Application by Medicines Australia Inc

[2007] ACompT 4

FEDERAL COURT OF AUSTRALIA

Application by Medicines Australia Inc [2007] ACompT 4

TRADE PRACTICES – applications for review of authorisation determinations under s 88 of the Trade Practices Act –proposed contract, arrangement, understanding or conduct involving exclusionary provisions – exclusive dealing arrangement – industry association – Code of Conduct – little anti-competitive detriment – sufficient public benefit to outweigh anti-competitive detriment and to allow authorisation of exclusionary provisions and third line forcing – public benefit limited by inefficiencies in enforcement of Code – nature of authorisation – nature of discretion to authorise where public benefit test satisfied – nature of power to impose conditions – where anti-competitive detriment low and public benefit case not strong – condition justified strengthening particular public benefit – Code of Conduct regulating promotion of pharmaceutical medicines by pharmaceutical companies to healthcare professionals – provisions relating to conferral of hospitality and other benefits on healthcare professionals – low level of complaint and enforcement of such provisions – whether conditions should be imposed to require Code to include public reporting of hospitality and sponsorship benefits – authorisation affirmed but varied as to terms of condition and period of authorisation   

Trade Practices Act 1974 (Cth) s 88, s 90, s 91, s 101, s 102
Therapeutic Goods Act 1989 (Cth)
Therapeutic Goods Amendment Act (No 1)2003 (Cth)
National Health Act 1953 (Cth)

Jones v Australian Competition and Consumer Commission (2003) 200 ALR 234; 131 FCR 216 cited
Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 8 ALR 481; 25 FLR 169
Re Howard Smith Industries Pty Ltd (1977) 28 FLR 385
Re Rural Traders Co-operative (WA) Ltd (1979) 37 FLR 244
Re 7-Eleven Stores Pty Ltd  (1994) 16 ATPR 41-357
Re Southern Cross Beverages Pty Ltd (1981) 50 FLR 176
Qantas Airways Ltd [2004] ACompT 9
Re VFF Chicken Meat Growers Boycott Authorisation [2006] ACompT 2
Application by Michael Jools (2006) 233 ALR 115
Re QIW Ltd (1995) 132 ALR 225
Re Media Council of Australia Authorisation; Re Australian Consumers’ Association’s Application (1987) 88 FLR 1
Re Australian Competition and Consumer Commission by Australian Association of Pathology Practices Inc (2004) 206 ALR 271
Re EFTPOS Interchange Fees Agreement (2004) 26 ATPR 41-999
Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492
Oshlack v Richmond River Council (1998) 193 CLR 72
Re Herald and Weekly Times Ltd (1978) 17 ALR 281
Re Queensland Timber Board (1975) 24 FLR 205

Lord Wilberforce, Campbell and Elles Restrictive Trade Practices and Monopolies (Sweet & Maxwell, London, 1966)
Donald BG and Heydon JD, Trade Practices Law (Law Book Co, 1978)
Barnes and Blakeney, Advertising Regulation (Law Book Co, 1982)
Gunningham N, “Codes of Practice: The Australian Experience” in Webb K (ed), Voluntary Codes: Private Governance, the Public Interest and Innovation (Carleton Research Unit for Innovation, 2004, Ch 12)
Webb K and Morrison A, “The Law and Voluntary Codes: Examining the “Tangled Web”” in Webb K (ed), Voluntary Codes: Private Governance, the Public Interest and Innovation (Carleton Research Unit for Innovation, 2004)

File No 6 of 2006

RE:APPLICATION BY MEDICINES AUSTRALIA INC FOR REVIEW OF A DETERMINATION BY THE AUSTRALIA COMPETITION AND CONSUMER COMMISSION GRANTING AUTHORISATION OF EDITION 15 OF MEDICINES AUSTRALIA’S CODE OF CONDUCT

BY:MEDICINES AUSTRALIA INC (ABN 57 105 836 803)  Applicant

FRENCH J, MR GF LATTA and PROFESSOR C WALSH
27 JUNE 2007
PERTH (HEARD IN SYDNEY)

IN THE AUSTRALIAN COMPETITION TRIBUNAL

No 6 of 2006

RE:

APPLICATION BY MEDICINES AUSTRALIA INC FOR REVIEW OF A DETERMINATION BY THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION GRANTING AUTHORISATION OF EDITION 15 OF MEDICINES AUSTRALIA’S CODE OF CONDUCT

BY:

MEDICINES AUSTRALIA INC
(ABN 57 105 836 803)

Applicant

TRIBUNAL:

FRENCH J (DEPUTY PRESIDENT),
MR GF LATTA
PROFESSOR C WALSH

DATE OF DETERMINATION

27 JUNE 2007

WHERE MADE:

PERTH (HEARD IN SYDNEY)

THE TRIBUNAL DETERMINES THAT:

1.Authorisations A90779 and A90780 are revoked.

