Alert

The Australian Competition Tribunal imposed special conditions on its authorisation of the Medicines Australia Code of Conduct, to require public disclosure of hospitality given to healthcare professionals. Although the level of disclosure required is less than originally proposed, all Medicines Australia members will still be required to make public disclosure every 6 months of certain benefits provided to healthcare professionals.

Background

In November 2005 Medicines Australia applied to the ACCC for authorisation of the 15th Edition of the Code. Authorisation exempts Medicines Australia members from provisions of the Trade Practices Act which might otherwise be breached by implementation of the Code (being the exclusive dealing and third line forcing provisions).

In July 2006 the ACCC authorised the Code for a period of 3 years on condition that there be extensive public disclosure of benefits provided by pharmaceutical companies to healthcare professionals, including the monetary value of those benefits.

Medicines Australia appealed the decision of the ACCC to the Tribunal.

Rationale for the decision

The Tribunal accepted Medicines Australia's submission that the Code of Conduct provides significant public benefit. In the Tribunal’s opinion, without the Code there is a real likelihood that promotion of pharmaceutical products would become more aggressive with some companies testing regulatory boundaries.

The Tribunal was of the opinion that

"there is a significant detriment associated with the unrestricted development of non-arms length relationships between pharmaceutical companies and healthcare professionals …. If the prescribing practices of healthcare professionals are influenced directly or indirectly by sympathies for particular products because of benefits derived from or links to the manufacturer or distributor of those products, patient care may be compromised."

The Tribunal accepted that in this respect the Code fills a gap in the legislative scheme. Two major public benefits were said to flow from the Code. First, it might give rise to a degree of restraint on the part of pharmaceutical companies in conferring benefits on healthcare professionals. Second, it would enhance public confidence that such conduct does not go unscrutinised.

The ACCC, to an extent, accepted these benefits but also portrayed the Code as a ‘toothless tiger’ in regulating provision of benefits to healthcare professionals. It highlighted that since 2003 the Medicines Australia Monitoring Committee had reviewed more than 4,700 invitations by pharmaceutical companies to healthcare professionals. Although the Committee had concerns over some of those invitations, none had been referred to the Code Committee for consideration.

After hearing evidence, the Tribunal was of the opinion that:

"There is little in the way of any real deterrent to contravention or incentive to compliance. There seems to be little incentive or enthusiasm for companies to complain about one another in this area … Public scrutiny of the hospitality and other benefits provided by pharmaceutical companies is more likely to lead to self imposed restraint by pharmaceutical companies than the institutional arrangements proposed by Medicines Australia.”

Reporting requirements

Under the Tribunal’s ruling, the Code must be amended before the end of September 2007 to require each member company to report to Medicines Australia every 6 months (in a prescribed format) all educational meetings and symposia held or sponsored by the company. Medicines Australia is required to publish that information on its website and to conduct reviews of the information.

Under the new regime member companies will be required to publicly report:

• the venue at which a function is held
• a description of the function including the duration of the educational content delivered
• the educational status of the attendees (eg GPs, anaesthetists)
• the nature of the hospitality provided and whether it included any food and/or beverages, accommodation, travel or entertainment
• the total cost of the hospitality component of the function
• the number of attendees
• the total cost of the function.

Where to from here?

Medicines Australia has announced that, while it is disappointed, it will abide by the Tribunal’s decision. The Code will be amended to incorporate the reporting requirements imposed by the Tribunal. Companies therefore need to comply with the reporting requirements outlined above, with the first report most likely needing to include information about hospitality provided on and after 1 October 2007.

Medicines Australia members therefore need to ensure that educational meetings and symposia (and other events in which educational content is embedded) are recorded in a way that will enable their reporting to Medicines Australia. Failure to comply with the reporting requirements will constitute a breach of the Medicines Australia Code, resulting in probable adverse findings from the Code Committee followed by sanctions .

For further information about this development or any other issues relating to the Medicines Australia Code of Conduct please contact Philip Argy or Lynne Peach in our Sydney office.