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30 October 2019
The marketing of medicinal products can take many forms and companies may use different methods in order to ensure that their products are prescribed over other equivalents. While there is no specific legislation that prohibits such actions (although competition law aspects can block certain methods), they may be contrary to the Ethical Rules for the Pharmaceutical Industry (LER), which are issued by the Swedish Trade Association of the Pharmaceutical Industry. While the LER is non-binding for non-member companies of the Swedish Association of the Pharmaceutical Industry (LIF), it is widely recognised as industry practice.
Two self-regulatory bodies – namely, the Information Review Board and its appellate instance, the Committee for the Review of Pharmaceutical Information – monitor compliance with the LER and issue decisions on whether companies' marketing activities are permissible.
A pharmaceutical company offered an immunosuppressive medicinal product supplied in the form of a starter kit for new patients. The product had several indications and was marketed towards two patient groups (depending on previous treatment experience). The starter kit contained six pre-filled syringes to be administered under a treatment period of three months and had an original list price of approximately Skr35,000.
In the marketed offer, the starter kit was free for the clinic and the only cost for patients was the co-payment fee of Skr100. This meant that a clinic's costs for the first three months of treatment were 100% reduced for one patient group and 50% reduced for the second (which needed a higher dose and thus more administrations than those included in the starter kit). The medicinal product was not included in the reimbursement system and the offer was made to give patients the opportunity to start treatment at a reduced cost for the clinic.
The Information Review Board initiated an investigation into a prohibited grant to healthcare against the company. A competitor also notified the board of the marketing, claiming that it violated the LER.
Pursuant to Chapter 2, Section 1, Article 10 of the LER, donations and grants to healthcare can support only research and development. The provision also states that donations and grants cannot be connected to past, present or potential future use, recommendation, sale or prescription of a donor's products or services, and may not constitute an inducement to recommend, prescribe, purchase, supply, sell or administer specific medicinal products.
In its interpretation of the provision, the Committee for the Review of Pharmaceutical Information held that a prerequisite for finding that an offer involves a grant to healthcare is that the offer includes or produced a financial benefit for the clinic or (by extension) region providers. In the present case, the alternative to prescribing the marketed product would have been to prescribe another medicinal product from the reimbursement system. The cost for such a product would have been paid by the healthcare provider (ie, the clinic, hospital or region). Where a clinic bears the cost, it is evident that offers include a financial benefit therefor. For high-cost treatments (ie, considered unaffordable for the patient), the prescribing clinic typically covers the treatment's costs. The starter kit at issue was considered to be a high-cost treatment where the cost would be covered by the clinic if the medicinal product was prescribed. Further, in such cases, the offer includes a financial benefit for the healthcare provider.
In light of the above, the Committee for the Review of Pharmaceutical Information found that the offer under review constituted a grant under the relevant provision. The committee noted that the grant had not been made to support research and development. As the treatment period for patients exceeded the administrations included in the starter kit, the offer also induced prescription of additional quantities of the medicinal product. Consequently, the committee held that by offering physicians to prescribe a drug at no (or a reduced) cost to the clinic, the company had acted contrary to good practice and offered a grant contrary to the LER.
As an LIF member, the company was fined Skr90,000 for the violation.
As the LER is binding on only LIF members, this decision may at first glance appear of little relevance for non-LIF members; however, compliance rates with these rules in Sweden are high and preferable even for non-members.
The rules are recognised as codifying marketing practice for medicinal products in Sweden and non-compliance could form the basis of a claim for unfair marketing practices under general marketing legislation in the general court system. The marketing of non-members may even lead to investigations by the LIF's self-regulatory bodies where:
If such marketing is found to contravene the LER, the non-member will be requested to sign a document that such practice will not be repeated. This document (signed or not) can be used in unfair marketing practice cases in the general court system.
The Committee for the Review of Pharmaceutical Information's decision confirms the strict view approach to the marketing of medicinal products in relation to pricing. It also serves as a reminder that companies should consider not only the intended purpose of an offer, but also its actual effects – as illustrated here, an intended discount may be considered a grant contrary to the LER.
The medicinal product at issue was not included in the reimbursement system. As a general rule for the Swedish market, the pricing of such products is free. However, according to the committee, this apparently applies only in relation to the regular list price and does not include payment arrangements resulting in discounts, at least not when offered by a pharmaceutical company (ie, not initiated by a region or payer).
The Dental and Pharmaceutical Benefits Agency (TLV) is responsible for the reimbursement and pricing of medicinal products within the reimbursement system. When deciding whether a medicinal product should be included in the reimbursement system, the TLV may invite the local regions (ie, the healthcare providers and payers) and the pharmaceutical company for so-called 'trialogue negotiations', where different issues relating to reimbursement – including pricing – may be negotiated. It is not uncommon that these discussions result in the pharmaceutical company offering the regions discounts compared with the reimbursed list price in order to receive a positive decision regarding reimbursement.
From its decision, it thus appears that the committee perceives a difference between whether the discussion of a discount is initiated by a pharmaceutical company (eg, to gain access to a market) or initiated by the TLV or the regions. The decision also hampers the pricing and discount possibilities, in effect making a straight discount per product sold or dispensed the only foreseeably acceptable discount model. It is uncertain whether a 'backloaded' discount (ie, where the discounts come into effect at a later stage of the treatment, after the initial prescription at list price) is acceptable or if it will be considered a grant or donation as well.
It is also unclear whether there is a difference between offering a discount on a product or giving it away (to the payer) for free. The committee is not sufficiently clear on this point, but in its final summary also includes "offering physicians to prescribe a medicinal product… at a reduced cost for the clinic" as a breach of the LER.
This decision is likely to be debated, as the pricing of medicinal products in Sweden is self-regulating. Companies must therefore be mindful of how their discounts are structured, the offer procedures used and (as always) how they can be considered to affect the behaviour of the prescribing physicians.
For further information on this topic please contact Jonas Löfgren or Siri Alvsing at Westerberg & Partners Advokatbyrå Ab by telephone (+46 8 5784 03 00) or email (firstname.lastname@example.org or email@example.com). The Westerberg & Partners Advokatbyrå Ab website can be accessed at www.westerberg.com.
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