2.The determination of the Australian Competition and Consumer Commission dated 26 July 2006 granting authorisation to applications A90994, A90995 and A90996 is affirmed subject to the succeeding variation to the conditions on the authorisations and their duration.

3.The condition on each of the authorisations is varied to read as follows:

3.1The Code of Conduct is varied within three months of this determination to include the requirement that each member company report to Medicines Australia all educational meetings and symposia as defined in ss 6, 7 and 10 of the Code held or sponsored by that company:

(a)by completing the table set out at Attachment A to the Determination for each month of the financial year;

(b)by providing a copy of the completed table for two six month periods every year (July to December; January to June) to Medicines Australia within 14 days of the end of each six month period.

3.2The Code is further amended to provide that:

(c)Medicines Australia will make publicly available on its website the completed table provided by each member company within three months of the end of each six month period;

(d)The Monitoring Committee will, at the end of each financial year conduct a review of the information provided by the members for three months selected by it at random for the preceding 12 month period.

3.3The Monitoring Committee will be empowered in any case to request information concerning a particular event such as a copy of the invitation to the meeting and a copy of any printed material provided to attendees. 

3.4.Where the Monitoring Committee considers that the conduct of the member company with regard to the meeting may breach the Code of Conduct, it will refer a report about the meeting and the member company’s response to the Code of Conduct Committee which, after giving notice to the member company, may deal with it as though it were a complaint.

3.5The Monitoring Committee shall also provide a detailed report on its other activities to Medicines Australia for publication in the Code of Conduct Annual Report.  This report shall also list any cases forwarded to the Code of Conduct Committee under the preceding provisions setting out the name of the member company and the date it was referred.

4.The authorisations referred to in paragraph 2 of this Determination shall be in force for a period of five years.

5.Liberty to apply to the Tribunal for such further determinations as may be necessary to implement and to carry into effect this determination.

Attachment A

SUMMARY OF EVENTS SPONSORED BY MEMBER COMPANIES: MONTH, YEAR 2006

Company Name:                  X

Number of events held:       Y

Venue	Description of function including duration of educational content delivered	Professional status of attendees	Hospitality provided	Total cost of hospitality	Number of attendees	Total Cost of Function
Specify venue name and location	Companies to provide as much information as they feel is necessary to explain the educational component, eg type of function, nature of education provided etc.	Specify, eg: GPs, anaesthetists, Occupational Therapists	Specify the nature of the hospitality provided and whether it included any of the following elements: Food and/or beverages Accommodation Travel Entertainment	$ cost This must state the total cost of the items listed in the hospitality column.  A breakdown of those costs may be provided if desired.	xx	$cost Including speakers fees, venue hire, transportation cost, materials provided to attendees etc.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	No 6 of 2006

RE:

 APPLICATION BY MEDICINES AUSTRALIA INC FOR REVIEW OF A DETERMINATION BY THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION GRANTING AUTHORISATION OF EDITION 15 OF MEDICINES AUSTRALIA’S CODE OF CONDUCT

BY:

 MEDICINES AUSTRALIA INC (ABN 57 105 836 803)

Applicant

TRIBUNAL:	FRENCH J (DEPUTY PRESIDENT),  MR GF LATTA  PROFESSOR C WALSH
DATE:	27 JUNE 2007
PLACE:	PERTH (HEARD IN SYDNEY)

