Insights

Austria: Schönherr Rechtsanwälte, Tuchlauben 17, P.O. Box 41, A-1014 Vienna;

Belgium: White & Case LL.P. incorporating Forrester & Sutton, 62, rue de la Loi, B-1040 Brussels;

Denmark: Jonas Bruun, Bredgade 38, DK-1260 Copenhagen K;

Finland: Castrén & Snellman, Attorneys at Law, Erottajankatu 5A, FIN-00130 Helsinki;

France: Alain Bensoussan, Avocats, 194 bis, rue garibaldi, F-69428 LYON cedex 03;

Germany: Ehlers, Ehlers & Partner, Rechtsanwaltssocietät, Widenmayerstrasse 29, D-80538 Munich;

Greece: M. & P. Bernitsas Law Offices, 5, Lykavittou Street, GR-106 72 Athens;

Hungary: S.B.G.&K. PATENT AND LAW OFFICES, Andrássy ÚT 113, H-1062 Budapest, Mailing address: P.O. Box 360, H-1369

Italy: Avvocati Associati Franzosi Dal Negro Pensato Setti, Via Brera 5, I-20121 Milan;

Netherlands: Stibbe, Strawinskylaan 2001, NL-1077 ZZ Amsterdam;

Norway: Advokatfirmaet Haavind Vislie DA, Raadhusgaten 27, P.O. Box 359, N-0101 Oslo;

Portugal: Carlos de Sousa e Brito & Associados Advogados, Rua Castilho, ◦712◦ Dto., P-1250-068 Lisbon;

Spain: Jausàs, Nadal & Vidal de Llobatera, Advocats, Avda. Diagonal, 407 bis, E-08008 Barcelona;

Sweden: RydinCarlsten, Advokatbyra AB, Norrmalmstorg 1, P.O. Box 1766, SE-11187 Stockholm;

Switzerland: Bratschi Emch & Partner, Advokaturbureau, Bollwerk 15, P.O. Box 5576, CH-3001 Bern;

What law should be used to judge advertising of pharmaceutical products? Switzerland has many different regulations which offer the means to control such advertising. Although they all contain roughly the same requirements, they have been promulgated at different levels in the Swiss legislative hierarchy, and their scope varies.

Cantonal level: Control of pharmaceuticals is among the cantons’ responsibilities. To perform this task, the cantons have enacted an Inter-cantonal Agreement on the Control of Pharmaceuticals, which establishes the Inter-cantonal Office for the Control of Medicines (IOCM) as its executive body. Among the IOCM’s assignments as regulatory authority is verifying whether advertising directed at professionals or the public complies with the applicable regulations. In order to carry out this task more efficiently, the IOCM has promulgated Directives on the Advertising of Medicines dated 23 November 1995. However, these Directives do not take effect automatically, but must be implemented by the cantons, which have to adapt their regulations to those directives.

National level: Advertising of pharmaceutical products falls within the scope of application of the Unfair Competition Act, a federal law which aims to protect free and fair competition in all the interest of all parties.

Industry: Finally, a private umbrella association of the chemical-pharmaceutical industry, the Swiss Society of Chemical Industries (SSCI), also controls the advertising of pharmaceuticals on the basis of the "Code for the Promotion and Advertising of Pharmaceutical Products for Human Use to Healthcare Professionals". The SSCI controls professional advertising by firms which have pledged to respect the Code by signing an individual declaration. Most pharmaceutical companies in Switzerland have given such an undertaking. The SSCI has charged a special body, headed by a physician, to work with companies on correcting promotional materials which have given rise to objections. When this procedure does not lead to agreement on an advertisement which complies with the Code,, the case is transmitted to the national admission authority, the IOCM.

