Last Updated June 11, 2019

Law and Practice

Contributed By Jones Day

Authors



Jones Day assists with all facets of clients' marketing, promotion, and advertising efforts by devising marketing strategies, developing packaging and labelling, obtaining internal and governmental approvals and implementing compliant advertising campaigns, including print, radio and television advertising, website development and social media platforms. The firm's Life Sciences team helps clients to preserve their advertising position and challenge infringing competitors. Its lawyers provide assistance with pharmaceutical, medical device and biological regulations, including counselling and representation on diverse issues such as product development, product clearance and approval, clinical trials, biosafety, licensing agreements, facility and establishment registration, product listing, government inspections, product and ingredient notifications, recalls, corrective actions, regulatory and due diligence projects, and audits and compliance with good manufacturing practices and the quality systems regulation. The team has successfully defended clients against FDA enforcement actions including warning letters, seizures, product recalls, inspections, civil monetary penalties, adverse agency determinations, consent decrees and corporate integrity agreements. The views and opinions set forth herein are the personal views or opinions of the author; they do not necessarily reflect views or opinions of the law firm with which [he or she] is associated.

Each Japanese law has one or more government agencies that are responsible for enforcement (ie, the regulatory authority). With regard to the PMD Act, as well as the Standards, the MHLW and the competent prefectural governor are the regulatory authorities. In the case of the UPMRA, the Prime Minister, the Consumer Affairs Agency, the Japan Fair Trade Commission and the competent prefectural governor are the regulatory authorities.

The main role of courts in administrative law enforcement (including for the PMD Act) is to impose criminal penalties on companies and their employees that violate the law. In the case of a serious violation, the regulatory authority will ask the Public Prosecutor’s Office to prosecute the company or its employee, and the Public Prosecutor’s Office will file charges against the company. The court will then render a final judgement.

With regard to the enforcement of self-regulatory codes, the codes usually establish an organ that is in charge of enforcing the code. In the case of the JPMA Promotion Code, the JPMA Code Compliance Committee is responsible for enforcement. As for the Fair Competition Code, the Fair Trade Council of the Ethical Pharmaceutical Drug Marketing Industry (the 'Fair Trade Council'), which consists of the pharmaceutical companies designated by the code, is responsible for the code’s enforcement.

In Japan, pharmaceutical companies may initiate civil litigation proceedings against their competitors before courts for certain types of advertising infringements based on the UCPA.

Under the UCPA, a company whose business interests have been infringed or are likely to be infringed by a competitor’s

  • dissemination of information or advertising likely to mislead the public as to the quality, content or manufacturing method of its goods or services (UCPA Article 2 (1) (xiv)); or
  • announcement or dissemination of a falsehood injurious to its business reputation (UCPA Article 2 (1) (xv)) may seek an injunction against the competitor suspending or preventing the infringement (UCPA Article 3 (1)).

The company may also claim damages to its business interests resulting from intentional or negligent infringement related to the above conduct.

For example, a pharmaceutical company may file a lawsuit in Japanese court seeking an injunction and/or compensation of damages against a competitor if the competitor creates an advertisement containing falsehoods or slander regarding the pharmaceutical company’s products.

Penalties or Measures Imposed by Regulators

In practice, Japanese regulatory authorities, such as the MHLW or the Prime Minister, will be likely to issue an administrative guidance against a pharmaceutical company to remedy the illegal conduct – if the company does not follow such guidance, the authority will issue an administrative disposition.

For example, under the PMD Act the MHLW or the competent prefectural governor may take the following administrative dispositions, among others:

  • conduct an on-site investigation (Article 69);
  • order a pharmaceutical company that violated the PMD Act to comply with a 'business improvement order' (eg, an order to improve internal review systems for advertisements) (Articles 72-4);
  • order a pharmaceutical company that advertised a pharmaceutical product before obtaining the necessary marketing authorisation (prohibited under Article 68) to take certain measures to prevent any such violation in the future (Article 72-5); and
  • withdraw a pharmaceutical company’s manufacturing and/or marketing licence or suspend all or part of its business for a certain period, as determined by the MHLW, for a company that violated the PMD Act (Article 75).

