Compliance Red Flag for Pharma
Recently, the media have frequently raised questions about the legality and ethics of pharmaceutical companies promoting their products through the involvement of medical/pharmaceutical workers.
In this regard, it is often questioned how certain measures to promote their products, used by pharmaceutical companies, are legal, and how the legislation regulates this issue.
Thus, one of the measures to promote the pharmaceutical companies of their products is to finance the participation of medical/pharmaceutical workers in scientific and educational and other similar events organized by these companies and independent organizers.
The RK legislation does not prohibit such financing.
According to the Law of the Republic of Kazakhstan "on charity" (hereinafter-the "Law on Charity") sponsorship activity is the activity of the sponsor on rendering charitable assistance for the purpose of popularization of the sponsor's name1.
Further, according to the Law on Charity charitable assistance is the property provided by the benefactor at no cost (i) in order to help improve the financial and material situation of the company, which carries out activities in the social sphere (including the provision of medical services), or (ii) in the form of sponsorship assistance2.
Sponsorship assistance
According to the definition given in the Tax code of RK, a sponsorship is a property, provided free of charge for the purpose of distribution of information about the person rendering the given assistance, to individuals in the form of financial support to participate in competitions, exhibitions, examinations and development of creative, scientific, scientific-technical, inventive activity, increase of level of education and sports skill3.
In accordance with the norms of the Civil Code of the Republic of Kazakhstan, monetary funds is also recognized as property.
Consequently, pharmaceutical companies have the right to finance medical/pharmaceutical workers by sponsoring or reimbursing their expenses for participation in scientific, educational and other similar events for scientific-educational development, etc.
Promotion of sponsor's name
According to the Law on Charity promotion of the sponsor's name is the distribution of information in visual and (or) sound forms of the sponsor's own name, its goods, trademarks, works, services in exchange for funding and/or logistical support for the event.
However, the following restrictions, provided by the legislation of the RK should be taken into account:
Firstly, the legislation does not provide the obligations of the person receiving sponsorship, to engage in the promotion of the name of the sponsor.
Secondly, the legislation has a number of prohibitions on promotion and advertising of medicines by medical/pharmaceutical workers. In particular:
(i)\tmedical/pharmaceutical workers shall not allow, on the basis of personal benefit, the promotion and use of methods and means of prevention and treatment;
(ii)\tmedical workers who prescribe medicines are prohibited from participating in advertising of medicines and medical devices;
(iii)\tmedical workers are required to prescribe prescriptions for medicines under an international non-proprietary name, except in cases of individual intolerance of the patient when the use of a trade name is permitted;
(iv)\tprovision or offer of financial compensation or any other incentives of a material or intangible nature to medical/pharmaceutical workers for the purpose of prescribing certain medicines shall be prohibited;
(v)\tthe inducement to prescribe medicines and medical products on prescription forms of an unidentified specimen, including those containing promotional information, as well as pre-printed names of medicines and medical devices shall be prohibited.
Ethical promotion of medicines
Recently the decree of the Minister of Health dated May 8, 2019, № DSM-69 that approves the rules of ethical promotion of medicinal products and medical devices (hereinafter referred to as "the Rules") were issued.
These Rules contain a number of provisions regulating relations arising in connection with financing of participation of medical/pharmaceutical workers in scientific and educational and other similar events by third parties.
In particular, the Rules allow:
provision of targeted financing, grants for training in refresher courses, provided that it does not pursue the prescription of medicines;
providing assistance for participation in scientific and practical conferences, congresses, symposiums, corresponding to the profile of a health-care subject or a member of professional associations.
The Rules stipulate that the support of medical and pharmaceutical workers, allowing them to participate in scientific conferences, congresses, symposiums, should not depend on any obligations in promotion of any medicines or medical products.
Another condition is the obligation of the person providing charitable assistance to sign with medical/pharmaceutical workers an agreement that the secondment expenses do not impose to such workers the obligation to promote medicines and medical products of the person.
The Rules also provide that a person who finances scientific events aimed at improving the professional level of medical and pharmaceutical workers should not prevent the participation in such events of other persons who produce or sell medicines and medical products with a similar mechanism of pharmacological action, or discriminate against individual participants.
Summarizing the above, undoubtedly, the provision of sponsorship assistance by pharmaceutical companies to medical/pharmaceutical workers is one of the effective branding channels to promote the products of pharmaceutical companies (especially new types of medicines that just appear in the market).
In addition, as the legislators did not seek to eliminate such a connection, it is unlikely to be completely removed. The main thing is not to forget that such interaction should benefit all the parties:
a medical/pharmaceutical worker has the opportunity to improve his skills, to familiarize himself with new methods and means of treatment, which in turn, should have a positive impact on the quality of services rendered by them;
those who seek such medical/pharmaceutical workers are more likely to receive more qualified assistance;
the pharmaceutical company, providing sponsorship, not only achieves the promotion of its name, but as an indirect result - the promotion of its products.
In this regard, considering limitations of the legislation of the Republic of Kazakhstan, the proper preparation of a contract for sponsoring medical/pharmaceutical workers to participate in various events (conferences, symposiums, etc.), so that the relationship, arising within the framework of such a contract is in compliance with the existing regulatory framework, is the key in such a relationship.
Information contained in this Client Update is of a general nature and cannot be used as legal advice or recommendation. Please note that Kazakhstan is an emerging economy, and its legislation and legal system are in constant development. Should you have any questions or want to discuss matters addressed in this Client Update, please contact us.
- Paragraph 2 of Article 1 of the Law on Charity
- Paragraph 10 of Article 1 of the Law on Charity
- Subparagraph 15 of paragraph 1 of Article 1 of Tax Code