INDEX

Introduction  [1] – [8]
Medicines Australia – Objects and Rules  [9] – [19]
The Code of Conduct – an overview  [20] – [26]
The Code of Conduct – provisions relating to
benefits for healthcare professionals  [27] – [34]
The Code of Conduct – enforcement committees  [35] – [47]
The Code of Conduct – guidelines for complaints  [48] – [49]
Differences between Edition 14 and Edition 15  [50] – [51]
The authorisation applications  [52] – [55]
The ACCC determination  [56] – [89]
The application for review  [90] – [92]
Statutory framework for authorisation  [93] – [100]
Who may apply for authorisation  [101] – [104]
General principles – the authorisation process  [105] – [106]
General principles - the public benefit test  [107] – [116]
General principles – the future with and without test  [117] – [121]
General principles - the discretion to authorise  [122] – [128]
General principles - conditions upon authorisation  [129] – [134]
General principles - the function of the Tribunal on review  [135] – [139]
The application for authorisation  [140] – [143]
The evidence before the Tribunal  [144] – [145]

Deborah Jane Monk – on the administration of the
 Code by Medicines Australia  [146] – [181]
Harry Michael Nespolon – a general practitioner
on the Code Committee  [182] – [192]
John Paul Seale – a pharmacologist on the Code
Committee  [193] – [209]
Kenneth Williams – an Appeals Committee member  [210] – [223]
Gary Jonathan Phillips – a non-member company’s
perspective on the Code   [224] – [236]
Stephen Ackland – a medical oncologist’s interaction with
the pharmaceutical industry  [237] – [247]
Ian Edwin Haines – a medical oncologist concerned about
pharmaceutical company benefits  [248] – [259]
David Alexander Henry – a pharmacologist’s research into
the scale and effect of interactions between the industry and
healthcare professionals  [260] – [278]

The external regulatory framework  [279] – [286]
The relevant market  [287] – [288]
An overview of voluntary codes and their interaction
with statutory regulation  [289] – [308]
The future without the Code  [309] – [324]
The future with the Code - anti-competitive detriment   [325] – [333]
The future with the Code – public benefits and entailed
public detriments  [334] – [358]
Whether the public benefit is sufficient to justify authorisation                   [359]
Whether a condition should be imposed as a matter of discretion                [360] – [374]

Annexure 1 – Summary of the Medicines Australia Code
as set out in paragraphs 3.5 to 3.90 of the ACCC
Final Determination and as Reworked by Medicines Australia
Annexure 2 – Results of consideration of complaints by
Code Committee
Annexure 3 – Results of consideration of appeals by
Appeals Committee
Annexure 4 – Comparison of alleged versus actual breaches
of the Code
Annexure 5 –  Rule Creation: Comparison of Regulatory
And Voluntary Code Regimes from Webb K and Morrison M
The Law and Voluntary Codes: Examining the “Tangled Web”
Annexure 6 – Rule Administration: Comparison of Regulatory
And Voluntary Codes Regimes from Webb K and Morrison M,
The Law and Voluntary Codes: Examining the “Tangled Web”
Annexure 7 – Adjudication: Comparison of Regulatory
And Voluntary Code Regimes from Webb K and Morrison M, The
Law and Voluntary Codes: Examining the “Tangled Web”
Annexure 8 – Summary of Cost Information in relation
To Hospitality  Provided by Pharmaceutical Companies
To Healthcare Professionals

IN THE AUSTRALIAN COMPETITION TRIBUNAL

No 6 of  2006

RE:APPLICATION BY MEDICINES AUSTRALIA INC FOR REVIEW OF A DETERMINATION BY THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION GRANTING AUTHORISATION OF EDITION 15 OF MEDICINES AUSTRALIA’S CONDUCT OF CONDUCT

BY :     MEDICINES AUSTRALIA INC
          (ABN 57 105 836 803)

Applicant

TRIBUNAL:	FRENCH J (Deputy President)  MR GF LATTA  PROFESSOR C WALSH
DATE:	27 JUNE 2007
PLACE:	SYDNEY

REASONS FOR DETERMINATION

Introduction

1. Medicines Australia Inc (Medicines Australia) is a national association of firms and companies involved in the manufacture and marketing of prescription medicines in Australia.  Prior to April 2002 the Association was known as the Australian Pharmaceutical Manufacturers’ Association Inc (APMA).

