The implementing Decree giving full effect to the French ‘Sunshine Act’ requires life sciences companies to disclose specifically listed information regarding agreements with, and benefits as of EUR 10 to, a wide range of health care actors. Awaiting the establishment of a single public website to be created for that purpose, the information must be published on the companies’ websites (or a website of a group of companies) and – when concerning health care professionals or students – the website of the relevant health care professionals’ Order. The information must remain available for a period of five years.
Immediate action is required, in particular with regard to information on agreements and benefits involving health care professionals or students (or their respective associations). Such information, for the year of 2012, had to be submitted to the National Council of the respective Orders by 1 June 2013; information related to the first calendar half of 2013 is due by 1 August 2013. Companies have a little more time to adjust their websites for purposes of the required disclosure as the publication deadline for the information on agreements and benefits entered into, or granted between, 1 January 2012 and 30 June 2013 is set at 1 October of this year.
Non-compliance with these transparency requirements may subject life sciences companies to a criminal fine of up to EUR 225,000. The Decree also contains further specifications related to the anti-gift statute, as implemented in Article L. 4113-6 of the Public Health Code (PHC), which are not further discussed in this e-alert.
On 29 December 2011, Law No 2011-2012 on the Strengthening of Health Protection for Medicinal and Health Products (“loi relative au renforcement de la sécurité sanitaire du médicament et des produits de santé”), also known as the “Loi Bertrand” (hereinafter “the Law”), introduced specific transparency obligations for a broad section of the French life sciences industry, as set forth by Article L. 1453-1 PHC. The law followed the 2010 US Physician Payment Sunshine Act, which also inspired similar legislation in the UK and the Netherlands (be it that the latter two laws are applicable to the pharmaceutical industry only).
Decree No 2013-414 of 21 May 2013 on the Transparency of Benefits granted by Companies Manufacturing or Commercialising Health Products and Cosmetics intended for Humans (“décret relatif à la transparence des avantages accordés par les entreprises produisant ou commercialisant des produits à finalité sanitaire et cosmétique destinés à l’homme”) (hereinafter “the Decree”) now specifies the kind of information that must be disclosed and the modalities and obligatory time frames of such disclosure. The Administrative Circular of the French General Directorate of Health (“Direction Générale de la Santé” or “DGS”) that was issued on 29 May (hereinafter “the Circular”) provides further guidance with respect to some specific provisions. The single public website to be created for purposes of disclosure of the required information will be established by another implementing Decree, the estimated timing of which is yet unclear today.
Analysis of the French Transparency Requirements
1. Scope of application
Who is subject to the new requirements?
HEALTH CARE COMPANIES – The transparency obligations apply to companies manufacturing or commercialising health products or providing associated services (Article L.1453-1 PHC).
Under French law, the concept of “health products” is very broad and includes medicinal products, medical devices, and cosmetics, but also other categories of products under supervision of the French Medicines Agency (“Agence nationale de sécurité du médicament et des produits de santé” or “ANSM”), such as human and animal tissues or cells, tattoo products, software, etc. The Circular provides a list of the relevant products and groups them into two categories: products for health purposes and products for cosmetic purposes.
The Circular also clarifies the meaning of “providing associated services” and renders a broad range of companies subject to the legal requirements, such as companies providing technical services (e.g., installation, maintenance, user training) related to the use of health products, companies providing services related to the reimbursement of these products by the social security system, and companies involved in the communication and advertising thereof.
In addition, companies acting on behalf of “companies manufacturing or commercialising health products” are subject to the transparency requirements. These could, for example, include other entities – not manufacturing or commercialising health products – of the same group (such as the holding, research entities, etc.) and external providers acting in name and on behalf of the relevant health care companies. Companies are therefore encouraged to designate the entity in charge of publication and establish clear procedures for collecting the required information from all entities in order to ensure a consolidated publication.
