Compliance issues for pharmaceutical companies in Germany

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1 Financial institutions Energy Infrastructure, mining and commodities Transport Technology and innovation Life sciences and healthcare Compliance issues for pharmaceutical companies in Germany Ten things to know

2 Compliance issues for pharmaceutical companies in Germany Compliance issues for pharmaceutical companies in Germany Co-operation between the pharmaceutical industry and other members of the health care sector, in particular doctors and clinics, has repeatedly been under critical review with regard to possible corruption risks. While much of this co-operation is necessary for the development and introduction of new pharmaceutical products, unlawful influence must be avoided and compliance with corruption and competition regulations must be secured. Particularly sensitive relationships between pharmaceutical companies and medical professionals and institutions include clinical trials, post-approval surveillance studies, consulting arrangements, invitations to congresses and training, sponsorship as well as gifts, donations and hospitality. Collaboration between the pharmaceutical industry and doctors must not only comply with statutory laws, such as criminal law, competition law and laws for the medical and pharmaceutical sector, but German and European pharma associations have also increasingly issued codes of conduct in order to establish special principles and guidelines. Recent developments in this sector include the plan of the European Federation of Pharmaceutical Industries and Associations (EFPIA) to implement a Transparency Code which provides (amongst other matters) for the publication of certain contributions to doctors by the pharmaceutical industry. In addition, the development, production and distribution of pharmaceutical products are highly regulated in order to meet safety and efficiency standards. This overview outlines some areas which are particularly important and may also be relevant with regard to possible bribery issues. Here are ten things to know about current regulations and developments regarding compliance in the pharmaceutical sector in Germany. 02 Norton Rose Fulbright September 2013

3 Ten things to know 01 Bribery of officials a criminal offence Unlawful influence of officials may in particular be punished as bribery (Bestechlichkeit/ Bestechung) or acceptance or offer of benefits (Vorteilsannahme/Vorteilsgewährung) under the German Criminal Code (Strafgesetzbuch, StGB). In 2012, the German Federal Supreme Court (Bundesgerichtshof, BGH) decided that a resident doctor (niedergelassener Arzt) does not act as official or representative of the statutory health insurances (Krankenkassen). Therefore, criminal liability based on bribery of officials (Bestechung/Bestechlichkeit) or bribery in commercial transactions (Bestechlichkeit im geschäftlichen Verkehr) under the German Criminal code does not apply with regard to resident doctors. Bribery of officials may, however, occur during other dealings between pharmaceutical companies and relevant members of the health sector. 02 Further statutory laws against corruption Dishonest influence of medical professionals, including non-officials, may also be punishable under further statutory provisions, including other provisions of the German Criminal Code such as fraud, competition law regulations or the Law on Advertising in the Health Care System (Heilmittelwerbegesetz, HWG). 03 Codes of conduct published by pharma industry associations The leading German associations of the pharmaceutical industry have published a joint opinion on the basic principles of cooperation between the pharmaceutical industry and medical professionals. In addition, several German pharmaceutical associations have issued separate codes of conduct which follow the same principles but may vary in scope and details. These codes of conduct generally include the interpretation of and/or additions to legal requirements, sanctions and enforcement provisions and/or internal compliance requirements (e.g. appointment of compliance officers). For their part, the professional codes of conduct for doctors also include provisions to ensure their independence when cooperating with third parties. 04 Voluntary Self-Control for the Pharmaceutical Industry (FSA) issuer of widely accepted codes of conduct Voluntary Self-Control for the Pharmaceutical Industry (Freiweillige Selbstkontrolle für die Arzneimittelindustrie e.v., FSA) is an association of companies which put pharmaceutical products on the German market. The aim of the FSA is to promote ethical behaviour between the pharmaceutical industry and healthcare professionals, patient organisations as well as health care partners. To this purpose, the FSA has issued two codes of conduct, the Code of Conduct for Healthcare Professionals (Fachkreise) and the Code of Conduct for Patient Organisations (Patientenorganisationen). Further, the FSA has published recommendations on cooperation with health care partners (Partner im Gesundheitswesen) and their employees. The codes of conduct issued by the FSA, which are based on the codes of conduct published by EFPIA, are well recognised and often used as reference. In case of non-compliance, the FSA may issue financial sanctions as well as public criticism. Norton Rose Fulbright September