2. In 1960 APMA established a Code of Conduct (Code) to be observed by its members.  That Code has evolved from its first edition, which was 12 pages in length, to the most recent and 15^th Edition, which is some 144 pages in length.  Broadly speaking it is said, in its Preamble, to set standards for:

   (a)the provision of information about prescription medicines to healthcare professionals;

   (b)the advertising of prescription medicines and other promotional activities, including printed materials, audio visual materials, use of the internet and trade displays;

   (c)interactions between healthcare professionals and pharmaceutical companies, including the provision of benefits to healthcare professionals by pharmaceutical companies; and

   (d)the manner in which pharmaceutical companies may deal with the general public including the prohibition of promotion of prescription products to members of the general public.

3. The first interaction of the Code with competition law in Australia occurred in 1977. The then Trade Practices Commission granted clearance under s 92(2) of the Trade Practices Act 1974 (Cth) (the TPA) in respect of the 4^th Edition on 30 June 1977. On 1 July 1977 s 92 of the TPA was repealed. Extant clearances were deemed to be authorisations granted by the Commission under s 88(1) or (5) of the TPA.

4. When the Code reached its 13^th Edition, in February 2001, APMA applied for its authorisation and the revocation of the 1977 clearance. Before the Australian Competition and Consumer Commission (ACCC) issued its determination in respect of the 13^th Edition, a 14^th  Edition was adopted by APMA which had by then become Medicines Australia.  That adoption occurred on 3 December 2002.  Medicines Australia subsequently requested that the ACCC consider a 14^th Edition for authorisation.  Authorisations A90779 and A90780 were granted in respect of  that Edition on 14 November 2003.  They came into effect on 6 December 2003 for a period of three years.  Between November 2004 and July 2005 Medicines Australia conducted a review of the Code which resulted in Edition 15, which is the subject of the present proceedings.  

5. On 30 November 2005 Medicines Australia applied for revocation of the existing authorisations and substitution of an authorisation for the 15^th Edition.  The ACCC granted authorisation in respect of that edition on 26 July 2006 subject to a condition requiring each member to report twice yearly to Medicines Australia on events sponsored by the member for healthcare professionals.  The condition required Medicines Australia to make such reports publicly available in tabular form on its website and to review them through its Monitoring Committee.  Authorisation was for a period of three years.

6. On 15 August 2006 Medicines Australia lodged an application with the Australian Competition Tribunal (the Tribunal) for review of the determination by the ACCC.  It, in effect, challenged both the imposition of the condition and the three year duration of the authorisation.   It sought a determination that the authorisations A90779 and A90780 be revoked and that its applications for authorisations numbered A90994, A90995 and A90996 be granted for a period of five years without conditions. 

7. Although Medicines Australia maintained, as its primary position, that it should have an unconditional authorisation for a period of five years it proffered at the hearing its own formulation of a condition on authorisation in relation to information about member company sponsorship of events for the benefit of healthcare professionals.

8. In our opinion the public benefit likely to flow from the implementation of the proposed Code outweighs any anti-competitive detriment flowing from it.  So far as the Code proposes exclusionary provisions and an exclusive dealing provision in relation to the training of medical representatives, the benefits are such that they should be allowed.  The necessary conditions for authorisation are thus satisfied.  There remains the question whether, in the exercise of its discretion under the Act, the Tribunal should authorise the proposed conduct.  In our opinion the authorisations should be granted but upon a condition, in each case, that the Code be amended to  require reporting by the members of Medicines Australia and public disclosure of hospitality benefits conferred by members on healthcare professionals.  The purpose of the condition is to increase the likelihood that the public benefit claimed for the Code is realised in respect of the provisions dealing with the conferral of such benefits on doctors.  We are also of the view that authorisation should be for a period of five years.

   Medicines Australia – Objects and Rules

9. Medicines Australia is an incorporated association governed by the Associations and Incorporation Act 1984 (NSW). 

10. The objects of Medicines Australia are set out in the Statement of Objects section of its Objects and Rules.  They include the maintenance of the highest standards in research, development, manufacture, production, promotion and distribution of prescription pharmaceutical products (1.1), the  development of the industry (1.2), cooperation with Federal and State governments (1.3), provision of information to members (1.4) and the establishment and maintenance of liaison with similar organisations in Australia and  overseas (1.5).  There is a general object of fostering awareness among members of the health professions, the media and the general public of the industry’s contribution to the health and wellbeing of the Australian community (1.6).  Objects 1.7 and 1.8 are of particular relevance to this application:

    To adopt and administer mechanisms for Industry self-regulation.