HEALTH CARE ADDRESSEES – Aforementioned companies must disclose the existence of agreements entered into with, and benefits given to, nine categories of health care actors listed in Article L. 1453-1 PHC:
Health care professionals (e.g., physicians, pharmacists, nurses, mid-wives, etc.);
Associations of health care professionals;
Students intending to become health care professionals and representative groups and associations of these students;
Non-profit associations (e.g., foundations) and advisory boards in the healthcare sector;
Publishing companies, radio and television publishers, and publishers of online (public) communication services (in particular scientific and medical press);
Designers of software for prescription and delivery of health products; and
Legal entities providing or participating in the initial training of healthcare professionals (e.g., universities or university hospitals).
The Circular provides further clarifications and examples related to the above categories. It explains that the provisions do not apply to health care professionals who are employed by the relevant health care companies (so that their employment agreements and other benefits they receive do not have to be published). Students’ trainee contracts do not have to be disclosed either.
More importantly, the Circular explicitly confirms that the requirements apply only to agreements with, and benefits to, health care actors exercising their profession in France.
Which activities are subject to the new requirements?
The transparency obligations apply to two types of activities: the existence of agreements with, and (as of a certain threshold) the benefits provided to, aforementioned health care actors.
AGREEMENTS - Companies manufacturing or commercialising health products – in particular pharmaceutical and medical devices companies – are required to disclose the existence of all agreements with the relevant health care actors. Only agreements regarding the purchase of goods or the provision of services (covered by Article 441-3 and 441-7 of the Commercial Code), such as purchase agreements between pharmaceutical companies, wholesalers and pharmacies, are explicitly excluded from the scope of application (Article R. 1453-2 I).
The Decree, however, clarifies that companies manufacturing or commercialising products for conmetic purposes – cosmetic products, non-corrective contact lenses, and tattoo products – are only required to disclose the existence of specific agreements, i.e., agreements regarding the safety assessment, vigilance, and biomedical research related to these products.
BENEFITS - Any benefits to health care actors, direct or indirect, in kind or in cash – as of a certain threshold – must be disclosed (Article L. 1453-1 PHC). The Decree has now set that threshold at the very low value of EUR 10 and above (taxes included). It also specifies that benefits granted in the framework of the above agreements must be disclosed.
The concept of “benefit” is not explicitly defined in the Law or the Decree. However, in accordance with Article L. 4113-6 PHC, it is interpreted broadly. The Circular provides a list of examples, including gifts to health care professionals, free medical equipment, donations to health care institutions, hospitality (e.g., meals, hotels), rebates, discounts, and reimbursement of costs (excluding those provided in purchase of goods or provision of services agreements).
The Circular also explicitly confirms that remunerations, salaries and fees which are the counterpart for a work or service (e.g., the fees provided to a health care professional for speaking at a conference) are not considered benefits. Consequently, the amounts thereof must not be disclosed. However, if the compensation is manifestly disproportionate in comparison to the work or the service to be rendered, it may be reclassified as a prohibited gift or benefit.
In addition, it is reminded that indirect benefits to be disclosed include benefits granted to a health care actor’s relatives or to an association the relevant actor is a member of. Therefore, when providing a benefit to individuals or legal entities, companies are advised to inquire whether other health care actors may indirectly benefit from it as well.
2. Practical implementation
What information must be published?
The Decree lists the specific information that must be disclosed, depending on the type of activity (and the health care actor) concerned.
AGREEMENTS – Article R. 1453-3 provides that the following information must be published with respect to agreements entered into by the company:
The identity of the parties to the agreement;
The signing date;
The subject matter of the agreement, with respect for the confidential information protected by law (in particular commercial and industrial secrets): the subject matter can thus be phrased in rather general terms (e.g., research agreement, scientific collaboration, promotional event, etc.) in order to protect companies’ business secrets.
If the agreement concerns a (promotional or scientific) event, the program of the event (please note that the amount involved should also be disclosed as a “benefit”).
