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The International Comparative Legal Guide to:<br />

Pharmaceutical Advertising 2012<br />

9th Edition<br />

A practical cross-border insight into pharmaceutical advertising<br />

Published by Global Legal Group, with contributions from:<br />

Adams & Adams<br />

Advokatfirmaet Grette DA<br />

Allen & Overy LLP<br />

Arnold & Porter (UK) LLP<br />

Arthur Cox<br />

Arzinger<br />

Avbreht, Zajc & Partners Ltd.<br />

Biolato Longo Ridola & Mori<br />

Clayton Utz<br />

Clifford Chance<br />

CMS<br />

Davis LLP<br />

Faus & Moliner<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Ganado & Associates<br />

Herbst Kinsky Rechtsanwälte GmbH<br />

Hwang Mok Park P.C.<br />

Jusmedico Advokatanpartsselskab<br />

Licks Advogados<br />

Life Sciences Legal Advocaten<br />

Mannheimer Swartling Advokatbyrå<br />

Nishimura & Asahi<br />

Olivares & Cia., S.C.<br />

PDG Avocats<br />

Roschier, Attorneys Ltd.<br />

Schellenberg Wittmer<br />

Sidley Austin LLP<br />

Sołtysiński Kawecki & Szlęzak<br />

Tilleke & Gibbins<br />

Vieira de Almeida & Associados<br />

YükselKarkınKüçük Attorney Partnership


The International Comparative Legal Guide to: Pharmaceutical Advertising 2012<br />

Preface:<br />

Preface by Tom Spencer, Counsel, GlaxoSmithKline Plc.<br />

Contributing Editor<br />

Ian Dodds-Smith,<br />

Arnold & Porter (UK) LLP<br />

Account Managers<br />

Dror Levy, Maria Lopez,<br />

Florjan Osmani,<br />

Oliver Smith, Rory Smith,<br />

Toni Wyatt<br />

Sub Editor<br />

Fiona Canning<br />

Editor<br />

Suzie Kidd<br />

Senior Editor<br />

Penny Smale<br />

Managing Editor<br />

Alan Falach<br />

Group Publisher<br />

Richard Firth<br />

Published by<br />

Global Legal Group Ltd.<br />

59 Tanner Street<br />

London SE1 3PL, UK<br />

Tel: +44 20 7367 0720<br />

Fax: +44 20 7407 5255<br />

Email: info@glgroup.co.uk<br />

URL: www.glgroup.co.uk<br />

GLG Cover Design<br />

F&F Studio Design<br />

GLG Cover Image Source<br />

Stockxchng<br />

Printed by<br />

Information Press<br />

June 2012<br />

Copyright © 2012<br />

Global Legal Group Ltd.<br />

All rights reserved<br />

No photocopying<br />

ISBN 978-1-908070-30-2<br />

ISSN 1743-3363<br />

Strategic Partners<br />

General Chapters:<br />

1 The European Commission’s Proposal on Providing Information to the General Public on<br />

Prescription-Only Medicinal Products - Jackie Mulryne & Silvia Valverde,<br />

Arnold & Porter (UK) LLP 1<br />

2 Pharmaceutical Promotion and the UK Bribery Act - Alison Dennis & Tony Lewis,<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP 8<br />

