Last Updated February 20, 2019

Law and Practice

Authors



Pakharenko & Partners (Kyiv) is one of the largest and most experienced intellectual property law firms in Ukraine, with offices in Kyiv (Ukraine) and London (UK). It also has many international partners all over the world. The firm provides the full scope of IP services required by pharmaceutical industry clients, including patent and trade-mark protection and enforcement, and has well-established expertise in domestic and international technology transactions, licensing, distribution agreements, confidentiality agreements, software licences and advertising. Clients include multinational, national and local corporations, major academic and research institutions, small entrepreneurial companies and engineering organisations, and individual inventors.

In accordance with the Law on Advertising, compliance with the legislation on the protection of consumer rights, particularly the rights of advertising consumers, shall be controlled by the State Service of Ukraine for Food Safety and Consumer Protection and its territorial bodies.

Furthermore, according to the Law on Advertising, the AMCU shall control compliance with the legislation on the protection of economic competition in the field of advertising. Decisions of the Anti-monopoly Committee may be appealed before the commercial court by an individual/entity on which a fine has been imposed for violation of the legislation in the field of advertising.

According to Article 26 of the Law on Advertising, the National Council of Ukraine on Television and Radio Broadcasting shall control within its powers the broadcasting organisations of all forms of ownership.

With regard to criminal (including corruption) offences (eg violation of rules for medicinal preparation advertising by an official of the public/municipal healthcare institution), liability for which is set forth in the Code on Administrative Offences of Ukraine, the National Agency on Corruption Prevention (NACP) and police are entitled to produce protocols (reports) on the administrative offence (containing information on the circumstances of the offence, evidence confirming its commission, etc), but a decision on liability and the penalty to be imposed shall be issued by court.

Also, there are self-regulatory authorities that may be responsible for enforcing the rules on advertising and the rules on inducement, eg, IFPMA and AIPM. In particular, the AIPM sets out some rules on advertising and methods of promotion to the general public. These requirements are prescribed by the AIPM Code of Practice, which is a self-regulatory code, and applicable only to the pharmaceutical companies that are members of AIPM.

First, proceedings may be initiated pursuant to the Law of Ukraine on Consumer Rights Protection of May 12, 1991 No 1023-XII (“Law on Consumer Rights Protection”) based on a request of a consumer (individual) who considers that his or her rights are violated as a result of unfair advertising of medicinal products. Such a request shall be submitted by a consumer to the State Service of Ukraine for Food Safety and Consumer Protection or its territorial bodies.

Second, any individual or legal entity may apply to the AMCU in the event of violation of their rights in result of acts or inactions identified as violations of the legislation on economic competition protection (constituting an act of unfair competition). Thus, according to the Law of Ukraine on Protection against Unfair Competition of 7 June 1996 No 236/96-VR (the “Law on Protection against Unfair Competition”), an act of unfair competition is constituted by a comparative advertisement containing comparison with goods, works, services or activities of another entity. Comparisons in advertising shall not be recognised as unlawful if the provided information on the goods, works and services is confirmed by actual data, reliable, objective and useful for informing consumers. Dissemination of misleading information in advertising also constitutes an act of unfair competition. Misleading information includes inter alia information containing incomplete, inaccurate or false information about a product origin, manufacturer, seller, method of manufacture, source and manner of purchase, sale, quantity, consumer properties, quality, completeness, suitability for application, standards, characteristics, peculiarities of sales of goods, works, services, prices and discounts on them and the essential terms of the contract. Furthermore, this includes incomplete, inaccurate or false information about the financial condition or economic activity of the entity; attributing powers and rights that they do not have or relationships that do not exist; containing references to the volumes of production, purchase, sale or supply of goods, execution of works, provision of services, which did not actually exist on the day of the information dissemination.

Based on the results of consideration of consumer requests, the State Service of Ukraine for Food Safety and Consumer Protection or its territorial bodies have the right to:

  • demand elimination of the revealed violations of the legislative requirements from advertisers, manufacturers and distributors of advertising;
  • demand cessation of actions preventing from realisation of the state control;
  • provide (send) the binding requirements for the elimination of violations to advertisers, manufacturers and distributors of advertising;
  • issue decisions on declaring the advertising as unfair, hidden, declaring the comparison in advertising as unlawful with simultaneous suspension of its distribution; and
  • issue decisions on suspension of distribution of the respective advertising.

Furthermore, according to the Law on Consumer Rights Protection, damages caused to consumers by unfair advertising are subject to reimbursement by the guilty party in full.

In accordance with the provisions of the Law of Ukraine on Protection against Unfair Competition, commission by economic entities of actions determined by this Law as unfair competition, entails imposition of a fine by the AMCU of an amount of up to 5% of the income (proceeds) from the sale of the products (goods, works, services) of the economic entity for the last reporting year preceding the year in which the fine is imposed.

The Fundamentals of the Ukrainian Legislation on Health Care also provide for the responsibility of medical and pharmaceutical workers for violating the procedure of medicinal products advertising during their professional activities (please see 8 Inducement/Anti-bribery). For example, according to Article 44-2 of the Code of Ukraine on Administrative Offences, violation of the restrictions imposed on medical and pharmaceutical workers in the course of their professional activities entails a fine of UAH5,100–20,400 (approximately EUR160–640).

