allowed to use advertising spokespersons to make recommendations or certifications. Therefore, not only because of the particularity of the people to whom medicines, medical devices, and health foods are applicable, but also because of the prohibition of laws and regulations on advertising spokespersons, we have encountered very few online live broadcasts of these types of health products in many online live broadcast marketing centers.

Of course, from the perspective of compliance control, the author recommends that the relevant business entity confirm whether the product can be webcast or hire an anchor to bring goods before engaging in online live streaming marketing of products other than the above-mentioned special health products; Strictly review the relevant qualifications of the third-party anchor organization (such as MCN, etc.) to be cooperated, clearly delineate the rights and obligations of both parties in the cooperation agreement or service agreement, and regulate the behavior of the third-party anchor organization and its anchors involved in the cooperation project; During the live broadcast, watch the live broadcast regularly or in the form of spot checks, and supervise the live broadcast of goods; At the end of the live broadcast or the end of the cooperation, the payment shall be made in accordance with the agreement to ensure that the anchor organization or the anchor does not have unauthorized publicity and distribution of the product.

Six

Strictly abide by the "bottom line" requirements in cross-border e-commerce retail

However, driven by the upgrading of domestic consumption, the cross-border e-commerce market in mainland China has developed rapidly in recent years, the transaction volume has continued to increase, and the demand for related products in the field of overseas health has also been increasing, and the number of various cross-border e-commerce platforms registered in China is also increasing, such as Tmall Global, Amazon China, Xiaohongshu, Yang Wharf, etc. However, the operators of cross-border e-commerce platforms, cross-border e-commerce operators, and even consumers should have bottom-line thinking and strictly abide by the relevant regulatory requirements in cross-border e-commerce retail.

First of all, cross-border imports of drugs, medical devices and health foods should obtain relevant import approval and approval in accordance with the law, and strictly follow the principle of market access. In 2018, the Ministry of Finance and 11 other departments jointly issued the Announcement on Adjusting the List of Cross-border E-commerce Retail Imports (No. 157 [2018]), which stated in the annex that "drugs, medical devices, health foods, etc., which need to be subject to the approval documents, registration or filing requirements of the first import license in accordance with the law, shall be implemented in accordance with the provisions of relevant national laws and regulations". However, for cross-border drugs, medical devices and health foods purchased sporadically by individual consumers, the Notice on Improving the Supervision of Cross-border E-commerce Retail Imports issued by six ministries and commissions including the Ministry of Commerce of the People's Republic of China on November 28, 2018 pointed out that the requirements for the approval of the first import license, registration or filing of the relevant commodities shall not be implemented according to the supervision of imported goods for personal use.

In addition, cross-border e-commerce retail imports of drugs, medical devices, and health foods should follow the limit on the amount of a single transaction. According to the Notice on Improving the Tax Policy on Cross-border E-commerce Retail Imports issued by the Ministry of Finance on November 30, 2018, the single transaction limit for cross-border e-commerce retail imports is RMB 5,000 and the annual transaction limit is RMB 26,000.

Third, cross-border e-commerce platforms should strengthen the protection of user information to prevent criminals from illegally using others' identity information. In May 2020, the Anti-Smuggling Bureau of Guangzhou Customs seized a smuggling gang that falsely reported trade methods, colluded with a number of cross-border e-commerce platforms in Guangdong Province, illegally used other people's identity information, and used false cross-border e-commerce orders, payment orders, and waybill information to declare to the customs to smuggle health care products of a national brand.

On December 30, 2019, the Beijing Municipal Food and Drug Administration, the Bureau of Commerce, Beijing Customs, and the Management Committee of Tianzhu Comprehensive Bonded Zone jointly issued the "Implementation Plan for the Pilot Work of Cross-border E-commerce Sales of Pharmaceutical Products in Beijing" (hereinafter referred to as the "Implementation Plan") and subsequently officially obtained the approval of the State Food and Drug Administration, clarifying the application conditions for the e-commerce pilot enterprises and the regulations on the management, sales management, supervision and management, and traceability management of the enterprises in the e-commerce pilot. So far, Beijing has become the first pilot city for cross-border e-commerce of drugs in China. On December 31, 2019, with the first batch of Japan's "Jiuguang Pharmaceutical Salombas Shoulder Pain Relief Plaster" from Beijing Tianzhu Comprehensive Bonded Zone, the country's first cross-border pharmaceutical e-commerce products were successfully cleared, and the legal and formal path for B2C import of mainland pharmaceutical products was opened for the first time.

Some people say that local authorities are actively learning and promoting the "Beijing model", and cross-border e-commerce in the field of big health seems to have ushered in spring. However, in the author's opinion, as the regulatory system is still in the process of continuous improvement, there are still some debatable and discussable points in the cross-border e-commerce retail of drugs, medical devices and health foods. For example, the sale of prescription drugs through e-commerce platforms must provide true and accurate prescriptions, but for cross-border e-commerce retail imported prescription drugs, there are also the same requirements. Another example is how consumers can effectively protect their rights if there is a quality problem with the big health products purchased through cross-border e-commerce platforms. Although the "Notice on Improving the Supervision of Cross-border E-commerce Retail Imports" of the six ministries and commissions pointed out that cross-border e-commerce enterprises, cross-border e-commerce platforms, domestic service providers, and consumers "clarify the responsibilities of all parties and bear their own responsibilities". However, the specific division and boundaries of responsibility are unknown, and these need urgent attention and consideration by legislative and law enforcement agencies.

[Note]

1. Source: 2020 Home Economy Insights Report, Financial Sector Website, https://author.baidu.com/home?from=bjh_article&app_id=1573162320060777

[2] Source: Compiled by Qianzhan Industry Research Institute

3. Source: Procuratorate Daily, June 16, 2019, http://newspaper.jcrb.com/