Investigations have recently been reported into allegations that millions of pounds worth of bribes have been paid to boost drug sales in China. This has focussed attention sharply on the rules regarding transfers of value between pharmaceutical companies and healthcare professionals and their organisations. Whether there has been any offence committed under the Bribery Act 2010 (the "Act") in the recent example is unclear. However, it is a reminder that having in place a suitable international anti-bribery policy is essential for a company wishing to show that it has "adequate procedures" in place to prevent bribery.
For pharmaceutical companies used to complying with the ABPI's Code, the advent of the Act two years ago required them to take a step back and consider the potential bribery risks connected with their businesses in a broader context than just the Code. However, in a climate of on-going concern about a lack of transparency, the Code is itself now due to be strengthened to require greater disclosure relating to "transfers of value". This follows the release by the European Federation of Pharmaceutical Industries and Associations (EFPIA) on 2 July 2013 of its disclosure code on transfers of value to healthcare professionals (HCP's) and healthcare organisations (HCO's). The code requires all members of EFPIA to disclose transfers of value to HCP’s and HCO’s as of 2016 regarding all transfers in 2015.
In order to comply with the EFPIA Disclosure Code, proposals to amend the ABPI Code of Practice for the Pharmaceutical Industry and the PMCPA Constitution and Procedure have been sent to companies and published on the PMCPA website1.
The key changes: "transfers of value" and the disclosure requirements
The proposed changes to the ABPI Code are fairly extensive, but the key proposals relating to the EFPIA Disclosure Code are as follows:
- A "transfer of value" is defined as "a direct or indirect transfer of value, whether in cash, in kind or otherwise, made, whether for promotional purposes or otherwise, in connection with the development or sale of medicines". The concepts of "direct" and "indirect" transfers of value are included.
- A "direct" transfer is one made directly by the relevant company to the recipient of the benefit.
- An "indirect" transfer is one "made by a third party on behalf of a company for the benefit of a recipient where the identity of the company is known to, or can be identified by, the recipient".
Certain "excluded disclosures" are also set out in the Code, to which the new disclosure regime does not apply:
- transfers of value relating to over-the-counter medicines;
- ordinary course purchases and sales of medicines by and between a company and a health professional or a healthcare organisation;
- samples of medicines provided in accordance with the Code;
- subsistence provided to healthcare professionals in accordance with the Code, provided that the maximum value of the food and drink does not exceed £75 (ex VAT) per person. The draft Code also notes that £75 is a maximum value that will only be permissible in "very exceptional circumstances";
- inexpensive items, and medical and educational goods and services, that are provided in accordance with the current provisions of the Code (note that the Code is very limited in the scope of items that can be provided to healthcare professionals).
- Transfers of value include clinical trials related payments to healthcare professionals or healthcare organisations.
A new clause 21 is added to the Code which provides that:
- companies must document and publicly disclose transfers of value made to healthcare professionals or healthcare organisations located in Europe;
- transfers of value that must be disclosed include: donations, grants and benefits in kind; sponsorship of attendance of healthcare professionals at meetings; fees paid to healthcare professionals; contributions to the cost of meetings (including registration fees, accommodation and travel);
- transfers of value to patient organisations continue to governed by the existing provisions of the Code;
- with effect from 2016, disclosure must be made in the first half of the year in relation to the previous year (i.e. the first set of disclosures on this basis will relate to 2015);
- different categories of transfers of value can be aggregated on a category by category basis, provided that itemised disclosure would be made available upon request to the relevant recipient or the relevant authorities;
- companies must provide a note summarising their methodologies used in preparing their disclosures; and
- where recipients of transfers of value "cannot be identified for legal reasons", the amount attributable to such transfers must be disclosed on an aggregate basis.
The EFPIA Disclosure Code v. Data Protection – a pan European conundrum?
The last bullet point above is particularly interesting. The EFPIA Disclosure Code states that "EFPIA recognises that disclosure can raise data privacy concerns…". The draft notes to Clause 21 of the Code state that:
"Companies are encouraged to include in a contract involving a transfer of value provisions regarding the consent of the recipient to its disclosure. In addition, companies are encouraged to renegotiate existing contracts at their earliest convenience to include such consent to disclose."
For companies concerned solely with the UK market, the interaction between the new requirements of the Code and the data protection regime throws up some interesting questions: for example, will consent set out in a general contract for services be sufficiently meaningful consent for data protection purposes?
For companies looking at the EFPIA Disclosure Code on an EU-wide basis, there are more issues to consider:
- Will taking the same approach to obtaining consent across the EU - for the purposes of the EFPIA Disclosure Code - comply with the variations in approaches taken by national data protection regulators?
- Will the data collected for the purposes of the EFPIA Disclosure Code be exported outside the EU, triggering further consent requirements from the healthcare professionals?
Such companies would be well advised to consider the data protection implications of implementing the EFPIA Disclosure Code on a country-by-country basis for the EU jurisdictions in which they make payments to healthcare professionals or healthcare organisations.
What happens now?
The proposals have been sent to the Medicines and Healthcare Products Regulatory Agency (MHRA), the British Medical Association (BMA), the Royal Pharmaceutical Society (RPS) and the Royal College of Nursing (RCN) as required by the Constitution and Procedure. They have also been sent to the Serious Fraud Office (SFO). In the meantime, the more general disclosure obligations – on an amalgamated basis – continue to apply under the Code (see for example Clause 19.4 and related notes).
Rulings under the ABPI's Code are published, and so companies found to be in breach of certain provisions - such as those relating to the new disclosure obligations - may attract the attention of the SFO under the Bribery Act as well as being found to be a breach of the relevant industry body code of practice. An April 2011 memorandum between the ABPI, the PMCPA and the SFO states that it will regularly review information on the PMCPA's website - on the face of it to avoid duplication of investigations - but it is possible that serious breaches of the ABPI's Code published on the PMCPA website may warrant even closer scrutiny by the SFO.
For those companies in the life sciences sector that are not regulated by the ABPI Code, the introduction of the EFPIA Disclosure Code represents a further step in the direction of increased transparency in the sector, and can be expected to spill over into other self-regulatory codes in due course.
To date, the impact of the Act on life sciences companies in the UK has been broadly the same as the impact on other sectors, with companies implementing appropriate policies and procedures to assist in compliance with the Act in the same way as those outside the sector. However, the high profile of the sector and the new level of scrutiny introduced by the EFPIA Disclosure Code mean that life sciences companies are well advised to ensure that compliance with the Act, industry codes of practice and company policies remains a priority.