Country Question and Answer Chapters:<br />

3 Australia Clayton Utz: Colin Loveday & Greg Williams 13<br />

4 Austria Herbst Kinsky Rechtsanwälte GmbH: Dr Sonja Hebenstreit &<br />

Dr Isabel Funk-Leisch 23<br />

5 Belgium Allen & Overy LLP: Geert Glas & Dieter Delarue 34<br />

6 Brazil Licks Advogados: Otto Licks 44<br />

7 Bulgaria CMS Cameron McKenna: David Butts & Angelika Dimitrova 51<br />

8 Canada Davis LLP: Bill Hearn & Samuel Schwartz 61<br />

9 Czech Republic CMS Cameron McKenna: Denisa Assefová & Vladěna Kuřecová 74<br />

10 Denmark Jusmedico Advokatanpartsselskab: Jan Bjerrum Bach & Lone Hertz 82<br />

11 England & Wales Arnold & Porter (UK) LLP: Silvia Valverde & Ewan Townsend 95<br />

12 Finland Roschier, Attorneys Ltd.: Mikael Segercrantz & Johanna Lilja 108<br />

13 France PDG Avocats: Paule Drouault-Gardrat & Juliette Peterka 118<br />

14 Germany Clifford Chance: Dr Peter Dieners & Marc Oeben 125<br />

15 Hungary CMS Cameron McKenna: Dóra Petrányi & Veronika Bednár 137<br />

16 Ireland Arthur Cox: Declan Hayes & Colin Kavanagh 146<br />

17 Italy Biolato Longo Ridola & Mori: Linda Longo & Andrea Moretti 155<br />

18 Japan Nishimura & Asahi: Somuku Iimura & Yoko Kasai 166<br />

19 Korea Hwang Mok Park P.C.: Kun Su Mok & Hye Yeon Lim 175<br />

20 Malta Ganado & Associates, Advocates: Dr. Anthony Cremona & Thomas Cutts-Watson 183<br />

21 Mexico Olivares & Cia., S.C.: Alejandro Luna & Juan Luis Serrano 195<br />

22 Netherlands Life Sciences Legal Advocaten: Anke E. Heezius 204<br />

23 Norway Advokatfirmaet Grette DA: Felix Reimers & Erik Helstad 212<br />

24 Poland Sołtysiński Kawecki & Szlęzak: Dr. Ewa Skrzydło-Tefelska &<br />

Agnieszka Jurcewicz 222<br />

25 Portugal Vieira de Almeida & Associados: Paulo Pinheiro & Francisca Paulouro 229<br />

26 Romania CMS Cameron McKenna: Valentina Parvu & Ioana Oprea-Barac 238<br />

27 Russia CMS, Russia: Vsevolod Tyupa 247<br />

28 Slovenia Avbreht, Zajc & Partners Ltd.: Andrej Kirm 254<br />

29 South Africa Adams & Adams: Alexis Apostolidis & Pieter Visagie 263<br />

30 Spain Faus & Moliner: Jordi Faus & Rodrigo Osorio 271<br />

31 Sweden Mannheimer Swartling Advokatbyrå: Helén Waxberg & Fredrik Lundegårdh 281<br />

32 Switzerland Schellenberg Wittmer: Andrea Mondini & Christine Beusch-Liggenstorfer 290<br />

33 Turkey YükselKarkınKüçük Attorney Partnership: Gökhan Gökçe & İrem Cansu Atikcan 301<br />

34 Ukraine Arzinger: Timur Bondaryev & Svitlana Postrygan 310<br />

35 USA Sidley Austin LLP: Coleen Klasmeier & Maura Norden 320<br />

36 Vietnam Tilleke & Gibbins: Tu Ngoc Trinh & Dzung Thi Thuy Nguyen 339<br />

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720<br />

Disclaimer<br />

This publication is for general information purposes only. It does not purport to provide comprehensive <strong>full</strong> legal or other advice.<br />

Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.<br />

This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional<br />

when dealing with specific situations.<br />

www.ICLG.co.uk


Chapter 2<br />

Pharmaceutical<br />

Promotion and the<br />

UK Bribery Act<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Alison Dennis<br />

Tony Lewis<br />

8<br />

The Bribery Act came into force on 1 July 2011. Together with<br />

explanatory guidance published by the Ministry of Justice in March<br />

2011, the new law replaced the outdated UK anti-bribery legislation<br />

which was over 100 years old. The UK was required to implement<br />

modern anti-bribery legislation by the OECD Convention it ratified<br />

in 1999. However, the 2002 enactments by the UK did not to <strong>full</strong>y<br />

