Key Points:

Government-led consideration is currently being given to whether a single code should apply to medical devices and technology, pharmaceuticals (including generics) and complementary medicines.

The relationship between members of the therapeutic goods industry and health care professionals (HCPs) is currently an area of considerable debate. It seems as though every week there is another newspaper, radio program, television network or journal publisher that has something to say about how this relationship is, or ought to be, managed.

That debate has gathered momentum in the context of proposed changes to the laws and codes that govern the promotion of therapeutic goods and dealings between industry and HCPs. The Federal Parliamentary Secretary for Health, Mark Butler, has entered the debate to initiate stakeholder consultation about whether changes are needed to achieve a "level playing field on marketing obligations within the therapeutic goods industry" and to address the issue of improper influence in marketing.

This article considers some of the triggers for the current focus and selected reform proposals. Government-led consideration is currently being given to whether a single code should apply to medical devices and technology, pharmaceuticals (including generics) and complementary medicines. While it is early days, many stakeholders have expressed concerns that a single code approach would be impractical.

Existing regulation

The existing system of regulation is a complex and fragmented combination of laws (primarily the Therapeutic Goods Act 1989 (Cth) and accompanying Regulations and Codes) and separate industry codes. Industry groups that have developed or are in the process of developing codes of conduct include Medicines Australia, the Medical Technology Association of Australia, the Generic Medicines Industry Association, the Complementary Healthcare Council and the Australian Self-Medication Industry.

Various medical colleges and associations such as the Australian Medical Association and the Royal Australasian College of Physicians also have codes of conduct incorporating provisions that address professional independence and conflicts of interests. In some Australian states, the legislation governing the registration of HCPs addresses these issues by including them in prescribed categories that deal with professional conduct.

Pharmaceutical companies are often at the centre of the debate about the relationship between HCPs and industry. Given the legal prohibition on direct to consumer advertising of prescription pharmaceuticals, marketing activity is chiefly directed at HCPs. For innovator pharmaceutical companies (but not generics), this field is governed by the Medicines Australia Code of Conduct (MA Code) which is the most rigorous of the industry codes.

Medicines Australia Code of Conduct Ed. 16

The MA Code complements the Therapeutic Goods Act and Regulations. The MA Code must be authorised by the Australian Competition and Consumer Commission (ACCC). Authorisation provides immunity from court action for conduct that may otherwise contravene laws which prohibit anti-competitive conduct.

The MA Code is updated approximately every three years. Following a consultation process, authorisation will be granted when the ACCC is satisfied that the public benefit of the Code outweighs any public detriment.

Applications for authorisation of Edition 16 of the MA Code were submitted to the ACCC on 30 June 2009 and 12 August 2009. This Edition is expected to commence operation on 1 January 2010. It will be the culmination of a lengthy and detailed consultation process, complete with an independent audit by Dr Simon Longstaff of the St James Ethics Centre.

Key proposed changes to the Code include:

1. Additional training requirements for company representatives and employees involved in preparing or approving promotional material to be familiar with Australian privacy and trade practices legislation.

2. Additional restrictions on advertising. Some examples include a complete prohibition on advertising prescription medicines in electronic prescribing software; new provisions dealing with the use of "social media" such as Facebook, YouTube, MySpace and Twitter for the promotion of prescription medicines; and a general prohibition on giving brand name reminders to HCPs unless they are educational and/or directly related to the practice of medicine or pharmacy.

3. Further measures which are said to be designed to lead to increased accountability and transparency of industry conduct. For example, specific regulation of relationships between pharmaceutical companies and health consumer organisations; further restrictions on the circumstances in which financial support and other benefits can be provided to HCPs by pharmaceutical companies; and new provisions extending the Code to cover interactions between a pharmaceutical company and healthcare professionals when conducting clinical research.

4. An increase in the maximum fines for moderate (from $100,000 to $150,000); severe (from $100,000 to $200,000; and $250,000 if activities have ceased and there is no opportunity for corrective action); and repeat breaches (from $200,000 to $250,000) of the Code. These increases are consistent with a trend to increase fines each time the Code is revised. A new fine of up to $50,000 for failure to pay a fine within 30 days has also been introduced.

The updated draft MA Code appears to have been well received by stakeholders. Notably, even those who in the past could be described as having been critical of the MA Code, and the industry generally, have publicly congratulated Medicines Australia on its extensive consultation process and proactive approach to strengthening the Code. Of course, some areas of disagreement remain.