    To promote cordial relations and to encourage a spirit of cooperation between members of the Industry, related health care organisations and the general public.

11. The membership of Medicines Australia is defined in Rule 2.  Its primary membership classes comprise “firms or companies operating a prescription pharmaceutical business in the Commonwealth of Australia either as a separate business or as a division of another business, in any one or more sections of the Industry, which include both research based firms or companies and non research based firms or companies” (r 2.1). 

12. There are three principal classes of members defined in r 2.2.  They are:

    (a)Class 1 Members – being firms or companies operating a business described in Rule 2.1 but being only research based firms or companies.

    (b)Class 2 members – being firms or companies operating a business described in Rule 2.1 and being

    (i)non research based firms or companies OR

    (ii)affiliates of Class 1 Members (where separate participation is desired).

    (c)Class 3 Members – being firms or companies significantly engaged in research into potential pharmaceutical products, but which have not yet commenced commercial production.

    There is additional provision for “Honorary Life members” and “Affiliate Members” (r 2.1(d) and (e)).   The Association presently has 39 Class 1, 2 and 3 members and 7 affiliate members.  Their combined sales represent over 90 per cent of the sales of prescription medicines in Australia.

1. Rule 2.6 provides:

   Members shall comply with all the provisions of the Objects the Rules and the Code of Conduct, and any alterations or additions thereto.

   A membership application must be submitted to the Board of the Association which determines whether or not to approve it.  On approval, the applicant is to receive a copy of the Objects and Rules and the Code of Conduct and is required to acknowledge their receipt  to the Public Officer (r 3.4):

   Such acknowledgment shall be deemed for all purposes an admission by such applicant that he is fully acquainted with and shall conform and be bound by the Objects, the Rules and the Code of Conduct and until such acknowledgment is received by the Public Officer the applicant shall not be deemed to be a Member and shall not be entitled to exercise any of the privileges of membership.

2. Rule 11 provides for cessation of membership.  Circumstances in which a person, firm or company ceases to be a member of the Association include mental illness, bankruptcy, insolvency, resignation and expulsion.  A breach of the Code is not set out as a ground for cessation of membership under r 11.  The only way in which non-compliance with the Code can lead to non-consensual cessation of membership is by expulsion.  Expulsion is one of three disciplinary remedies set out in r 13.1 which provides:

   Where the Board is of the opinion that a Member:

   (a)has infringed or neglected to comply with any provision or provisions of the Objects, the Rules or Sections 12.2 or 12.3 of the Code of Conduct; or

   (b)is guilty of any act proceeding or practice which the Board considers to be inconsistent with his position as a Member or has acted in a manner prejudicial to the interests of the Association,

   the Board may, by resolution: 

   (i)expel the Member from the Association ; or

   (ii)suspend the Member from membership of the Association for a specified period or until the breach for which he was suspended is remedied;

   and/or

   (iii)ratify the imposition of a fine under Section 12.3 of the Code of Conduct.

   There is a right of appeal from a decision of the Board to a general meeting of the Association. 

3. The powers of the Board include the control and management of the affairs of the Association “subject to the Act, the Regulations, the Objects, the Code of Conduct, these Rules and to any resolution passed by the Association in general meeting …” (r 15). 

4. The Code is defined in r 1.1 as follows:

   “the Code of Conduct” means the Code of Conduct adopted by the Association defining the responsibilities of Members to the Australian medical profession and to all members of the community with regard to promotional procedures.

5. There is no specific provision relating to the adoption of the Code, however r 37.1 provides:

   The Objects, the Code of Conduct and the Rules may be altered, rescinded or added to only by a special resolution of the Association.

6. Rule 23 empowers the Board, by instrument in writing, to delegate to one or more committees the exercise of such of the functions of the Board as are specified in the instrument other than the power of delegation, a function which is a duty imposed on the Board by the Act or any other law and the power to expel or suspend a member as provided in r 13.1.  The Board may also delegate to a committee “the power to impose a charge for abuse of the Code as recommended by the Code of Conduct Committee” (Code Committee) (r 23.1(d)). 

7. The existence of the Code Committee appears to be assumed by the Objects and Rules, there being no express provision establishing it.  