achieve this goal and the UK was recognised to have failed to meet<br />

its obligations until enactment of the 2010 Bribery Act.<br />

The pharmaceutical industry has for many years taken a battering<br />

particularly from the US authorities over bribery and kick-backs<br />

and has paid some very substantial fines for breaches of anticorruption<br />

legislation, both in the US and elsew<strong>here</strong>. For this<br />

reason, the pharmaceutical industry has had the opportunity to<br />

consider, in advance, some other industries which behaviours<br />

constitute bribery and which are acceptable ways of doing business.<br />

This detailed consideration of the ethics of selling pharmaceutical<br />

products has brought into existence various industry codes of<br />

practice, such as those published by IFPMA, EFPIA, PhRMA and<br />

ABPI, as well as equivalent codes in the medical devices industry:<br />

EUCOMED; Advamed; and ABHI. Each of these codes define, in<br />

some cases in substantial detail, the promotional activities (as well<br />

as other activities) which are considered by the industries to be<br />

acceptable because they are deemed not to influence the prescribing<br />

habits of medical professionals. The UK’s Serious Fraud Office<br />

(SFO) has indicated that compliance with an industry code might be<br />

evidence that no bribery has taken place, but that this compliance is<br />

not a cast-iron guarantee that the activity will not be scrutinised and<br />

even prosecuted.<br />

This chapter considers whether the promotional activities of<br />

pharmaceutical companies might breach the rules under the Bribery<br />

Act, with a view also of the guidance issued by the Ministry of<br />

Justice. We also look at the ABPI code (as one of the most detailed<br />

industry codes) and consider whether t<strong>here</strong> are any potential<br />

conflicts between the activities which are permitted by the ABPI<br />

code and those which might breach the Bribery Act 2010. We also<br />

consider the extensive extraterritorial jurisdiction engaged by the<br />

Bribery Act and how this might apply to promotion activities<br />

engaged in by global pharmaceutical companies.<br />

As a note of caution, it must be remembered that industry codes on<br />

promotional activities are limited in scope. T<strong>here</strong> are many other<br />

activities engaged in by pharmaceutical companies which might<br />

breach anti-corruption laws. Meeting the requirements of these<br />

codes and laws are t<strong>here</strong>fore only a part of any compliance<br />

programme. Conversely, promotional activities which do not<br />

involve the provision of a benefit to a third party, whether a gift,<br />

benefit in kind or pecuniary advantage, will not breach anti-bribery<br />

legislation, but could breach an industry code.<br />

Promotional Activities and Bribery Act Offences<br />

T<strong>here</strong> are potentially three separate Bribery Act offences which<br />

might be committed through promotional activities.<br />

Inducement of Improper Performance<br />

Promotional activities which involve the provision of inducements<br />

in exchange for doctors or administrators prescribing or purchasing<br />

particular products might amount to an offence under the Bribery<br />

Act 2010, Section 1, because in each case, the company will be<br />

offering or giving an advantage intended to induce a person to, or<br />

reward a person for, improper performance, with that “improper<br />

performance” being specified by codes and laws which are<br />

applicable to the person accepting the inducement.<br />

The GMC guide on Good Medical Practice states that UK<br />

registered doctors “must act in your patients’ best interests when<br />

making referrals and when providing or arranging treatment or care.<br />

You must not ask for or accept any inducement, gift or hospitality<br />

which may affect or be seen to affect the way you prescribe for,<br />

treat, or refer patients”. Likewise, under the NHS rules on The<br />

Code of Conduct for NHS Managers (2002) managers making<br />

purchasing decisions about pharmaceuticals are required to ensure<br />

that decisions are not improperly influenced by gifts or<br />

inducements. Most countries in the developed world will have<br />

similar deontological codes for their physicians and administrators<br />

and some countries will have these included as part of their laws on<br />

pharmaceutical promotion. As is discussed later in this chapter, the<br />

Bribery Act is not limited jurisdictionally to activities taking place<br />

in the UK. A failure of a pharmaceutical company to meet the<br />

requirements of these foreign codes or laws might, if bribery is<br />

proven and the company has the required nexus with the UK,<br />

constitute a breach of the Bribery Act.<br />

The Bribery Act also requires that the physician or administrator is<br />

under an obligation in their “function or activity” to prescribe or<br />

purchase “in good faith, or impartially” or alternatively that they are<br />

in a position of trust in their performance of it. Arguably, all three<br />

of these conditions might apply to their engagement in the selection<br />

of pharmaceutical products for prescription and/or purchase.<br />

Bribery of Foreign Public Officials<br />

Whilst the ABPI code will generally not apply to promotional<br />

activities addressed to physicians and hospital managers based<br />

outside the UK, the Bribery Act has the potential to do so. Section<br />

6 of the Act prohibits bribing a foreign public official with an<br />

intention to influence that individual in that capacity, but also with<br />

WWW.ICLG.CO.UK<br />

ICLG TO: PHARMACEUTICAL ADVERTISING 2012<br />

© Published and reproduced with kind permission by Global Legal Group Ltd, London


