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.

General anti-bribery rules that apply to the interactions between pharmaceutical companies and healthcare professionals or organisations are provided in the Penal Code (Act No 45 of 24 April 1907, as amended). In addition, pharmaceutical companies are expected to comply with the National Public Service Ethics Code (the 'Ethics Code'). Further, the Unfair Competition Prevention Act (Act No 47 of 19 May 1993, as amended) (UCPA) provides rules regarding bribery to foreign officials. These regulations apply only to benefits provided to recipients who are individuals (eg, public officers).

Penal Code

Article 198 of the Penal Code is the basic anti-bribery regulation that directly applies to officers or employees of pharmaceutical companies. Article 198 provides that any person who gives, offers or promises to give a bribe to a public official shall be punished by imprisonment with labour for not more than three years or a fine of not more than JPY2.5 million.

Bribery under the Penal Code is broadly defined. It covers not only money or goods but also any benefit (material or immaterial) sufficient to satisfy a person’s desires. “Public Official” is also broadly defined. The term includes not only national or local government officials but also individuals deemed government officials under special laws.

National Public Service Ethics Code

The Ethics Code is a code established by the Cabinet based on the National Public Service Act for the purpose of maintaining the integrity of, and citizens’ trust in, public service. The Ethics Code prohibits national public officials from receiving money or goods from interested parties. In some situations, pharmaceutical companies can be considered such 'interested parties'. The Ethics Code provides for some exemptions, including, among others:

  • accepting gifts that are distributed widely to the public as promotional goods or as souvenirs; and
  • accepting souvenirs at a large dinner party. Pharmaceutical companies are expected not to participate in conduct that violates the Ethics Code in order to prevent illegal acts by national public officers.

Unfair Competition Prevention Act

Article 18 (1) of the UCPA prohibits any person from giving, offering or promising to give any benefit to a foreign public official to have that foreign public official act or refrain from acting in relation to the performance of his or her official duties, in order to make any illicit gains in business with regard to an international commercial transaction. An employee of a pharmaceutical company who violated Article 18 would face imprisonment with labour for up to five years and/or a fine of up to JPY5 million. Further, the pharmaceutical company itself may also be subject to a fine of up to JPY300 million.

The UPMRA and the Fair Competition Code concerning Restriction on Premium Offers in the Ethical Pharmaceutical Drugs Marketing Industry (the Fair Competition Code) regulate offering benefits or other inducements to prescribe to healthcare professionals or organisations. The JPMA Promotion Code contains similar rules. These regulations apply to benefits provided both to individuals and organisations.

UPMRA

Article 4 of the UPMRA allows the Prime Minister to restrict the offering of premiums in various ways, including through a prohibition. Under Article 6 (2) of the UPMRA, the Cabinet issued a public notice: 'Restrictions on the Offering of Premiums in the Ethical Pharmaceutical Drugs, Medical Devices and Sanitation Inspection Industries'. The notice prohibits pharmaceutical companies from offering articles, services or other premiums to healthcare institutions as a means of inducing unjust transactions beyond what is commercially reasonable for the usage or sanitary inspection of ethical pharmaceutical drugs.

Fair Competition Code

'Fair competition codes' are self-regulatory codes set up by the business associations of specific industries based on the UPMRA restrictions on the provision of premiums. Generally, fair competition codes will include UPMRA rules as well as supplemental rules not provided under the UPMRA depending on the nature of the products and transactions in the relevant industry. The pharmaceutical industry established the Fair Competition Code, which pharmaceutical companies are currently complying with.

The Fair Competition Code provides that pharmaceutical companies shall not offer premiums to healthcare professionals or institutions as a means of unjustifiably inducing drug transactions. If, however, based on standard commercial practices the offers of economic benefits are considered to be discounts, after-sale services or benefits in connection with the drugs, they are no longer categorised as offers of premiums. In addition, even if money, goods or economic benefits are considered premiums, there are some cases in which offering premiums is permitted (several examples are listed). In addition, if premiums are 'small sum offerings', offering them will not violate the Fair Competition Code.

The JPMA Promotion Code

The JPMA Promotion Code has several provisions regarding offering benefits to healthcare professionals or institutions. It regulates, among other issues:

  • the total amount of sample drugs that can be supplied;
  • food, drinks, and gifts that can accompany lectures;
  • gift-giving; and
  • provisions of cash or its equivalent that may negatively affect the proper use of drugs.
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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