4 Compliance issues for pharmaceutical companies in Germany The codes of conduct only have a direct binding effect on member companies of the FSA. A breach of the Code of Conduct for Healthcare Professionals, however, may be regarded by German courts as a breach of competition rules, i.e. it would also have an indirect impact on non-members. 4.1 FSA Code of Conduct for Healthcare Professionals Pharmaceutical companies have to provide all necessary and adequate information regarding the characteristics of pharmaceutical products, including possible applications as well as their limits and risks, to healthcare professionals. By doing so, dishonest practices and ethical conflicts can be avoided. The Code of Conduct applies (i) to the promotion to healthcare professionals of pharmaceutical products for human use which are available on prescription and (ii) to the cooperation of the member companies of the FSA with healthcare professionals in research, development, manufacturing and sale of pharmaceuticals for human use available on prescription. Healthcare professionals include doctors and pharmacists and further medical, dental, pharmaceutical and other professionals as well as other persons who prescribe, apply or sell pharmaceuticals for human use. Therefore, the Code of Conduct includes provisions to ensure that the promotion of pharmaceuticals is true, adequate, fair, objective and complete. Further, it contains regulations regarding cooperation with healthcare professionals, who must not be dishonestly influenced in their therapy, prescription and sale decisions and who must not be granted or promised dishonest advantages. These in particular include advantages which are contrary to statutory provisions or the professional standards of the respective healthcare professionals. 4.2 FSA Code of Conduct for Patient Organisations The Code of Conduct applies to cooperation between the member companies of the FSA and organisations for patient self help (Patientenselbsthilfe). Under the Code of Conduct, these organisations shall retain full control over their work and remain independent. Accordingly, the Code of Conduct contains provisions regulating the separation of member companies from patient organisations (i.e. employees of the member companies must not exercise functions in patient organisations), transparency, the prohibition of recommendations for special pharmaceutical products, the limitation of promotions and the prohibition of requests for exclusivity. Further, the member companies have to publish a list of those organisations to which they make payments and other contributions, including the amount of such payments. 4.3 FSA Recommendations on cooperation with health care partners The Recommendations regulate cooperation between the member companies of the FSA and health care partners and their employees. Health care partners include in particular the ministries, authorities and other public institutions which are active in health care politics. Employees of health care partners must not be influenced in a dishonest manner, and therefore must not be granted or promised any advantages for this purpose. Further, any cooperation must be open and transparent. The Recommendations therefore include guidelines regarding hospitality, invitations, provision of services against remuneration, sponsorship, donations and gifts. 04 Norton Rose Fulbright September 2013