Thus there are regulations on the advertisement of pharmaceuticals at sectoral, cantonal and national level. They all contain more or less the same material provisions, with some adaptations to the particularities of the pharmaceutical specialties, and meet the general requirements on free and fair. From this point of view, which regulation is used to evaluate advertising of pharmaceuticals apparently does not matter. However, there are differences between the importance of the regulations which derive from their binding character and the hierarchy of laws. Following the rule that federal law overrides cantonal law, and the fact that industry regulation by the umbrella association constitutes merely a contract between the parties, the Federal Unfair Competition Act must finally be considered as the authoritative law for examining advertising of pharmaceutical products, which can always be invoked.

Nevertheless, this state of affairs is unsatisfactory and unacceptable, since as a result an advertisement which raises objections will be examined by persons with different levels of qualifications according to the regulation applied. At the IOCM and the SSCI these examinations are carried out by specialists (doctors and pharmacists), whereas assessments under the Unfair Competition Act are made by civil judges who lack specific knowledge of pharmaceutical products. Since the IOCM does not have the power to decree and cannot lay down provisional measures, civil judges will have to deal with all cases in which a competitor sues a company and requests interim measures banning an advertisement which it considers inadmissible. The judge will then have to decide at short notice, in a summary proceeding and without even hearing the defendant, whether the advertisement gives the impression of being unfair or deceptive. As the judges are not qualified to answer the technical questions involved, they will be more inclined to grant such requests than to allow a potentially deceptive advertisement to remain in circulation. Since plaintiff companies are aware of this, they can obtain a simple and effective competitive advantage by having competitors’ advertisements banned under interim measures.

Thus, although such bans are only temporary, a company can effectively block a competitor’s advertising measures by the (lawful) exploitation of the legal hierarchy. This leads to the paradoxical situation that although specialist authorities to assess the advertisement of pharmaceuticals exist in Switzerland, they can be simply and lawfully avoided by requesting urgent action to decide on the provisional banning of an allegedly inadmissible advertisement.

Although France’s institutions and professional organisations do not intend to curb the development of the electronic health record, vigilance is nevertheless the rule and the computerisation of the health record is controlled. cb

Until recently, strikes by Gesetzliche Krankenversicherung (GKV) or Social Health Insurance (SHI) groups (which will from this point forward be referred to as SHI) accredited physicians groups, (mainly in former East Germany, and Berlin), have been infrequent - after all, strikes by SHI-accredited physicians are illegal. So, what has caused members of the SHI-accredited physicians group to strike? What has led to their growing annoyance and anger There are two reasons: firstly, their fees, and secondly, their ongoing fear of the collective liability which is the penalty for prescribing beyond the pre-set budget limits. This article, however, does not discuss the problem of fees, but only the issue of collective liability.

The Einheitlicher Bewertungsmasstab (EBM) or the Doctor’s Fee Scales (which will be referred to as EBM) seriously miscalculated the number of prescriptions which members of SHI-accredited physicians’ groups would be writing on behalf of their patients. The EBM set up a point system for various medical procedures, based on a permitted expense for various prescriptions of 10 pfennigs (DEM 0.10) for each point. Because physicians have exceeded the limit laid down for prescriptions in various parts of former East Germany, the points have now been devalued to 3 pfennigs (DEM 0.03) per point. This has resulted in a 70% reduction in the permitted budget laid down for prescriptions.

The collective liability system was put in place by the new government as a deterrent to over-prescribing of various medicaments. It penalised all SHI-accredited physicians by setting prescription limits for the group as a whole rather than for individual physicians. If the group exceeded these pre-set limits, it became collectively liable to pay the government health insurance agencies a fee representing a percentage of the amount which those agencies had refunded to patients for these prescriptions. Fear of this collective liability system led to the frustrations which have ended in strikes by various SHI-accredited physician groups.