<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Pharmaceutical Promotion and the UK Bribery Act<br />

an intention to obtain or retain business or an advantage in the<br />

conduct of business. In most countries in Europe, and in many<br />

other countries world-wide, hospitals are run by the state and<br />

t<strong>here</strong>fore both the doctors and administrators will, in these<br />

hospitals, be “foreign public officials”. T<strong>here</strong> is t<strong>here</strong>fore potential<br />

for promotional activities addressed to such individuals, if they<br />

constitute a “bribe”, to breach section 6.<br />

Failure to Prevent Bribery<br />

This offence is only applicable to commercial organisations and not<br />

to individuals. It is committed if a person “associated” with the<br />

company is engaged in bribery for the benefit of the company. No<br />

particular knowledge or acquiescence is required for the offence to<br />

have been committed and this offence is t<strong>here</strong>fore often referred to<br />

as the “strict liability” offence.<br />

The proximity of the person engaging in the bribery to the person<br />

who might be liable for it has been the subject of much speculation.<br />

Promotional activities might of course be undertaken by a whole<br />

range of persons on behalf of a company, particularly when selling<br />

overseas or in jurisdictions which are less friendly towards foreign<br />

companies and require the use of local intermediaries to broker the<br />

sales. In these countries the question is particularly pertinent.<br />

The Ministry of Justice guidance does give some clarification on<br />

the point. The guidance states that an employee of the company is<br />

presumed to be performing services for the company, and agents<br />

and subsidiaries could be performing services. Furthermore “all<br />

relevant circumstances” are to be considered when deciding<br />

whether the relationship between a company and a third party will<br />

make that third party an “associated person” for which the company<br />

is responsible under the Act. The Guidance rather unhelp<strong>full</strong>y<br />

states that the definition is deliberately large “to embrace the whole<br />

range of persons connected to an organisation who might be<br />

capable of committing bribery on the organisation’s behalf”. The<br />

words “on the organisation’s behalf” would seem to indicate that a<br />

distributor who sells for their own account would not be an<br />

“associated person”. However, t<strong>here</strong> are further examples given in<br />

the guidance w<strong>here</strong> a purchaser of goods is performing services for<br />

the original manufacturer and not just acting as an onward seller of<br />

those goods for their own account. In the pharmaceutical industry,<br />

the relationship between a company and those purchasing and<br />

selling its products is often a close one because of the need for<br />

continuous pharmacovigilance, traceability and the ability to<br />

undertake recalls. The guidance does go on to say that a company<br />

is “likely only to exercise control over its relationship with its<br />

contractual counterparty” and not further down the supply chain.<br />

However, if pharmacovigilance and traceability requirements<br />

necessitate a close relationship with those further down the supply<br />

chain, it is perhaps possible that the pharmaceutical industry is the<br />

one which might be the exception as the use of the word “likely”<br />

perhaps indicates that t<strong>here</strong> will be some exceptions?<br />

If a company is found guilty of the corporate offence of failing to<br />

prevent bribery, its liability is unlimited. An additional concern is<br />

that in the European Union, any company found guilty of bribery<br />

anyw<strong>here</strong> in the world, may be barred from future government<br />

contracts in all twenty-seven Member States. This in some ways<br />

seems to be a particularly harsh penalty for promotional activities<br />

which have overstepped the boundaries.<br />

T<strong>here</strong> is a defence to this strict liability corporate offence if the<br />

company can show that it has “adequate procedures” in place<br />

designed to prevent “persons associated with [the company] from<br />

undertaking such conduct”. This will mean that a pharmaceutical<br />

company’s own code for compliance, as well as its implementation<br />

ICLG TO: PHARMACEUTICAL ADVERTISING 2012<br />

© Published and reproduced with kind permission by Global Legal Group Ltd, London<br />

will in the future have a dual role: firstly to achieve compliance<br />

with applicable laws and rules; and secondly to contribute to<br />

“adequate procedures” and as such the “get out of jail free card”<br />

with respect to the Bribery Act. This defence will of course only be<br />

used after an actual act of bribery has been committed. Once a<br />

company is found to have dirty hands it will neither be easy nor<br />

straightforward for them to prove that it was not their “fault” or that<br />

they did all they could to keep them clean.<br />

Particular Promotional Activities and the Bribery<br />

Act<br />

Promotional Aids<br />

The ABPI 2011 Code, which was <strong>full</strong>y effective from 1 May 2011, has<br />

