The Australian Competition Tribunal has backed the Australian Competition and Consumer Commission's tight public reporting conditions for Medicines Australia's Code of Conduct.
"Medicines Australia, the drug industry's national association, had sought authorisation of its Code of Conduct which governs the activities of drug companies when they promote prescription medicines to doctors," ACCC Chairman, Mr Graeme Samuel, said today.
"The code regulates advertising of prescription drugs to doctors, 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.
"The code was authorised by the ACCC in July 2006, with a condition requiring Medicines Australia to publicly report details about all functions sponsored by pharmaceutical companies.
"The condition required greater detail about the functions including cost and the type of hospitality provided. This information was to be made available to the public on the Medicines Australia website every six months.
"The condition aimed to increase the level of transparency concerning functions sponsored by pharmaceutical companies. The ACCC considered a condition requiring public reporting and transparency was necessary to deliver the public benefits for the code to be authorised.
"The ACCC believed that enhanced transparency would bring about greater accountability on the part of pharmaceutical companies about their sponsorship activities and would help the public to assess whether the code is being effectively enforced by Medicines Australia.
"Medicines Australia sought review by the Australian Competition Tribunal of the ACCC's decision and sought to have its code authorised, without the public reporting condition."
While the Tribunal found that the code would deliver public benefits the Tribunal felt it was appropriate to impose the ACCC's public reporting condition.
In particular, the Tribunal stated: "Making public the nature, frequency and scale of benefits conferred will impose its own compliance constraint that companies conferring the benefit will have to be in a position to explain and justify it in public as well as to the Code Committee should a complaint be made.
In the Tribunal's opinion, "the existing enforcement mechanism, so far as it relates to these [providing hospitality and other benefits to healthcare professionals] provisions, is weak. It is also open to lenient interpretation. There is little in the way of any real deterrent to contravention or incentive to compliance. There seems to be little incentive or enthusiasm for companies to complain about one another in this area."
The Tribunal stated that "there is a real risk that absent any requirement for regular reporting and public disclosure of the kind proposed in the ACCC condition some companies will test the boundaries and offer inappropriate benefits to healthcare professionals.
"The Tribunal's decision recognises that public scrutiny of hospitality and other benefits offered by drug companies to healthcare professionals is the most effective mechanism for ensuring that drug companies are accountable," Mr Samuel said.
The Tribunal has granted authorisation to the code for five years instead of the three proposed by the ACCC. The Tribunal considered that granting authorisation for five years would give adequate time to assess the effectiveness of the condition.