In 1996, a reorganisation (Neuordnungsgesetze) of the system was proposed, including the introduction of what may be described as "prescription parameter checks". This proposal focuses on individual physicians and their patients rather than on all SHI-accredited physicians’ groups and budget limits, by allowing a certain amount for each patient in each financial quarter. This means that if a physician needs to write a prescription which exceeds the pre-set amount, he will have to explain why to the governmental health insurance agency. If his action is found to be justified, there will be no further action. However, if it is found to be unjustified, the physician concerned will be liable for part of the sum which the health-care agency has refunded to the patient.

It should be noted that even under the old budgeting system no physician or group of physicians in Germany actually paid anything for prescribing over the budget limits. This was because the constitutionality of the law itself was in doubt during legislative proceedings in 1992, and the Ministry was therefore unable or unwilling to enforce it.

The Arzneimittelbudget-Ablösungsgesetz-ABAG has put together draft legislation to replace the budget limit system with the system outlined above. At present the ABAG draft is being discussed by the Bundesrat (the German Council of State). Major proposed changes to the law include: the retroactive revocation of collective liability. The Kassenärztliche Vereinigung (Regional Association of SHI-Accredited Physicians) will have increased responsibility for managing liability, which will be taken out of the hands of government and given to the regional SHI-Accredited Physicians’ groups, leading to a greater degree of self-administration.

What contractual regulations will be agreed remains to be seen. cb

Further to the adoption on 18 June 1999 of the Spanish Royal Decree regulating the "System of Reference Prices regarding the Financing of Medicines with Social Security Funds or Public Funds Affected by the Health System", Spain’s health authorities decided early last June to reduce the price of certain active principles included in the reference price system by 15%.

This selective individual reduction, which should be viewed as an additional measure adopted with the aim of containing pharmaceutical expenses, and affects specialities whose prices are 15% higher than the average of the three cheapest medicines of the relevant therapeutic group, was extremely unpopular with in the pharmaceutical industry. This is quite understandable, since the measures were adopted unilaterally during negotiations concerning the general agreement on pharmaceutical expenses (the "Pacto") between the industry and the health authorities, only a few months after the implementation of the reference price system itself. As often happens with decisions involving pricing in Spain, the measure may have an impact on parallel trade, which could be aggravated by the fact that the medicines in question do not face generic competition in certain Member States.

The individual pricing reduction should have entered into force on June 14, 2001. However, probably owing to the rapid reaction by the industry, the Health Authorities decided to revoke the measure and adopt a new decision which will have the reduction coincide with the date when the price of pharmaceutical specialities must be shown on their packaging in both pesetas and euros.. This at least means that the producers affected will not have to re-label their product packaging twice within a very short period of time.

However, it appears that the individual reduction in prices of certain specialities is very likely to go ahead. We presume that any such ecision – which would be very difficult to justify on legal grounds- will not go unchallenged. cb

In the previous issue of Insights we analysed the Advocate General’s opinion in a referral to the European Court of Justice by the Danish Supreme Court concerning the application of Directive 85/374/EEC on liability for defective products(1). The action arose when a kidney intended for transplantation was irreparably damaged because the perfusion liquid used to prepare it for the transplant operation crystallised. The perfusion liquid had been manufactured in a public hospital administered by the District of Aarhus, and the intended recipient of the kidney transplant claimed damages from the District of Aarhus under the Danish law implementing the Product Liability Directive. The District of Aarhus claimed it was exempt from liability because the product had not been manufactured for an economic purpose or put into circulation as required by the Directive. The Danish Court sought advice on the interpretation of the Directive in such cases (who should be regarded as the victim, and whether damage to an organ intended for transplantation constitutes personal injury or damage to property). First and foremost, however, it asked whether the Directive was applicable at all in the circumstances of the case, since the perfusion liquid was not manufactured for economic purposes (health care is free in Denmark) and was not intended to be put into general circulation.