introduced a rule about promotional aids which is new to the UK.<br />

Pharmaceutical companies are no longer permitted to provide<br />

promotional aids which previously habitually included stationery<br />

items, such as computer accessories for business use, pens, pads,<br />

diaries and calendars and clinical items, such as nail brushes, surgical<br />

gloves, tongue depressors, tissues and peak flow metres. The previous<br />

rule permitted these gifts if they were less than £6 in value, and names<br />

of medicines could be included on them if this would not be<br />

misleading. This change brings the UK into line with both PhARMA<br />

and Advamed on this particular point. It also shows a changing<br />

“ethic”, which is something that we discuss further below. It was<br />

previously considered that the giving of such items would not affect<br />

the integrity of doctors. Some psychology studies have shown that a<br />

person receiving a gift or benefit, however trivial, generally feels a<br />

sense of obligation to the giver. T<strong>here</strong> was also, in this case the<br />

subliminal value of a particular medicine’s name being visible in a<br />

physician’s practice every day. These are perhaps the reasons for the<br />

change both in the US and subsequently the UK. It is unlikely that the<br />

SFO will want to concern itself with gifts under £6 when t<strong>here</strong> are<br />

rather more substantial bribes to consider. However, this seemingly<br />

trivial change in the ABPI Code has also changed the way in which<br />

such gifts, when given in the UK by a company which has signed up<br />

to the ABPI Code, might be treated under the Bribery Act. Under<br />

Section 1 of the Bribery Act, it would have been argued that under the<br />

2008 version of the ABPI Code that the giving of such gifts did not<br />

constitute “improper performance” because it was considered that<br />

they did not have the effect of inducing anyone to prescribe a medicine<br />

w<strong>here</strong> they would not otherwise have done so. From the effective date<br />

of the 2011 version of the ABPI Code, the £6 promotional item is<br />

deemed to have such an effect on the doctor, essentially changing the<br />

nature of the action from not being a “bribe” to actually being a bribe.<br />

Medical and Educational Goods<br />

Under the ABPI Code, individual companies are permitted to supply<br />

medical and educational goods and services as long as these are for the<br />

benefit of patients or the NHS and are not provided to individuals for<br />

their personal benefit. Medical and educational goods provided in this<br />

way may bear the name of the company, but not of a particular<br />

medicine. T<strong>here</strong> is a long list of additional rules in an attempt to create<br />

a barrier between the sale and prescription of medicines and the<br />

provision of goods or services. However, the provision of goods and<br />

services provides pharmaceutical companies with a means of<br />

strengthening their links with the people who are, in effect, their<br />

“customers”. Given the strong financial incentives for pharmaceutical<br />

companies to do this, might this be another area in which the “ethics”<br />

of such gifts might in future be the subject of a seismic ethical shift in<br />

the same way that promotional aids have been?<br />

WWW.ICLG.CO.UK<br />

9


<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Pharmaceutical Promotion and the UK Bribery Act<br />

Meetings and Hospitality<br />

Meetings with healthcare professionals, hospital administrators and<br />

other persons making decisions on the use and purchase of<br />

pharmaceutical products are not, of themselves, problematic under<br />

the Bribery Act. However, once “hospitality” is added to the<br />

agenda for such meetings or gifts beyond pens, pencils and paper<br />

necessary for the meeting (without the name of a particular<br />

medicine inscribed on them), that is w<strong>here</strong> a concern is raised under<br />

the code, and as a result of this, under the Bribery Act.<br />

In the guidance under Section 1, an example given of the permitted<br />

hospitality is taking foreign clients to a six nations match at<br />

Twickenham “to cement good relations or enhance knowledge in<br />

the organisation’s field”. However, taking a doctor or hospital<br />

administrator would constitute a breach of the GMC Code of Good<br />

Practice and also likely the administrator’s own employee code,<br />

either NHS or private. As such, this would constitute improper<br />

performance of a relevant function or activity. W<strong>here</strong> prescribers or<br />

purchasers of pharmaceuticals are involved, anything which goes<br />

beyond meeting the basic human need to eat regularly (but not<br />

lavishly) and w<strong>here</strong> the timing of a meeting necessitates it, needs to<br />

be given some thought. This illustrates the point that the<br />

pharmaceutical industry should not slavishly read the guidance to<br />

the Bribery Act as if it is wholly applicable to its activities: this<br />

industry has a different set of ethics because of the ethical<br />

imperative that patients should receive the most appropriate<br />

treatment.<br />

Charity Donations<br />

Physicians sometimes request donations for medical charities. The<br />

ABPI Code states that modest payments into a reputable charity are<br />

acceptable if they are not an “inducement”. The ABPI Code does<br />

not go into detail on what might constitute an “inducement”. T<strong>here</strong><br />

