Legal news Deloitte Czech Republic. October 2017

Transcription

1 Legal news Deloitte Czech Republic October 2017

2 Regulation of pharmaceutical 2 Advertising is undoubtedly an important aspect of virtually any business. However, advertising is also subject to public regulation included primarily in Act No. 40/1995 Coll., on Regulation of Advertising and on the change and completion of Act No. 468/1991 Coll., on Radio and Television Broadcasting, as amended ( Act ), with its civil law implications being addressed directly in the Civil Code. Under the Act, advertising generally encompasses any notification, display or any other presentation distributed primarily through communication media with the purpose to support business activities, namely the consumption or sale of goods or services. The Act firstly sets out general requirements imposed on advertising irrespective of the advertised product; generally, advertising must not breach legal regulations and good manners. Subsequently, the Act defines specific requirements in relation to advertising focused on certain types of commodities, ranging from tobacco products, alcoholic drinks, pesticides and fertilizers, infant food and arms to pharmaceuticals, which are discussed below. The legal regulation of pharmaceutical advertising can be divided in terms of who is the intended recipient of the advertisement whether it is an expert or the general public. Advertising focused exclusively on experts must not be distributed by any other communication means than those that are largely intended for the experts. Determining the communication means, typically expert periodicals, etc., does not pose any problems in practice but a degree of uncertainty exists in interpreting the term expert. According to Section 2a of the Act an expert is a person that is authorised to prescribe or dispense medicinal products that are subject to advertising. While the term expert have historically concerned only physicians, pharmacists or their assistants, i.e. exclusively natural persons, the decision-making practice of the State Institute for Drug Control ( Institute ) supported by the case law of higher courts indicates that the term expert necessarily includes also certain legal entities. As such, in line with the case law, a pharmacy may be considered an expert in certain circumstances and it only remains to be seen when the Institute attempts, by analogy, to apply the same line of argumentation to hospitals. Such a situation would have significant practical impacts, namely given that the Act prohibits the experts from accepting gifts or other benefits of a non-negligible value unrelated to the

3 3 performed expert activity in connection to pharmaceutical advertising while also banning the mere offering or provision of such benefits to experts. However, the distribution of medicinal products often features various commercial tools and instruments, mostly in a form of discount or bonus schemes that are targeted at various components of the distribution chain, including pharmacies and hospitals. The business logic of these instruments designed to enhance sales of medicinal products is incontestable, but they pose a risk in terms of the Act since certain types of discounts and bonuses might be treated as the benefit provided to an expert in connection to pharmaceutical advertising. According to the Act, offering or providing such a benefit constitutes an administrative offence for which the Institute may impose a penalty of up to CZK 1,000,000. In practice, this issue has additional implications in terms of pricing regulation and taxation and criminal law consequences are also being debated in view of the recent reports published by certain media. Deloitte Legal As part of our services, we assist our clients in reviewing commercial tools and instruments in the pharmaceutical distribution chain in terms of both advertising regulation and price and tax regulation. v Tereza Davidová tdavidova@deloittece.com Filip Vrubel fvrubel@deloittece.com

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