As stated in our earlier article, although the Advocate General concluded that the Directive was not applicable since it only applied to "industrially produced movable goods" he nevertheless provided answers to the Danish Court’s questions in case the Court of Justice should disagree with his finding"(2). He deduced from the facts presented that the solution used for the kidney was a "unique preparation, prepared each time it is to be used for a transplant" and thus was not an "industrially produced product". He also agreed with the District of Aarhus’s claim that the perfusion fluid was not manufactured for an economic purpose, and had not been put into commercial circulation

Although the Court of Justice is not bound to concur with the Advocate General’s opinion, in practice it often does so. The judgment issued by the Court of Justice on May 10 is one of the exceptions to this rule, since the Court of Justice concluded, contrary to the opinion of the AG, that the Directive does apply to the present case. Its reasons for doing so are interesting.

The Court of Justice agreed that the Product Liability Directive does not define the notion of "putting into circulation". However, in the Court’s view the Directive’s aim and purpose clearly indicate that the exemption under Article 7(a) where a producer proves that "he did not put the product into circulation" is "intended primarily to cover cases in which a person other than the producer has caused the product to leave the process of manufacture"(3). In this case, however the product had been "used during the provision of a specific medical service"(4), which, the Court held, constituted "putting into circulation" in terms of the Directive.

The District of Aarhus’s argument that the perfusion fluid had not been manufactured for an economic purpose relied on the fact that the costs of medical care in Denmark come from public funds. The Danish Government, supported by Ireland, which has a similar system, claimed that making public hospitals liable for defective products "would have harmful consequences for the entire structure of [public] health schemes"(5), and place them at a disadvantage compared with private schemes. The Court thought otherwise:

"...the fact that products are manufactured for a specific medical service for which the patient does not pay directly but which is financed from public funds maintained out of taxpayers’ contributions cannot detract from the economic and business character of that manufacture. The activity in question is not a charitable one which could therefore be covered by the exemption from liability provided for in Article 7(c) of the Directive."(6)

Thus, even though Danish patients did not pay directly for medical treatment, they paid for it indirectly through their taxes. Medical services in Denmark therefore had an "economic and business purpose"(7) which brought them within the scope of the Directive.

Having decided that the Directive was applicable, the Court of Justice dealt with the Danish court’s request for guidance on the meaning of the word "damage" as used in Article 9 of the Directive. The Court pointed out that although the Directive did not give an explicit definition, it clearly stated that "damage must cover both damage resulting from death or from personal injuries and damage to, or destruction of, an item of property"(8). National laws could not make this provision less effective by restricting the types of damage to be made good. The Danish Court then asked whether in this case the damage to the kidney was to be viewed as damage resulting from personal injury or damage to an item of property. The Court of Justice carefully replied that the national court must decide this, although it could not "decline to award any damages at all"(9) because although the other conditions for liability under the Directive were fulfilled, the damag concerned neither physical image nor damage to property. In other words, the unfortunate patient was not to be denied compensation simply because the defective perfusion fluid had prevented the kidney from ever becoming part of his body, or on the ground that as a human organ, the damaged kidney was not an "item of property" under the terms of Article 9 of the Directive. The Court also stressed that although it was for national legislatures to determine what constituted "damage resulting from death or from personal injuries and damage to or destruction of, an item of property" in terms of Article 9 of the Directive, nevertheless:

"...save for non-material damage whose reparation is governed solely by national law, full and proper compensation for persons injured by a defective product must be available in the case of those two heads of damage. Application of national rules may not impair the effectiveness of the Directive ... A Member States cannot therefore restrict the types of material damage, resulting from death or personal injury, or from damage to or destruction of an item of property, which are to be made good."(10)

The implications of this judgment for State-run health care services are clear; they cannot escape liability just because they offer free treatment. The ruling is also important for the pharmaceutical industry – and, indeed, industry in general - since it clarifies what is meant by "putting a product into circulation", and when a manufacturer is to be deemed responsible for doing so. It could be used to support a wide variety of claims, such as cases where patients are contaminated by transfusions of infected blood. The Court of Justice was evidently anxious to ensure that consumers enjoy maximum protection in such a sensitive area as health.

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