   The Code of Conduct – an overview

8. The Preamble to Edition 15 of the Code states that it sets out standards of conduct for the activities of companies when engaged in the marketing of prescription products used under medical supervision as permitted by Australian legislation.  It asserts the responsibility of members of the industry to provide ongoing, objective and scientifically valid interpretations of data on prescription medicines to healthcare professionals and appropriate non-promotional information to the public.  It is the responsibility of members of the pharmaceutical industry to be aware of the Advertising Principles under the  Therapeutic Products Advertising Code (TPAC):

   Principle 1
   Advertisements must comply with the Therapeutic Products Act(s) and Rules and the Therapeutic Products Advertising Code (TPAC).

   Principle 2
   Advertisements must be truthful, balanced and not misleading.

   Claims must be valid and have been substantiated.

   Principle 3
   Advertisements must observe a high standard of social responsibility.

9. Acceptance and observance of the Code is said to be a condition of the membership of Medicines Australia and the Preamble adds:

   In accepting and observing the Code companies must comply with both the letter and spirit of the Code.

   The Preamble also states that the Code will be supervised and administered by the Board of Medicines Australia.     

10. The Code is said to reflect the industry’s commitment to ensure that all activities with, or materials provided to, healthcare professionals and members of the general public are never such as to bring discredit upon, or reduce confidence in, the pharmaceutical industry.  Such activities are described in the Preamble as a “Severe Breach” of the Code.  Failure to comply with the Code will result in sanctions being applied under the provisions of s 12. 

11. After the Preface and the Preamble there are 16 sections with many subsections followed by two Appendices and a Glossary.  The headings of the sections provide an outline of the content of the Code.  They are as follows:

    1.        Nature and Availability of Information and Claims

    2.        Types of Product Information

    3.        Promotional Material

    4.        Company Representatives

    5.        Product Starter Packs

    6.        Involvement in Educational Symposia, Congresses and Satellite Meetings

    7.        Sponsorship

    8.        Research

    9.        Relationship with the General Public

    10.      Relationship with Healthcare Professionals

    11.      Administration of the Code

    12.      Sanctions

    13.      Appeals

    14.      Monitoring

    15.      Compliance Procedures

    16.      Reporting

    Appendix 1 to the Code comprises “Guidelines for Complaints”.  Appendix 2 is an extract from the Objects and Rules dealing with the disciplining of members and rights of appeal.  This extract comprises Rules 13, 14 and 23.

12. The determination by the ACCC dated 26 July 2006 sets out, at [3.5] to [3.90], a convenient summary of each of the sections of the Code.  A reworked version of that summary was prepared by Medicines Australia and handed up to the Tribunal as Annexure C to its closing submissions.  It appears to be common ground that the document fairly summarises the Code.  In order that the substantive part of these reasons is not more lengthy than it has to be, the reworked summary is reproduced as Annexure 1.  There are tables attached to it which refer to complaint and disposition statistics.  There was some dispute as to whether Tables 3 and 4 were based on the relevant Annual Reports of complaint and disposition statistics produced by Medicines Australia.  The ACCC and Medicines Australia have agreed that the tables were compiled from the Reports.  They differ about the presentation of the material.  Medicines Australia in compiling the tables says it recorded complaints received rather than the number of breaches found in each financial year. 

13. As appears from the index of sections and the appended summary of the Code it contains detailed and apparently comprehensive provisions directed to securing completeness, accuracy and balance and to prohibiting misleading or inaccurate claims in advertising and promotional information provided to healthcare professionals.  Chapter 3, which deals with the various forms of advertising and promotion, is highly prescriptive.  The Code deals specifically with product samples or starter packs in Ch 5.  The remaining substantive parts are concerned with the training of medical representatives and the relationships between industry members and healthcare professionals.

14. The evidence and the submissions put to the Tribunal by Medicines Australia and the ACCC have focussed substantially, although not exclusively, upon issues raised by the contested condition which the ACCC imposed upon its authorisation.  That was a condition under which Medicines Australia would require each member to report, for each month of the financial year on a twice yearly basis, all educational meetings and symposia as defined in ss 6, 7 and 10 of the Code held or sponsored by that member.  It is appropriate, without detracting from the totality of the review to be undertaken by the Tribunal, to direct particular attention to ss 6, 7 and 10.

