ACCC conditionally authorises generic medicines code

3 November 2010

The Australian Competition and Consumer Commission has granted conditional authorisation to the Generic Medicines Industry Association's Code of Practice 2nd edition for three years.

The code is a self-regulatory framework for the supply of generic medicines in Australia.

"The ACCC is granting authorisation subject to conditions which will provide greater transparency around the relationship between the manufacturers of generic medicines and pharmacists," ACCC chairman Graeme Samuel said today.

This decision affirms the ACCC's draft decision, released for public comment on 3 August 2010, although the ACCC has reworked the conditions that were initially proposed.

"Following the draft decision, the ACCC received support from a range of interested parties to maintain conditions providing transparency, despite submissions from the GMiA that these conditions were not necessary."

The ACCC's condition extending the code's public reporting on the hospitality and entertainment provided at educational events to medical practitioners as well as pharmacists is largely unchanged from the draft decision. The ACCC considers that the administrative burden on GMiA members will be limited, as pharmacists generally received training in-store with limited hospitality.

The ACCC remains of the view that a condition to provide transparency around the provision of hospitality to pharmacists at educational events would help to maintain public confidence that such relationships are able to withstand professional and public scrutiny. This is one of the aims of the code.

A second condition, designed to provide high level disclosure around the nature and extent of the gifts and other non-price incentives provided by manufacturers to pharmacists as an incentive for the pharmacist to stock their brand of product, has been reworked by the ACCC following the draft decision.

Under the revised condition the GMiA will report annually in a table the accumulated total cost to each member of providing the non-price benefits, other than more favourable trading terms, to pharmacists and identify the types of non-price benefits provided by each of its members in the reporting period.

In order to reduce the compliance burden on the GMiA's members the ACCC has reduced the number of reports required under the term of authorisation from six to three.

This condition responds to concerns that the offer of loyalty programs or other non-price incentives to pharmacists undermines public confidence in the generic medicines industry. This was a concern raised by interested parties. The ACCC considers that making public the nature and size of such benefits imposes its own constraint and the companies conferring such benefits are likely to ensure they are in a position to publicly explain them.

The GMiA code is a newly developed code and as such the ACCC is granting authorisation for three years, rather than the five years sought by the GMiA. Should the GMiA seek authorisation at the end of this time it will be important for the GMiA to demonstrate how the code has been enforced and how effective it has been in regulating member behaviour in the areas governed by the code.

Authorisation provides protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

The ACCC's determination will be available from the ACCC website.

Related register records

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