Contributed By Jones Day
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.
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:
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