are, however, situations w<strong>here</strong> a physician has a close personal<br />

connection with a charity, including w<strong>here</strong> it funds their own<br />

research, which might include part of their salary and/or a salary for<br />

their own researchers. This question arises frequently in the<br />

medical devices industry w<strong>here</strong>, as a matter of necessity, the<br />

industry works closely with physicians in the development of new<br />

or improved devices. The EUCOMED Code is t<strong>here</strong>fore more<br />

detailed on this point. The EUCOMED Code requires that “a<br />

written request should be submitted by the charitable organisation,<br />

detailing the purpose of the charity and the nature of its activities.<br />

The payment should be made out in the name of the charity and<br />

paid directly to the charity. Charitable donations to a bona fide<br />

organisation should not be made in response to requests made by<br />

Health Care Professionals unless the Health Care Professional is an<br />

employee or officer of the organisation and submits the request on<br />

behalf of the organisation.” This illustrates the need to undertake<br />

an individual analysis of the situation of the physician, their<br />

relationship with the company and the charity and the precise<br />

destination and beneficiary of the monies. The particular point to<br />

answer is whether the donation is “bona fide”, or if t<strong>here</strong> is an<br />

intention to benefit an individual, even if it is not a direct personal<br />

financial benefit, but one which might act as a perceived<br />

inducement to prescribe?<br />

Promotional Activities Through Tenders<br />

W<strong>here</strong> tenders are offered, it is common for goods or services to be<br />

requested and/or offered which extend beyond the goods which are<br />

the main subject of the tender. An example in this industry might<br />

be a diabetes nurse. However, European law requires that the items<br />

or services which are not the main subject matter of the<br />

procurement do not influence the final outcome of the procurement<br />

process. T<strong>here</strong>fore, offering these additional goods or services will<br />

only be an offence if they influence the final outcome. This is not<br />

something a company might know in advance of the final decision<br />

of the tendering authorities, and even then is something they might<br />

have to imply. The Bribery Act guidance goes on to state that<br />

“prosecutors will consider the public interest in prosecuting” and in<br />

these circumstances pharmaceutical companies might want to<br />

determine, in advance of engaging in such processes, whether they<br />

are comfortable being “under consideration” by the prosecuting<br />

authorities, or whether they would prefer to avoid this scrutiny by<br />

not offering these additional items or services at all. Government<br />

tenders in the UK frequently specifically include a request for these<br />

additional goods and services. This is unlikely to change unless all<br />

pharmaceutical companies refuse to offer them.<br />

Jurisdictional Scope of the Bribery Act and the<br />

Promotional Activities:<br />

Examples given above illustrate how activities categorised as<br />

“promotion” might be problematic under the Bribery Act. We have<br />

looked at the ABPI Code for the purposes of this illustration.<br />

However, like the US Foreign Corrupt Practices Act, the territorial<br />

reach of the Act is extensive and goes way beyond activities taking<br />

place in the UK. Pharmaceutical companies, w<strong>here</strong>ver they are<br />

incorporated, may be liable for actual acts of bribery if acts or<br />

omissions forming part of the offence (meaning bribery or bribing<br />

a foreign public official) occur in the UK. If the same acts or<br />

omissions occur outside the UK, then the UK courts will have<br />

jurisdiction over corporate bodies only if they are incorporated in<br />

the UK.<br />

However, of greatest concern to pharmaceutical companies with a<br />

global footprint is the offence of failing to prevent bribery. The act<br />

or omission constituting bribery can have occurred anyw<strong>here</strong> in the<br />

world, and the failure to prevent it might be committed by a<br />

company that carries on a “business”, or only “part of a business”,<br />

in the UK. In the promotion of pharmaceutical products in different<br />

countries a variety of corporate structures are used. It would appear<br />

from the way the Bribery Act is written that it is not necessary for a<br />

company to even have a subsidiary in the UK for t<strong>here</strong> to be a<br />

sufficient nexus for the offence to have been committed and<br />

prosecuted. Just having a sales office or representative in the UK<br />

might suffice to bring a pharmaceutical company with its<br />

headquarters outside the UK within the jurisdiction of the UK<br />

courts for the purposes of the Act, even for activities carried on in<br />

another separate country.<br />

In addition to this corporate liability, individual directors and<br />

managers who are “senior officers” of global pharmaceutical<br />

companies might personally be prosecuted under the Bribery Act.<br />

These individuals need personally to have a “close connection” to<br />

the UK w<strong>here</strong> “close connection” essentially means that the<br />

