The fundamental goal of each company is to increase sales. For this purpose, players that operate in the Ukrainian pharma market utilize a wide range of promotional activities. However, Ukrainian laws on health protection allow very few of them when it comes to prescription (or “Rx”) pharmaceuticals.
Currently, advertising Rx pharmaceuticals, sponsoring events that are open to the general public, and ordering the preferred sheltering of such products in places accessible to customers is prohibited. As a result, Ukrainian pharma companies tend to promote new Rx pharmaceutical products using alternative methods – which very often lack clear legal regulation.
The key allowed promotional activities for Rx pharmaceuticals are: (1) Sponsoring scientific events for qualified healthcare professionals (HCPs) as speakers/moderators or participants; (2) Sponsoring publications in specialized periodicals; (3) Dispatching samples and promotional materials among HCPs; and (4) Creating or donating to hospital- and patient-organizations charities.
All such activities must serve a scientific purpose or create a positive image for the company. Pharmaceutical companies are prohibited from demanding that HCPs increase the number of prescriptions of Rx pharmaceuticals following such activities.
Moreover, pharma companies must be careful when engaging state officials, public servants, chief doctors, senior medical assistants of public healthcare institutions (together, “Officials”) in their promotional activities as these individuals are subject to anti-corruption legislation.
If an Official participates in a scientific event as a speaker or moderator, he/she may receive a reasonable reward. In addition, pharma companies may also provide Officials with gifts or signs of hospitality. The value of such benefits cannot exceed the established threshold (currently around USD 79 for one-time gift and USD 157 for all gifts received during one year from a single source).
Violations of anti-corruption legislation may lead to administrative or criminal liability.
Officials may bear administrative liability for accepting excessive gifts or signs of hospitality, performing actions influenced by an actual conflict of interest, or failing to take appropriate measures to reveal a corruption offence. Administrative liability may be imposed in confiscating the gift or a fine amounting to up to USD 245.
At the same time, both representatives of pharmaceutical companies and Officials may be subject to criminal liability for the following offenses: (1) Accepting unlawful benefits; (2) Proposing and giving an unlawful benefit; (3) Bribing an officer of a privately-owned legal entity, regardless of the organizational and legal form; and (4) Bribing an employee of a legal entity.
The sanctions for these crimes vary, and may take the form of a fine of up to USD 2400, arrest, imprisonment, and/or prohibition from holding certain positions and engaging in certain activities. Under the most aggravating circumstances, crimes may result in up-to ten years of imprisonment for proposing and/or giving an unlawful benefit, being prohibited from holding certain positions and engaging in certain activities for up to three years, and having property confiscated.
Pharma companies also use sampling and dispatching promotional materials to promote their Rx pharmaceuticals. Under Ukrainian law, HCPs may receive samples only for personal use and clinical trials, but not for their professional activities. Moreover, the distribution of samples directly to patients is prohibited. Pharma companies may distribute promotional materials only to duly-qualified HCPs. Samples and promotional materials are also treated as gifts. Thus, if a pharma company provides an HCP with samples and/or promotional materials with a value exceeding the threshold established for gifts, administrative or criminal liability will apply.
Participating in charitable activities is also a well-known practice that may help pharma companies create a positive image and raise loyalty to their brand. Still, to comply with Ukrainian anti-corruption laws, the key goal of such activities must be the creation of an actual charity. This means that pharma companies must not link their charity budgets to increasing the sales of their products.
Therefore, based on legislative restrictions, pharma companies must promote their new Rx pharmaceuticals with due diligence. Apart from following legislative requirements, companies are encouraged to have an anti-corruption program, to regulate interaction with HCPs, and, particularly, with Officials. In addition, pharma companies may want to apply a stress-check program to ensure compliance with anti-corruption law when launching each promotional and marketing activity with regard to Rx pharmaceuticals.
By Mykola Stetsenko, Managing Partner, and Bogdana Parkhomchuk, Associate, Avellum
This Article was originally published in Issue 8.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