What is most interesting is the push that the new MA Code has generated for changes to how other players in the therapeutic goods industry are regulated. There is now a lively debate about working towards consistent regulation across the innovator and generic pharmaceutical industries, and extending that regulation to devices, medical technology, over-the-counter and complementary therapeutic goods.

Triggers and recent events

Appropriate governance of the relationship between industry and HCPs is an ongoing issue. It is well recognised that companies that develop therapeutic advances and possess much of the relevant information about them have a role to play in educating HCPs so that medicines are used safely and effectively. Industry is responsible for and funds a significant percentage of HCP continuing education and makes an important philanthropic contribution to healthcare endeavours. However, some commentators claim that this relationship is fraught with the risk of actual or perceived improper influence.

Calls for increased transparency in relationships with HCPs as well as consistency in how companies are regulated continue to grow, with the aim of ensuring integrity and increasing public confidence in the industry and the health care system. The pressure for change has been building for years both in Australia and overseas, especially in the United States.

So what has led to the recent explosion of interest?

The first point is that timing is everything. The MA Code is currently being reviewed by the ACCC and the Medical Technology Association of Australia's Code has been recently revised. The second point is that while those industry bodies are actively reviewing their Codes, other industry bodies have not acted. For example, the Generic Medicines Industry Association has not yet implemented a code of conduct even though a draft has been around for a number of years.

Amongst these developments, a recent event that has sparked debate is the concern about a Mediterranean cruise run by a generic pharmaceutical company, for which HCPs pay $8000-$10,000 each to attend. It includes some accredited educational events and approximately four company representatives are present. The cruise would breach the MA Code. However, the generic company declined to participate in MA's complaints resolution process, leading to the matter being referred by the Parliamentary Secretary for Health to the Therapeutic Goods Administration (TGA). The TGA ruled that the cruise did not breach the law, essentially because of a gap in the legislation, which regulates the promotion of particular products rather than the company's behaviour generally.

Immediately, calls for reform to hold generic and originator companies to the same standard were made.

Close on the heels of this issue, articles have recently been published in the general press which raise concerns about the relationship between medical device companies and HCPs. Well-known commentators of industry-HCP relationships also seized upon the opportunity to raise other concerns such as the ineffectiveness of complementary medicine regulation and the limited effectiveness, lack of enforceability and lack of transparency surrounding other complaints processes, especially that of the Complaints Resolution Panel.

At around the same time, the US regulators fined a leading pharmaceutical company US$2.3 billion for inappropriate promotion of its now withdrawn prescription medicine.

These events have led some to consider the need for reform across the industry.

A unified approach?

At the instigation of the Parliamentary Secretary for Health, the first stakeholder consultation meeting to consider possible reforms was held on 17 September 2009. No doubt, the coming months will see further activity.

The two broad themes that are being championed in the context of the reform proposals are increased consistency and transparency.

Currently, the regulation of promotional practices varies between product types and depends on the medium in which a claim is made or the context in which conduct occurs. The complaints processes and sanctions for inappropriate conduct are also different.

The drive to hold companies to the same high ethical standards may help to set a more level playing field. However, achieving this requires a sophisticated approach and further consultation and consideration is clearly needed. For example:

  • Any convergence in approach needs to still reflect the different legal restrictions on advertising for prescription medicines, medical devices, OTC products and complementary medicines. The most obvious difference is whether or not those products can be advertised to consumers.
  • Is it practical for a single code to cover different industry groups and products? Only some standards are of general application. A balance needs to be struck between consistency and retaining the scope to introduce tailored measures that enable industry members to collaborate and set best practice. Effective complaints procedures and sanctions are at the core of any industry code.
  • Should the existing hybrid model of legal regulation and industry codes be retained? What is the balance to be struck between legal requirements and voluntary codes of conduct?

What can companies do?

Many companies, via the relevant industry association, will be aware of the proposed reforms and have at least an indirect opportunity to participate in the consultation process. We will have to wait and see what the ultimate responses and outcomes will be.

At the individual company level, the current focus on the appropriateness of relationships between industry and HCPs is an incentive to ensure companies are implementing best practice compliance and risk management policies and procedures.

Pharmaceutical companies should also use the coming months to prepare for the expected changes to the MA Code. Clayton Utz can advise you on all aspects of compliance including preparation and implementation of new training modules, contract review, compliance program updates and managing risks arising under the Trade Practices Act 1974 (Cth).