Overview

A new Act to Combat Corruption in Healthcare has passed the last German Parliamentary hurdle, and will come into force in the next few weeks. This Act will see the introduction of two new criminal offences of active and passive bribery in healthcare to the German Criminal Code, exposing healthcare industry players to increased liability and reputational risks when interacting with healthcare professionals.

Companies and investors in the German healthcare sector should take this opportunity to review their compliance management systems, and to identify potentially problematic interactions with healthcare professionals and medical facilities. For investors, placing anti-bribery compliance at the forefront of both pre-acquisition due diligence and post-closing compliance integration is critical to avoiding liability.

Background

Until now, in Germany, it was only possible to be held criminally liable for bribing hospital doctors. Self-employed healthcare professionals could not be held criminally liable under existing legislation prohibiting commercial and public bribery, as they did not qualify as ‘public officials’ or ‘associated persons of a business’ under the German Criminal Code. This position was confirmed by a decision of the German Federal Court of Justice on 29 March 2012.

The new Act will remove this distinction, broadening criminal anti-bribery law to cover all healthcare professionals.

Significant changes introduced by the new Act

The new Act implements two new criminal provisions: active bribery (§ 299a) and passive corruption (§ 299b). The former prohibits the receipt of unfair benefits by healthcare professionals, and the latter the granting of unfair benefits to healthcare professionals by service providers. Therefore, the individuals acting on either side of a bribe could be held criminally liable.

Which behaviours could be held criminally liable?

According to § 299a, a healthcare professional could be held liable for the receipt of an unfair benefit if he or she requests, accepts a promise of, or accepts a benefit in return for giving preference to a particular person or entity in relation to:

  • the prescription of pharmaceutical or medical products;
  • the procurement of pharmaceutical or medical products; or
  • the referral of patients.

On the other hand, any person who offers, promises or grants such benefits to a healthcare professional could also be held criminally liable under § 299b.

Who will the new offences apply to?

The new offences will be of broad application to interactions with members of the medical profession, including all healthcare professionals whose training is subject to state regulation. Therefore interactions with not only doctors, dentists, veterinarians or pharmacists, but also nurses, midwives or speech therapists will be covered.

What kind of benefits could now be prohibited?

The new offences will apply broadly to the provision of any benefits, whether tangible or intangible, and whether given to a healthcare professional or a third party. The legislative notes to the Act give a number of examples of relevant benefits that generally fall in the scope of the new offence. These include, amongst others, the invitation of healthcare professionals to conferences, the sponsorship of training and hospitality, payments in relation to observational studies, financial contributions in return for patient referrals or the supply of laboratory samples, and the offering of profit shares in companies.

However, in order to be held liable for a German bribery offence, the new law requires that such benefit is provided in return for preferential treatment leading to an unwarranted competitive advantage.

What are the sanctions?

Breach of §§ 299a or b could result in the imposition of fines or imprisonment. Particularly serious cases might result in imprisonment of up to five years.

These offences are defined as ‘ex officio crimes’, which means that the prosecutor is obliged to initiate investigations of its own volition (i.e. there is no requirement that a criminal complaint should first be submitted). It should be noted that the threshold at which the prosecutor must start an investigation in Germany is relatively low – mere suspicion of a possible breach is sufficient.

In parallel with the introduction of the new provisions, we have seen this area becoming the subject of growing public scrutiny. The last few years have seen a trend towards Federal States (most recently Bavaria) establishing specialised public prosecutors to focus specifically on corruption in healthcare. It is therefore widely expected that the intensity of prosecutions in this area is likely to increase in coming years.