individual has British citizenship or residency, or is a national of a<br />

British overseas territory. Their personal responsibility would arise<br />

if promotional activities of the company amounting to the offence<br />

of bribery or bribery of any foreign public official were ones to<br />

which they consented or in which they have connived. Individuals<br />

convicted under the Act can be imprisoned for up to ten years.<br />

10<br />

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ICLG TO: PHARMACEUTICAL ADVERTISING 2012<br />

© Published and reproduced with kind permission by Global Legal Group Ltd, London


<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Pharmaceutical Promotion and the UK Bribery Act<br />

Failure to Prevent Bribery: Relevant Commercial<br />

Organisation<br />

The “strict liability” corporate offence of “failure to prevent<br />

bribery” applies to any “relevant commercial organisation”. The<br />

definition of a “relevant commercial organisation” potentially<br />

includes pharmaceutical companies which might have only limited<br />

connection to the UK, but which promote their products worldwide.<br />

This limited connection requires only that the company “carries on<br />

a business or part of a business, in any part of the UK”. The<br />

guidance states that the government expects that a “common sense<br />

approach” will be applied. Given the vagueness of this direction,<br />

we do not yet have sufficient information to know whether having<br />

a mere sales office in the UK will be sufficient to allow the SFO to<br />

prosecute a company for its promotional activities occurring in<br />

other jurisdictions. The guidance states that any “commercial<br />

activities” will constitute carrying on a business but that having a<br />

UK subsidiary will not, itself, mean that a parent company is<br />

carrying on a business in the UK, since a subsidiary “may act<br />

independently of its parent or other group companies”. If a<br />

pharmaceutical company might be responsible for an independent<br />

third party distributor, because of the nexus through<br />

pharmacovigilance activities, it is difficult to see how it would not<br />

also be responsible for its own subsidiary or branch office<br />

undertaking similar activities, but actually on behalf of the<br />

corporate group. Whilst the Guidance (but not the Act) seems to be<br />

clear that a parent company will not always be held to be<br />

responsible for the bribery of its subsidiaries, it is difficult to<br />

imagine that a parent company will escape liability for a UK<br />

subsidiary w<strong>here</strong>ver in the world it might be undertaking those<br />

promotional activities.<br />

We will, however, have to see whether the SFO will flex its muscles<br />

only if a UK parent has had some direct involvement in the bribery<br />

(for example, through their management or direction), or whether<br />

they will be considered de facto to have failed to prevent bribery<br />

simply because the bribery has been engaged in by a subsidiary<br />

over which it ought to have exerted control.<br />

Conclusion<br />

Whilst the pharmaceutical industry is ahead of other industries in<br />

terms of having already considered in some detail which of its<br />

activities might potentially amount to improper inducements, it is<br />

possible that as a result of the Bribery Act, some of the activities<br />

which are currently “permitted” through industry codes might need<br />

to be reassessed. This <strong>article</strong> also illustrates the fact that<br />

generalised statements in the guidance issued by the Ministry of<br />

Justice should be read caution when trying to apply the guidance to<br />

the promotional activities of the pharmaceutical industry because of<br />

the different ethic applicable to the sale and marketing of<br />

pharmaceuticals when compared with other unregulated products.<br />

Global pharmaceutical companies might also want to consider<br />

care<strong>full</strong>y the location of their subsidiaries, branches and sales<br />

offices and what the reporting lines are between them. From this<br />

they will be able to determine w<strong>here</strong> t<strong>here</strong> is potential for the<br />

Bribery Act to apply, particularly w<strong>here</strong> their senior managers are<br />

UK residents or citizens and who, as a result, will have a connection<br />

to the UK for individual liability no matter w<strong>here</strong> in the world they<br />

carry out their duties.<br />

ICLG TO: PHARMACEUTICAL ADVERTISING 2012<br />

© Published and reproduced with kind permission by Global Legal Group Ltd, London<br />

