ACCC authorises code of conduct governing drug companies' dealings with doctors

The Australian Competition and Consumer Commission has authorised*, subject to conditions, a code governing drug companies' dealings with doctors.

"The code governs the marketing activities of companies promoting prescription medicines to doctors", ACCC Chairman, Mr Graeme Samuel, said today. "It has been developed by Medicines Australia, the national association representing the industry". 

The ACCC has granted authorisation subject to conditions requiring Medicines Australia to:

• undertake greater monitoring of pharmaceutical company promotional activities; and
• publish full details of all breaches of the code on its website.

"The ACCC acknowledges recent improvements to the code but believes the conditions will improve the code's ability to prevent drug companies' marketing activities inappropriately influencing doctors' prescribing decisions.

"When it issued its draft decision, the ACCC proposed to impose a different condition on the authorisation. In light of concerns raised following the draft decision, the ACCC has revised this condition to ensure that it is practical and effective, and provides a reasonable level of transparency of industry practices.

"The ACCC has authorised the code for three years. This will allow the ACCC to assess how effective self-regulation has been in addressing consumer concerns about the drug companies/doctors".

The code regulates matters such as drug company sponsorship of medical conferences; the payment of travel and accommodation expenses of doctors attending such conferences; and the provision of other forms of hospitality and entertainment.

The code also regulates advertising of prescription drugs to the medical profession. Advertising to consumers of prescription drugs is prohibited by the Therapeutic Goods Administration.

The ACCC also has a role in endorsing effective industry codes of conduct that aim to achieve best practice within an industry. The endorsement process is quite distinct from the authorisation process. Authorisation only indicates that a code passes the legal test set out in the Trade Practices Act 1974 (that the ACCC is satisfied that the public benefit arising from the conduct outweighs any competitive detriment). Authorisation does not indicate that a code is best practice and this authorisation can in no way be held out as endorsement or approval by the ACCC of the code.

*The Trade Practices Act 1974 prohibits certain forms of anti-competitive agreements including agreements between competitors which limit their ability to deal with who they choose or on the terms they choose (including price). Authorisation provides immunity from court action under the Act arising from certain anti-competitive agreements. Authorisation can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any competitive detriment.