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The French authorities publish an interpretative document concerning the French Sunshine regulations - Foreign companies may be subject to the new transparency requirements
Sunshine regulations were introduced to French law pursuant to a law dated 29 December 2011 (aka. Bertrand law), and completed by the French Decree n°2013-414 recently published on 22 May 2013. These texts also impacted the French Anti-Benefits regulations introduced in France by French law n°93-121 dated 27 January 1993.
The new rules require public disclosure of information concerning agreements concluded between healthcare companies and individuals (e.g. healthcare professionals) or entities (e.g. patients organisations) active in the French health sector and direct and indirect benefits provided by the companies to such individuals or entities.
The industry was expecting an interpretative circular from the French Administration to clarify various aspects of the newly introduced sunshine regulations.
This circular which was published on 12 June 2013 (Circular n° DGS/PF2/2013/224 dated 29 May 2013 - the "Circular"), provides details on the interpretation of the French Health Department (the Direction Générale de la Santé) on the French Sunshine regulations and Anti-Benefits regulations.
Although the Circular provides some useful information regarding the application of certain aspects of the regulations, the interpretative document of the French authorities remains silent on many other aspects.
ARE COMPANIES ESTABLISHED ABROAD CONCERNED BY THE SUNSHINE REGULATIONS?
The public disclosure requirement introduced by the Sunshine regulations is imposed on companies which manufacture or market health (or cosmetic) products, including medicinal products and medical devices, or which provide services linked to those products.
An initial draft of the Circular (issued in September 2012) limited the scope of this public disclosure requirement to companies established in France. Yet, the definitive version of the Circular does not include any such limitation. However, the Circular clearly provides that the transparency obligation relates to agreements concluded with and direct or indirect benefits granted to stakeholders practicing their activities in France.
As of today, none of the various texts applicable (in particular Article L.1453-1 and Article L5311-1 of the French Public Health Code - "PHC") provide for an explicit limitation of this public disclosure requirement to French companies or companies established in France.
The obligation to publish is subject to criminal sanctions. French criminal laws are generally applicable to any offence perpetrated in France. This principle applies regardless of the nationality of the perpetrator. A company breaching French criminal laws may be subject to criminal sanctions irrespective of the fact that the company is established or not in France.
An offence is deemed perpetrated in France if one of its composing elements can be located in France. The offence at stake relates to the fact that one company willingly omits to publish information. To locate omissions (which is not obvious at first), case law considers that such an offence should be located where the omission has had consequences and where the actions omitted (i.e. the declaration for publication purposes) should have been accomplished.
Regarding the failure to publically disclose information concerning agreements concluded between healthcare companies and individuals or entities active in the French health sector and direct and indirect benefits provided by the companies to such individuals or entities, it could be argued that the offence could, therefore, be located in France. Consequently, in the absence of any text explicitly limiting to French companies the scope of this public disclosure requirement, we believe that this obligation may apply to both French and foreign legal entities. In other words, if a company, regardless of its structure and connection(s) with France:
(1a) manufactures the products referred to in Article L5311-1 PHC which are then sold in France; or
(1b) markets such products in France (e.g. medicinal products and medical devices companies selling products into France from abroad); or
(1c) provides services (e.g. a CRO) linked to the said products on behalf of the companies mentioned above;
(2) enters into a relationship with one of the stakeholders listed in Article L1453-1 PHC which practices its activities in France;
then such company is likely to be subject to the public disclosure requirement.
The above analysis can be further fine-tuned depending on the circumstances. It could also evolve on the basis of the application of the new provisions by the French authorities and the interpretation provided by the French courts in relation to these provisions. In the meantime, we recommend mitigating the risk of criminal sanctions by considering the above obligation of publication to be applicable to non-French companies until further notice.
OTHER TOPICS COVERED BY THE CIRCULAR
Situation of "multi-products" companies
For companies producing or marketing various types of products, the public disclosure requirement only applies in relation to the activities relating to the products mentioned in Article L5311-1 PHC.
Avoiding publishing the same information twice
There may be circumstances where both a company producing or marketing products falling within the scope of the new Sunshine regulations, and a service provider acting for such company, are legally subject to the publication obligation for the same type of information (e.g. a benefit granted by a CRO to a healthcare professional may also be a benefit granted indirectly by the producer/marketer having appointed the CRO to work with such healthcare professional).
The Circular provides that in such a case, the two companies at stake must organize themselves to make only one publication.
Clarifications made regarding the stakeholders and agreements concerned by the public disclosure requirement
The Circular includes clarifications regarding each type of stakeholders listed in Article L1453-1 PHC. As an illustration, the Circular provides that advisors which are part of regulated professions are not considered to fall within the category advisors and consultancies listed in Article L1453-1 PHC, Section I(6).
The Circular also provides details on the agreements that are subject to the publication obligations. Employment agreements are expressly excluded from the scope of application of the new public disclosure requirement.
What sanctions apply in case of non-compliance?
The infringement of the sunshine regulations may expose companies to fines up to EUR45,000 and to other sanctions such as the publicity of sanctions or the prohibition to manufacture products.
Can benefits be granted to healthcare professionals associations?
The Circular clarifies the question as to whether a healthcare professionals association can be funded via grants. The Circular provides that healthcare professionals association which are not intended to represent and defend the professional interests of the healthcare professionals can receive grants (e.g. if the purpose of the association is the conduct of research or medical training activities).
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