Strengthening Intelligent (智能) Supervision of Excessive Prescription: Regulatory Update and Strategic Implications for Multinational Pharmaceutical Companies

The “Hundred-Day Campaign” and judicial enforcement

Launched on September 25, 2025, the Insurance Fraud “Hundred-Day Campaign” runs through December 31, 2025. It focuses on addressing key issues in medical insurance fund management, including falsified prescriptions, illegal drug swapping, the improper collection and re-dispensing of medications by medical institutions, and the resale of medications. The campaign also targets abnormal prescribing and purchasing behaviors detected through drug traceability codes, such as prescribing beyond clinical need and purchases under false identities.

In parallel, the Supreme People’s Court has intensified its crackdown on medical insurance fraud. Its August 2025 release of representative cases illustrates the breadth of fraudulent behavior, ranging from institutional corruption and digital black markets to individual collusion. The judiciary’s approach emphasizes document integrity, coordinated enforcement, and severe penalties, signaling a long-term commitment to safeguarding public healthcare funds.

Implementation roadmap

The NHSA Notice introduces a three-stage implementation plan using the unified national medical insurance information platform. This phased approach aims to standardize monitoring nationwide:

1. Phase 1 (by December 31, 2025): Pilot regions must incorporate 50 key monitored drugs under intelligent supervision. While the official list of monitored medications exists as an internal document, it has not been formally released to the public.
2. Phase 2 (by June 30, 2026): Coverage expands to at least 100 drugs across all provinces, autonomous regions, and municipalities.
3. Phase 3 (by December 31, 2026): Full national coverage with standardized mechanisms for data screening, early warning, and enforcement.

Key regulatory focus areas

• Drugs Under Scrutiny: Targeted categories include drugs frequently linked to insurance fund misuse, those with high or rising expenditure, and products with strong resale demand. While the specific list of 50 key monitored drugs has not been made public, high-cost imported drugs that exert a significant impact on public health, including certain innovative therapies and specialized treatments, are expected to be prioritized.
• Behavioral Red Flags: Monitoring will focus on excessive purchases beyond clinical need, repeated purchases across institutions without justification, and fraudulent purchases, including impersonation.
• Institutional and Personnel Risks: Risks extend to insured individuals, designated medical institutions, and healthcare professionals involved in excessive or fraudulent prescribing.

Data-driven supervision and enforcement

The initiative relies on advanced analytics, including drug traceability codes and big data models, to identify suspicious patterns and generate risk profiles for both institutions and individuals. When these analytics detect potential issues, the system triggers alerts that enable proactive intervention and targeted audits.

Based on these data-driven insights, enforcement is structured in tiers. Institutions and individuals are encouraged to conduct self-inspections and voluntarily correct any irregularities, with leniency offered to those who proactively comply. However, severe or repeated violations will result in strict penalties, such as suspension or termination of insurance payment qualifications and public disclosure of cases.

Potential risks for multinational pharmaceutical companies

Regulatory changes bring several emerging risks for multinational pharmaceutical companies.

1. Real-Time, Data-Driven Supervision: Regulatory authorities are implementing continuous, intelligent monitoring of prescription and reimbursement activities. While hospitals and pharmacies are directly subject to surveillance of prescribing and dispensing behaviors, pharmaceutical companies are increasingly exposed to oversight of their product distribution patterns and market presence. Advanced analytics and drug traceability systems will make it easier for regulators to identify irregularities linked to specific products or manufacturers.
2. Greater Risk of Regulatory Investigations: Pharmaceutical companies may face more frequent regulatory inquiries or audits related to prescription trends and distribution practices, especially for products associated with abnormal or excessive use. While pharmaceutical companies in China do not process or access individual patient claims or data, regulators may still expect them to cooperate in investigations by providing product-level information, distribution records, and compliance documentation. This cooperation helps authorities verify that insurance claims involving their products are legitimate and compliant with regulatory requirements. Companies may be drawn into investigations if their products are repeatedly flagged for excessive or suspicious use, even if the underlying prescribing or claims activity occurs at the medical institution level.
3. Institutional Accountability: Regulators are emphasizing full-chain accountability, meaning that all entities involved in the lifecycle of a reimbursed product, including manufacturers, distributors, and healthcare providers, may be scrutinized if patterns of excessive prescribing or repeated compliance issues are detected.

Industry speculation and strategic considerations

While the NHSA has not made the list of 50 key monitored drugs public, industry watchers have speculated that the list may include many high-value therapies from multinational companies, such as insulin analogs, SGLT2 inhibitors, statins, and immunosuppressants. Such speculation may reflect industry concerns that regulators are likely to focus on drugs with high cost, demand, and market share.

Practical implications

Multinational pharmaceutical companies should anticipate:

• Increased regulatory scrutiny of products for chronic diseases and specialty care, with closer examination of prescribing patterns and distribution channels.
• Heightened compliance risks, particularly regarding off-label promotion, which involves encouraging the use of drugs for unapproved indications, as real-time analytics make detection and enforcement more likely.
• Reputational risks, as enforcement strategies include public exposure of violations, with potential brand damage and regulatory penalties even for indirect involvement.

Conclusion

The NHSA’s latest notice, together with the “Hundred-Day Campaign” and intensified judicial enforcement, reflects China’s increasingly sophisticated medical insurance regulatory landscape. For multinational pharmaceutical companies, proactive compliance and continuous improvement are essential to navigate this evolving environment and avoid significant regulatory and reputational risks.

Authored by Calvin Ding and Evelyn Ni.