BENEFITS - Article R. 1453-4 lists the information that must be disclosed regarding the benefits provided by companies to various health care actors:
The identity of the beneficiary;
The amount, including taxes, rounded to the nearest euro; the date and the nature of each benefit (e.g., donation, gift) received by a beneficiary during a calendar half;
The calendar half during which the benefit has been received.
The Decree also specifies the kind of information that must be provided when describing the parties to an agreement or the beneficiary of a specific benefit, i.e., for a
Health care professional: the name, first name, profession, professional address and, where applicable, the qualification, title, speciality, the subscription number with the relevant Order (“l’Ordre”), and the personal number in the register of health care professionals;
Health care student: the name, first name, educational institution and, where applicable, the personal number in the register of health care professionals;
Legal entity: the corporate name, the corporate purpose, and the address of the registered seat.
Where must the information be published?
FINAL DISCLOSURE – The aforementioned information must be published on a single public website and should be transmitted to the responsible authority. The Decree only specifies that the information must be published in French. Any further practical details related to the operation of this website (including the competent authority) should be determined by another implementing Decree after advice of the French Data Protection Authority (“commission nationale de l’informatique et des libertés” or “CNIL”) (Article R. 1453-4 PHC). There is currently no information available as to when this website is expected to be operational.
TRANSITIONAL DISCLOSURE – In the absence of a competent authority and single public website, companies must publish the required information on their own website or a website shared by different companies (for this purpose). It can also be published on the website of a professional association of which the company is a member. In addition, information regarding agreements and benefits involving health care professionals, associations thereof, health care students, or associations thereof must also be published on the website of the National Council of the Order of the relevant health care professionals (“conseil national de l’ordre de la profession de santé concernée”). The information (in French) must be freely accessible at a dedicated section of the website(s).
When must the information be published?
FINAL TIMEFRAME – As soon as the envisaged public website is operational, companies must submit the information regarding agreements to the competent authority piecemeal, within 15 days of concluding the agreement. For benefits, on the other hand, the information must only be submitted twice a year, i.e., before 1 August regarding benefits provided during the first calendar half of the year, and before 1 February for benefits provided during the last calendar half (Article R. 1453-5 PHC).
The information regarding both agreements and benefits must then be published by the competent authority before 1 October and 1 April respectively and remain available for a period of five years as of the online publication (Article R. 1453-6 PHC).
TRANSITIONAL TIMEFRAME – Awaiting further implementation of the website, the first publication is due on 1 October 2013. Given the retroactive effect of the legislation, this publication should include the required information concerning agreements and benefits for the year 2012 and the first calendar half of 2013. However, information related to agreements and benefits involving health care professionals, health care students, or their respective associations must already be submitted to the National Council of the relevant health care professionals' Order way earlier: the information for 2012 was due on 1 June and the information for the first calendar half of 2013 is due by 1 August 2013.
The next publication by companies and health care professionals’ Orders, covering the second calendar half of 2013, should be done on 1 April 2014 (and be submitted to the National Councils by 1 February 2014).
3. Enforceability and sanctions
Companies that “knowingly” violate the transparency requirements may be subject to a criminal fine of up to EUR 225,000. Additional sanctions, such as a ban on participation in public tenders, suspension of business activities, and temporary or permanent closing of facilities may also apply. Individuals, on the other hand, may face sanctions such as the public communication of the sentence, being barred from exercising a public function or a commercial or industrial profession, and a prohibition to commercialise, import and market health products (Articles L. 1454-3 to L. 1454-5 PHC).
While these provisions entered into effect on 1 August 2012, the French General Directorate of Health previously indicated that criminal sanctions would not be issued until the publication of the implementing Decree. Now that the implementing Decree has been published, a failure to disclose the required information for the period of 1 January 2012 until 30 June 2013 by 1 October 2013 is likely to be subject to effective enforcement.