Officials of public or municipal medical institutions may be held liable for violation of the procedure for advertising of medicinal products containing signs of criminal offences, including corruption (please see 8 Inducement/Anti-bribery). For the time being, such cases are examined by general courts in criminal proceedings. In particular, such cases refer to criminal offences stipulated by Articles 364, 364-1, 368, 368-3, 369, namely: abuse of power or office; abuse of authority by an official of a legal entity of private law, irrespective of legal business structure; acceptance of a proposal, promise or obtaining an unlawful benefit by an official; bribery of an official of a legal entity of private law irrespective of business legal structure; and proposal, promise or providing an unlawful benefit to an official. The above-mentioned actions are punishable by a fine of UAH144,000–1,441,500 (approximately EUR4,500–45,000), as well as removal of the right to occupy certain positions or engage in certain activities for a certain period of time, arrest, custodial restraint or imprisonment.

Also, the High Anti-Corruption Court of Ukraine is to be established by March 2019. Cases concerning corruption in Ukraine will be brought directly to this court. The jurisdiction of the court covers crimes that caused damage in the amount exceeding USD31,000.

The two processes of procedures before or measures taken by the self-regulatory authority and the procedures before or measures taken by courts are parallel and separate. There is no relationship between them unless there is a court decision which enforces certain decision made by the self-regulatory authority.

In light of active harmonising the Ukrainian legislation in force with the legislation of EU, public discussion is currently ongoing with regard to a new Ministry of Health bill on advertising, in particular, to regulate the issue of medicinal products advertising among medical workers. The draft provides for a clear definition of professional medical editions, where advertising of drugs unprovided by law is permitted, as well as the development and approval by the Government of separate rules on advertising of medicinal products aimed at healthcare professionals. In addition, it is proposed to strengthen the monitoring and control of the content of advertising by the Ministry of Health of Ukraine and to establish clear penalties for violation of the Law on Advertising. It should be noted that for the time being, the Ministry of Health is as for now not among the authorities controlling the advertising of medicines/medicinal products in Ukraine.

       Two recent cases that also illustrate trends in relation to pharmaceutical advertising in Ukraine are the following:

  • The Kyiv Regional Department of the AMCU issued a decision on declaring the actions of the plaintiff (pharmaceutical company) regarding placement on the website of the advertising information about the dietary supplement “Cocoa Butter” as having therapeutic properties, without indicating that this product is not a medicinal product, to constitute violation of the legislation on protection of economic competition in the form of disseminating misleading information by providing false information to general public by an economic entity with regard to consumer properties of the goods. The Plaintiff was fined for this violation. According to the conclusions of the State Sanitary and Epidemiological Examination, “Cocoa butter” is a product of the food industry and its scope of use is in catering and nutrition. The court decided that the information on the therapeutic properties of the product placed on the website without indicating that the product was not a medicinal product, could contribute to creating the impression that the product is a medicinal product and is able to treat bronchitis, acute respiratory infections, influenza and cholecystitis, which, in turn, may mislead consumers as to the consumer’s properties of the product and, at the same time, is a factor in stimulating sale of the product as a medicinal product, which is not true to fact. In view of this, the court decided to dismiss the claim (Decision of the Kyiv Commercial Court dated 2 October 2017 in the case No 910/13758/17); and
  • The Plaintiff – a chain of pharmacies – filed a claim for the invalidation of the defendant’s decision (Kyiv Regional Department) of the AMCU decision on violation of the legislation on Protection from Unfair Competition and imposing a fine. The decision obliged to stop the violation by bringing the exterior design of the defendant’s pharmacy in compliance with the provisions of the current legislation. Such a decision was made in connection with commission of the violation in the form of disseminating misleading information by providing incomplete or false information to the general public by an economic entity with regard to peculiarities of sale of the goods, price and discounts on them, which may affect intentions of these individuals regarding purchase of the goods of this entity. In particular, there were signboards with the inscription “THE LOWEST PRICES”, “-5%” and “-7%.” The previous court instances concluded that there were no legal grounds for declaring the AMCU decision invalid. The Supreme Court of Ukraine ruled that the cassation appeal shall be dismissed (Ruling of the Supreme Court of Ukraine dated 6 November 2018 in the case No 910/18025/17).
Pakharenko & Partners

72 Velyka Vasylkivska Str.
Entrance 1, 7th Floor.
Business Centre “Olimpiysky”
Kiev 03150 Ukraine

+380 44 593 96 93

+380 44 451 40 48

pakharenko@pakharenko.com.ua pakharenko.ua/
Author Business Card

Authors



Pakharenko & Partners (Kyiv) is one of the largest and most experienced intellectual property law firms in Ukraine, with offices in Kyiv (Ukraine) and London (UK). It also has many international partners all over the world. The firm provides the full scope of IP services required by pharmaceutical industry clients, including patent and trade-mark protection and enforcement, and has well-established expertise in domestic and international technology transactions, licensing, distribution agreements, confidentiality agreements, software licences and advertising. Clients include multinational, national and local corporations, major academic and research institutions, small entrepreneurial companies and engineering organisations, and individual inventors.

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.