    The Code of Conduct – provisions relating to benefits for healthcare professionals

15. The opening provisions of s 6 under the heading “General Principle” describes its coverage thus:

    This section covers:

    .Congresses which are events sponsored and organised by a society, college, university or other non-company entity;

    .Symposia which are scientific meetings sponsored by a company as an independent event or as a satellite to a congress; and

    .Satellite meetings which are meetings held in conjunction with international or Australasian congresses and are under the auspices of the society, college or other non-company entity.

    Educational meetings are said to be important for the dissemination of knowledge and experience to healthcare professionals.  Companies involved in these events must have the primary objective of the enhancement of medical knowledge and the quality use of medicines in Australia.  The section goes on to deal with trade displays which must be directed only to healthcare professionals. 

16. Section 6.2 deals with hospitality and provides:

    Hospitality

    6.2.1Any hospitality provided by companies either directly or by sponsorship or assistance to the organisers of educational meetings, must be secondary to the educational purpose.

    6.2.2For educational meetings directly organised by, and the responsibility of companies, all hospitality must be consistent with the professional standing of the delegates.  Meals provided at an educational meeting should not be extravagant or exceed standards which would meet professional and community scrutiny.  No entertainment should be provided.

    Section 6.4 deals with sponsorship or involvement in independently organised congresses:

    Companies may assist and make financial contributions to educational meetings organised by third parties and may sponsor the attendance of healthcare professionals at these meetings, if:

    .the primary objective of the meeting is the enhancement of medical knowledge and the quality use of medicines in Australia; and

    .any assistance or sponsorship provided will be used for activities that further that objective, which would not bring discredit upon the industry and are able to successfully withstand public and professional and community scrutiny and conform to professional and community standards of ethics and good taste.

17. Section 6.5 deals with the sponsorship of healthcare professionals.  It requires that the selection criteria for sponsorship to attend educational meetings be based solely on the interests of the relevant professional in the area of medicine being discussed and his or her ability to communicate any relevant information to Australian healthcare professionals to enhance the quality use of medicines.  Section 6.6 relates to the selection of venues for educational meetings organised by or the responsibility of companies.  The venues must be “suitable for the attainment of the primary objective of enhancing medical knowledge and the quality use of medicines in Australia”.  They must be able to withstand “public and professional scrutiny and conform to professional and community standards of ethics and good taste”.

18. Section 6.8 allows companies sponsoring healthcare professionals to subsidise their travel to and from and within Australia to symposia and/or congresses.  The symposium or congress must be directly related to the professional’s area of expertise.  Travel within Australia should be by economy class unless business class is appropriate.  For international travel, economy or business class should be used.  Travel costs and expenses for family or travel companions must not be paid for or subsidised by the sponsoring company. 

19. Section 7 deals with the sponsorship, by members of the pharmaceutical industry, of healthcare professional organisations and activities involving healthcare professionals.  Again there is a general requirement of conformity to professional and community standards of ethics and good taste and an objective of enhancing the quality use of medicines (7.1.1).  Sponsorship is not to be conditional upon an obligation to prescribe a particular product.  Nothing is to be offered or provided in a manner or on conditions that would interfere with the independence of a healthcare professional’s prescribing or dispensing practices (7.1.2).

20. Section 10 of the Code deals with relations with healthcare professionals.  It opens with a general statement that companies may choose to support, initiate or become involved in activities with healthcare professionals.  The formula is again used:

    Such involvement either by financial or other means must be able to successfully withstand public and professional scrutiny, and conform to professional and community standards of ethics and of good taste.

    Benefits must not be offered to healthcare professionals to influence them in their prescribing or dispensing of pharmaceutical products.  Interactions must have the primary objective of enhancing medical knowledge and the quality use of medicines in Australia. 

21. In relation to entertainment, s 10.1 provides:

    Interactions between companies and healthcare professionals must not include entertainment.

    An exception to this requirement is that educational meetings of two or more day’s duration may include a modest opportunity for unstructured and individual recreational activities at the delegate’s own expense.

    Section 10.2, relating to hospitality, provides:

    Hospitality

    Any hospitality offered by companies to healthcare professionals must be secondary to the educational content, provided in an environment that enhances education and learning and reflect the professional standing of the audience.  The venue and location at which a company provides hospitality to healthcare professionals must be conducive to education and learning and must not be chosen for its leisure or recreational facilities.  Meals provided by companies at an educational meeting should not be extravagant or exceed standards which would meet professional and community scrutiny.