A company that has had its manufacturing and/or marketing licence withdrawn has the right to appeal such a disposition above under the Administrative Appeal Act (Act No 160 of 15 September 1962, as amended).

The JPMA Code Compliance Committee may take actions against pharmaceutical companies that violate the JPMA Promotion Code to address the companies’ violations in accordance with the ,Rules of Actions against the Breach of the Promotion Code'. Actions the aforementioned committee may take include, among others, serious warning, suspension of membership or expulsion from the JPMA.

The Fair Trade Council may order companies violating the Fair Competition Code to take certain measures. If the violator does not comply with such an order, the council may impose a penalty, including a fine of up to JPY1 million or expulsion from the council. The council may also request the Consumer Affairs Agency to take necessary actions.

Penalties Imposed by Courts

Courts may impose criminal penalties on pharmaceutical companies and/or on their officers and employees who violate the relevant laws. The major criminal sanctions for the violation of pharmaceutical advertising rules and rules on inducements to prescribe are as follows:

  • false or exaggerated advertising and advertising for an unauthorised drug: imprisonment with labour for not more than two years and/or a fine of up to JPY2 million (PMD Act Article 85);
  • advertising to the general public pharmaceutical products intended for use in the cure of cancer, sarcoma or leukaemia: imprisonment with labour for not more than one year and/or a fine of up to JPY1 million (PMD Act Article 86);
  • violation of a cease-and-desist order from the Secretary General of the Consumer Affairs Agency: imprisonment with labour for not more than two years or a fine of up to JPY3 million (UPMRA Article 36);
  • bribery of a public official: imprisonment with labour for not more than three years or a fine of up to JPY2.5 million (Penal Code Article 198); and
  • bribery of a foreign public official: imprisonment with labour for not more than five years and/or a fine of up to JPY5 million (UCPA Article 21 (2) (vii)).

While only individuals are subject to criminal sanctions under the Penal Code, both individuals and companies may be subject to criminal sanctions under the PMD Act, the UPMRA and the UCPA (PMD Act Article 90 (ii), UPMRA Article 38 (1) and UCPA Article 22 (1) (iii)).

The procedures before and measures taken by the self-regulatory authority and the courts are conducted separately and independently.

The MHLW is strengthening its enforcement activities in relation to pharmaceutical advertising. In 2016, it began monitoring advertising in order to identify violations early and encourage voluntary measures on behalf of the pharmaceutical companies and trade associations. This endeavour included an anonymous healthcare institution appointed by the MHLW to identify problematic items in advertisements and promotional information provided by the pharmaceutical companies, including on their websites or in specialist journals. As a result of the monitoring activities, the MHLW found 52 cases, including 67 problematic items in 2017. Partly in response to these issues, the MHLW issued the Detailing Guidelines in 2018.

Jones Day

Kamiyacho Prime Place
1-17, Toranomon 4-chome
Minato-ku
Tokyo 105-0001
Japan

+81 334333939

+81 354012725

www.jonesday.com/tokyo/

Authors



Jones Day assists with all facets of clients' marketing, promotion, and advertising efforts by devising marketing strategies, developing packaging and labelling, obtaining internal and governmental approvals and implementing compliant advertising campaigns, including print, radio and television advertising, website development and social media platforms. The firm's Life Sciences team helps clients to preserve their advertising position and challenge infringing competitors. Its lawyers provide assistance with pharmaceutical, medical device and biological regulations, including counselling and representation on diverse issues such as product development, product clearance and approval, clinical trials, biosafety, licensing agreements, facility and establishment registration, product listing, government inspections, product and ingredient notifications, recalls, corrective actions, regulatory and due diligence projects, and audits and compliance with good manufacturing practices and the quality systems regulation. The team has successfully defended clients against FDA enforcement actions including warning letters, seizures, product recalls, inspections, civil monetary penalties, adverse agency determinations, consent decrees and corporate integrity agreements. The views and opinions set forth herein are the personal views or opinions of the author; they do not necessarily reflect views or opinions of the law firm with which [he or she] is associated.

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