With Croatia joining the European Union and assuming the obligation to implement EU law, compliance became the key word in the country’s legal market. At first, the complicated regulatory environment produced legal uncertainty in entire industries.
Through the persistent education of in-house lawyers and the outsourcing of highly complex issues to specialized lawyers, the majority of companies learned how to address compliance issues in a timely and systematic fashion. However, it is safe to say that the pharmaceutical industry continues to experience problems with regards to compliance due to extensive regulation, the interest of the general public, and the publicity surrounding the industry.
In my personal experience, having worked in the industry for quite some time, one of the basic issues in the pharmaceutical industry that still requires further development and awareness is advertising. The general opinion among the compliance community is that efficient monitoring and controlling of advertising practices in pharma is still quite challenging even for experienced compliance experts. The Croatian Regulation on Medicine Advertisement (the “Regulation”) recognizes several types of marketing, but the most important kinds to be stressed in terms of compliance is advertising towards the general public, the organization of promotional events attended by persons entitled to prescribe medicines, and the organization of professional conferences.
When it comes to advertising a medicine to the general public, the content and context of the advertisement are to be thoroughly examined by compliance experts due to the numerous restrictions imposed by the Regulation, including prohibitions on implying that the advertised medicine guarantees success in treating a specific illness or is better than another. One common mistake in this type of advertising in Croatia is the use of misleading graphic displays showing the supposed changes caused by the medicine.
The organization of professional conferences has also been in the spotlight for the last couple of years. Certain restrictions have been imposed there too, including a prohibition against any reimbursements other than for costs actually incurred by the attendees of the conference. However, as a result of the April 2015 amendment to the Regulation, the reimbursement of costs to third persons (such as spouses or children of attendees) is also permitted, in accordance with the existing practices of international professional associations, such as the Ethical code of the EFPIA (European Federation of Pharmaceutical Industries and Associations).
Although fines imposed by the Croatian Law on Medicine may not seem draconian (they range between EUR 13,000 and EUR 20,000), a more significant sanction is provided for in the Agreement on Ethical Advertising of Medicine, which is specific in Croatian law. Since 2010, these agreements have been concluded between the Croatian Health Insurance Fund and each marketing authorization holder. These agreements usually contain clauses providing for fines in the amount of up to 3% of annual revenues for breaches of the legal framework with regards to the advertising of medicines. So far, proceedings in these types of matters have mainly been initiated by direct competitors. However, the regulator is expected to take a more active approach in the near future in order to endorse good practices in the industry.
These fines represent an adequate stimulus for companies in the pharma industry to increase their compliance endeavors. Not only are large fines at stake in the compliance game, but also the goodwill of the company, especially when it comes to an industry this sensitive to the public eye. Additionally, the problem of in-house counsel’s and compliance officers’ organizational autonomy within the corporate organizational matrix, as the basic prerequisite for providing unbiased advice, should be addressed and dealt with in the coming years. In order to do this, due to the high complexity of the matter and for the sake of achieving an objective approach to the problem, I strongly advise companies to entrust a periodical assessment of their compliance to outside experts.