France: Again the Life Science Industry Will Have to Take a Close Look at a New Set Of Regulations Reshaping Transparency-Related Obligations

by Reed Smith

Reed Smith

The relationship between the life sciences industry and health-care practitioners is being reshaped in France through regulatory developments under both the French Anti-Gift Law and the French Sunshine Act.

The regulatory landscape in France regarding the relationship between the life sciences industry and health-care practitioners (HCPs) continues to undergo significant changes.

Transparency requirements are regulated in France by two main sets of regulation: Law No. 93-121 of 27 January 1993 (the “French Anti-Gift Law or French DMOS Law) regulates the provision of gifts, discounts and other incentives to HCPs by life sciences companies, while Law No. 2011-2012 of 29 December 2011 (the French Sunshine Act) imposes on companies disclosure obligations relating to benefits granted to and agreements concluded with HCPs.

While the French Sunshine Act has been frequently amended to reflect subsequent changes brought by implementing decrees, orders, and circulars, the Anti-Gift Law has been less subject to change, at least until now.

Reshaping of Anti-Gift provisions

Changes to the Anti-Gift Law are contemplated in the near future pursuant to the recent adoption of Ordinance No. 2017-49 on 19 January 2017, which aims at extending the scope of the Anti-Gift Law and at changing the procedure related to the prior submission to the national or departmental board of the relevant HCP professional body.

Under its original provisions, the Anti-Gift Law established the principle that HCPs cannot receive any benefits from companies manufacturing or marketing health products that are reimbursed under the French social security system. However, it provided specific exemptions to this general rule by allowing (i) remuneration under agreements related to research activities or scientific evaluation, provided that such remuneration (a) was not calculated proportionally to the number of products prescribed by the HCP concerned and (b) was of a reasonable amount, and (ii) hospitality offered at promotional, professional and scientific events, provided that such hospitality was (a) reasonable and (b) limited to the scientific and professional purpose of the event.

The new provisions expand the scope of the Anti-Gift Law to broadly cover any company manufacturing or marketing health products, regardless of whether or not payment for the products is reimbursed under the French social security system. However, the Anti-Gift Law does not extend to companies manufacturing non-corrective lenses, cosmetic products and tattoo products.

The new provisions will also clarify what benefits will be specifically excluded from the scope of the Anti-Gift Law. For example, exceptions would include remuneration, compensation, and reimbursement of expenses provided by an employment contract and relating exclusively to the exercise of the HCP’s professional activities; or benefits related to the exercise of the HCP’s professional activities, provided that the amounts concerned are of a negligible value. In that respect, the maximum amounts paid as a benefit under each category are to be determined by means of a future implementing order.

Another upcoming change relates to the processing of the transparency requirements: as things currently stand, before being concluded or granted, agreements and hospitality proposals must be submitted for prior opinion to the national or departmental board of the relevant HCP body in order for it to assess whether the remuneration for services and the hospitality provided are reasonable in amount and limited to the sole scientific or professional purpose of the relevant event. This procedure is about to be changed into a declaration/authorisation procedure, depending on the amount of the benefits and hospitalities provided. The thresholds for determining whether a declaration or an authorisation is required are also to be set by means of a future implementing order.

Last but not least, the penalties incurred for non-compliance with the requirements of the Anti-Gift Law will be doubled from the current fine of up to €375,000 to a fine of up to €750,000. Alternatively, the fine could be up to 50 per cent of the expenses incurred in carrying out any practice constituting an offence. Although the notion of expenses incurred in carrying out any practice constituting an offence remains to be clarified, such change points towards a clear strengthening of the applicable rules.

The new provisions will enter into force after the adoption of an implementing decree, and at the latest on 1 July 2018. It is already to be expected that the announced changes will particularly impact life sciences companies manufacturing or marketing non-reimbursable health products – which were until now exempt from the rules of the Anti-Gift Law. These companies will have to promptly integrate the procedural rules into their daily business.

Upcoming clarification on the disclosure of remuneration paid to HCPs

In addition to the Anti-Gift Law, life sciences companies are required to disclose certain information on a public Stateportal. In recent years there have been changes concerning the content of the disclosure and this has presented a challenge for life sciences companies trying to meet their disclosure obligations. (See our previous alert).

Initially, life sciences companies were required to disclose any benefits granted to HCPs and the nature of agreements concluded with HCPs, but they were not required to disclose the amounts of any remuneration. However, on 24 February 2015, the French Supreme Administrative Court (Conseil d’Etat) ruled null and void the provision under which only the existence of agreements with HCPs had to be disclosed, but not the remuneration amounts paid to HCPs. As a consequence, Law No. 2016-41 of 26 January 2016 codified the principle that any remuneration contained in agreements concluded with HCPs must be disclosed, with implementation of the new provisions to be carried out by way of decree. In this respect, Decree No. 2016-1939, recently published on 28 December 2016, provides partial clarification as to the basis for the implementation of the new provisions.

The new decree provides that any remuneration above €10 under agreements concluded with HCPs has to be disclosed. This provision harmonises the rules relating to disclosures and aligns the regime applicable to any benefits, hospitality or remuneration for services provided for in agreements.

The new decree also corrects the discrepancy in the reporting timelines. In the past, while agreements had to be disclosed within 15 days after their signature, benefits had to be disclosed only twice a year: by 1 February and 1 August.

Now, details of benefits and remuneration for services above €10 granted during the first half of the calendar year will have to be disclosed by 1 September, and those granted during the second half by 1 March of the following year. This means that, going forward, disclosures of both benefits and remuneration will be in step.

Finally, the decree provides that the new provision on the disclosure of remuneration will enter into force as soon as the relevant implementing order is published, and at the latest on 1 July 2017.

In that respect, the guidelines of the French Pharmaceutical Association (the LEEM), issued in February 2017, anticipate that the first disclosure of any remuneration provided for under an agreement will need to be made by 1 September 2017.

Indeed, since the implementing order was issued after 1 February – the deadline date for the disclosure of data related to the second half of 2016 – it is unlikely that this will have retroactive effect on remuneration under agreements concluded in 2016. However, the LEEM mentions that this possibility cannot be totally excluded and companies should await publication of the implementing order for further guidance.

It should be borne in mind that at the time of its publication in May 2013, the original decree to implement the French Sunshine Act had full retroactive effect to as far back as January 2012 – the date the French Sunshine Act came into force. Both companies and industry associations resisted this interpretation on the grounds that such retroactive disclosure would be too cumbersome for companies to implement.

Under a restrictive interpretation, the new disclosure requirement relating to remuneration should apply as of January 2012, which means adjustments will need to be made to cover the last five years. However, a degree of flexibility will probably be allowed with respect to such retroactive disclosure given the burden of work this would impose on companies.

In any case, companies should be prepared for significant upcoming changes and therefore monitor closely the evolution of the regulation in that respect.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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