WWW.ICLG.CO.UK<br />

11


<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

Pharmaceutical Promotion and the UK Bribery Act<br />

Alison Dennis<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

35 Vine Street<br />

London, EC3N 2PX<br />

United Kingdom<br />

Tel: +44 20 7861 4637<br />

Fax: +44 20 7488 0084<br />

Email: alison.dennis@ffw.com<br />

URL: www.ffw.com<br />

Tony Lewis<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> LLP<br />

35 Vine Street<br />

London, EC3N 2PX<br />

United Kingdom<br />

Tel: +44 20 7861 4940<br />

Fax: +44 20 7488 0084<br />

Email: tony.lewis@ffw.com<br />

URL: www.ffw.com<br />

Alison is a Partner and head of Life Sciences for <strong>Field</strong> <strong>Fisher</strong><br />

<strong>Waterhouse</strong> LLP. She works with clients in the pharmaceutical,<br />

biotech. and medical device industries from across the globe.<br />

Alison helps clients in these industries to resolve regulatory<br />

issues and to comply with laws and codes on advertising and<br />

promotion. In addition, Alison uses her extensive transactional<br />

experience in drafting and negotiating a wide range of specialist<br />

agreements for clients in the Life Sciences sector, with particular<br />

emphasis on the protection and exploitation of intellectual<br />

property rights through a variety of different structures.<br />

Alison is a graduate of the Universities of Bristol and Oxford and<br />

is a fluent French speaker.<br />

Alison sits on both the Legal Committee and the Compliance<br />

Working Group of the ABHI (UK trade association for medical<br />

devices industry).<br />

Tony is head of the Fraud and Anti-Corruption team at <strong>Field</strong><br />

<strong>Fisher</strong> <strong>Waterhouse</strong> LLP. He is a recognised as an expert in the<br />

legal directories, specialising in investigations and claims arising<br />

from fraudulent conduct, focussing on corruption, tracing assets,<br />

theft of confidential information and other assets, money<br />

laundering, and the interplay between civil and criminal<br />

proceedings. Tony has acted in many high profile, complex and<br />

reported cases, often multi-jurisdictional. He is at the forefront of<br />

developments relating to the Bribery Act 2010, having contributed<br />

to the consultation process that proceeded the legislation, and<br />

having spoken and written extensively on the topic.<br />

Tony is also an active member of various professional<br />

organisations, including the Commercial Fraud Lawyers’<br />

Association, the International Bar Association, the London Fraud<br />

Forum, the Commercial Litigators’ Forum and the Proceeds of<br />

Crime Lawyers’ Association.<br />

<strong>Field</strong> <strong>Fisher</strong> <strong>Waterhouse</strong> is a European law firm specialising in providing commercial solutions for all industries and sectors. We<br />

have a particular focus on companies that are highly regulated and those with intellectual property and technology driven business<br />

models. We have offices in Brussels, Düsseldorf, Hamburg, London, Manchester, Munich, Paris and Tokyo. Our main areas of<br />

practice are corporate, IP, technology and outsourcing and regulatory law.<br />

Our international client base choose to work with us because we provide exceptional lawyers with industry expertise, including the<br />

pharmaceutical and medical device industries. Our strong commercial knowledge of their businesses enables us to work with<br />

them to maximise their market opportunities.<br />

12<br />

WWW.ICLG.CO.UK<br />

ICLG TO: PHARMACEUTICAL ADVERTISING 2012<br />

© Published and reproduced with kind permission by Global Legal Group Ltd, London


Other titles in the ICLG series include:<br />

Aviation Law<br />

Business Crime<br />

Cartels & Leniency<br />

Class & Group Actions<br />

Commodities and Trade Law<br />

Competition Litigation<br />

Corporate Governance<br />

Corporate Recovery & Insolvency<br />

Corporate Tax<br />

Dominance<br />

Employment & Labour Law<br />

Enforcement of Competition Law<br />

Environment & Climate Change Law<br />

Gas Regulation<br />

Insurance & Reinsurance<br />

International Arbitration<br />

Leveraged Finance<br />

Litigation & Dispute Resolution<br />

Merger Control<br />

Mergers & Acquisitions<br />

Patents<br />

PFI / PPP Projects<br />

Private Client<br />

Product Liability<br />

Project Finance<br />

Public Procurement<br />

Real Estate<br />

Securitisation<br />

Telecoms, Media & Internet<br />

Trade Marks<br />

59 Tanner Street, London SE1 3PL, United Kingdom<br />

Tel: +44 20 7367 0720 / Fax: +44 20 7407 5255<br />

Email: sales@glgroup.co.uk<br />

www.iclg.co.uk

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