5 Ten things to know 05 Planned Transparency Code As a reaction to the decision of the German Federal Supreme Court regarding the status of resident doctors and to the contributions of the pharmaceutical industry to medical professionals and health care institutions, EFPIA plans to institute a Transparency Code (Transparenzkodex) in Germany by the end of According to the FSA, a wide scope of data on contributions, e.g. remuneration for scientific presentations and consulting services by doctors as well as invitations to scientific congresses, is planned to be collected and published. The compilation of data is planned to be initiated from 2015 and published from 2016 onwards. Compliance with the Code shall constitute a self obligation and not a statutory obligation. 06 Regulation of clinical trials Clinical trials require an approving evaluation by the relevant ethics commission and need to be authorised by the Federal Institute for Pharmaceuticals (Bundesinstitut für Arzneimittel, BfArM) or the Paul-Ehrlich-Institute (PEI), a federal institute for vaccines and biomedical pharmaceuticals. The requirements for and execution of clinical trials are regulated by the German Pharmaceuticals Act (Arzneimittelgesetz, AMG) and the Regulation on Good Clinical Practices in the conduct of clinical trials on medicinal products for human use (GCP-Verordnung). Clinical trials require, amongst other things, the consent of the persons concerned, the provision of relevant/appropriate information, a sufficiently qualified supervisor and the certification of the tested products under Good Manufacturing Practices. Currently, the EU Commission is reviewing the regulation of clinical trials in order to facilitate these requirements, reduce bureaucracy and enable more research, e.g. by introducing a centralised authorisation proceeding with regard to participating EU countries. Additionally, the requirements regarding the publication of the results are planned to be increased, e.g. by publishing detailed clinical study reports. Various aspects of these plans, however, have been met with criticism and are still under discussion. 07 Competition laws and patent protection In general, pharmaceutical companies which participate in the European market are subject to European competition regulations, in particular the prohibition of cartels and the prohibition on abuse of a market-dominant position. In 2008, the European Commission initiated sector inquiries for the pharmaceutical industry on the basis of a possible malfunction of competition in this sector. Still under critical review are, in particular, patent settlement agreements between the producers of original pharmaceuticals and the producers of generics before the expiry of the patent protection. Pharmaceuticals can be patented with the German Patent and Trademark Office (Deutsches Patent- und Markenamt) or the European Patent Office (Europäisches Patentamt). A patent will be granted for a maximum period of 20 years from application. Council Regulation (EEC) No 1768/92 provides the possibility to extend the patent protection for a further period of up to five years by applying for a supplementary protection certificate. Norton Rose Fulbright September

6 Compliance issues for pharmaceutical companies in Germany 08 Special requirements for the production of pharmaceuticals Each pharmaceutical producer with a production site in Germany requires an authorisation to produce pharmaceutical products (Herstellungserlaubnis) as set out in the German Pharmaceuticals Act. The producer has to fulfil certain requirements regarding, among other matters, quality management, personnel, hygiene requirements, production proceedings and storage in accordance with the regulation on the production of pharmaceutical products and active ingredients (Arzneimittel- und Wirkstoffherstellungsverordnung) which corresponds with the Good Manufacturing Practices Directive established by the EU Directive 2003/94/EC. Compliance with the authorisation requirements is regularly supervised by the Federal Institute for Pharmaceuticals or the Paul-Ehrlich-Institute. 09 Authorisation necessary for market introduction In order to bring a pharmaceutical to the market, the producer requires a special marketing authorisation for pharmaceutical products (Arzneimittelzulassung). In Germany, the authorisation is granted either by the Federal Institute for Pharmaceuticals or the Paul-Ehrlich-Institute, depending on the nature of the pharmaceutical product. The applicant has to document the pharmaceutical quality, efficacy and safety of the pharmaceutical product. If a pharmaceutical product is already subject to a marketing authorisation in one EU member state, a mutual recognition procedure is available in order to obtain authorisation in any other EU member state. Further, EEA-wide marketing authorisations may be obtained via a centralised procedure under which applications are made directly to the European Medicines Agency (EMA). This proceeding is compulsory for medicines derived from biotechnology, advanced-therapy medicines, human medicines for the treatment of certain diseases and other special medicines. Application for central authorisation for other medicines is optional. After market authorisation, pharmaceutical companies have to document and report any side effects of the pharmaceuticals and take appropriate measures (pharmacovigilance). 10 Rules for the promotion of pharmaceutical products Promotion of pharmaceuticals is strictly regulated by the Law on Advertising in the Health Care System (Heilmittelwerbegesetz). A distinction has to be made between promotion directed towards medical professionals and patients. For example, the promotion of pharmaceuticals which require an authorisation but have not yet been authorised is not permitted, and pharmaceuticals which are only available on prescription may only be marketed to doctors, pharmacists and other people who distribute such pharmaceuticals. 06 Norton Rose Fulbright September 2013

7 Ten things to know Contacts If you would like further information please contact: Munich Dr. Andreas Börner Partner Norton Rose Fulbright LLP Tel +49 (0) Dr. Michael Malterer Partner Norton Rose Fulbright LLP Tel +49 (0) Norton Rose Fulbright September

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