    A company must not subsidise or pay for the costs of family or companions of attendees at educational meetings.

    Section 10.3 deals with subsidised travel and imposes restrictions along the lines of those already referred to.  Other provisions of s 10 relate to the supply of materials for medical education and the use of medical literature and reprints. 

22. Section 10.6 contains new provisions relating to the use of healthcare professionals as consultants and members of advisory boards to companies.  Section 10.6 states:

    Companies may legitimately seek the services of suitably qualified and experienced healthcare professionals to provide advice and guidance on a range of matters.  It is appropriate that healthcare professionals who provide these services be offered remuneration and reimbursement for reasonable travel, accommodation and meal expenses incurred as part of providing those services.

    There follow criteria for consultancy arrangements and membership of advisory boards set out in ss 10.6.1 through to 10.6.5.  There must be a legitimate need for the services clearly identified in advance of requesting the services of the healthcare professional.  The purposes and objectives of the interaction must be to obtain advice and be clearly articulated in the original advice to healthcare professionals.  Moreover there must be a written contractual agreement outlining the nature and duration of the services to be provided. 

    The Code of Conduct – enforcement committees

23. Section 11 provides for the administration of the Code and states that it shall be supervised by the Code Committee which will be responsible to the Medicines Australia Board.  The Committee may seek external expert advice in reaching a decision as to whether or not a breach of the Code has occurred.

24. Section 11.1 sets out procedures which shall apply in the event of Medicines Australia receiving information alleging contravention of the Code by a member.  The complaint is to be acknowledged in writing by the Chief Executive Officer of the Association or the relevant delegate within five working days of receipt.  The respondent to the complaint shall be given full details of information lodged with the Association.  It will be invited to state within ten days whether or not the information supporting the complaint is correct and to give any answer or explanation which may be deemed necessary.  The respondent is to provide the Association with whatever references or information are deemed by the Chief Executive Officer or delegate to be necessary to fully investigate the complaint. 

25. Clause 11.1.2 provides:

    If the Code Committee, after making such further inquiry as is necessary or desirable, meets and reaches a decision that a breach of the Code has occurred, the Chief Executive Officer or his or her delegate will:

    (a)within two (2) working days of the Committee meeting notify the Subject Company and the complainant in writing that a breach has been found and identifying the section of the Code that the Committee has determined has been breached.

    (b)within ten (10) working days of the Committee meeting provide copies of the extract of the minutes of the Committee meeting to the subject company and the complainant which will include a full explanation for the decision made and the form of any sanction to be applied to the subject company, as provided for under Section 12 of the Code.

    The Code Committee may also request the Code of Conduct Secretary to notify Medicines Australia’s Board, and any other bodies or individuals with a direct interest, of the Committee’s decision.  

    All findings and/or sanctions of the Code Committee shall remain confidential and shall not be released to any third parties until after the Subject Company and complainant have exhausted all appeal procedures and the outcome of any appeal is known.

    There is a requirement under s 11.1.3 that if the Code Committee requires a company to cease or withdraw a promotional activity it shall at once comply with that ruling pending any appeal.  A suspended promotional activity is not to be reactivated before the conclusion of the appeal process (11.1.3).

26. Section 11.2 sets out the membership of the Code Committee.  That is reproduced in the summary at Annexure 1.  Under s 11.3 no member of the Code Committee, whether a full member or observer, can have a conflict of interest with respect to either the therapeutic class of a medicine the subject of a complaint or with respect to the complainant or respondent member.  Medicines Australia asks the respondent to identify any potential conflicts of interest.  The complainant is asked to declare any potential conflict when notifying its complaint on the Complaint Submission Form or within 48 hours of lodging the complaint if the form is not completed.  Evidence was given by Ms Deborah Monk, the Director, Scientific and Technical Affairs of Medicines Australia that permanent members of the Code Committee are advised in advance of any meeting of the Committee of the complaints that are scheduled and asked to identify any potential conflicts. 

1. Section 11.5 allows for complaints concerning the promotional activities of non-members to be forwarded to the non-member with an invitation to have the complaint adjudicated by the Code Committee and to abide by the Committee’s decision and any sanctions imposed.  If the non-member accepts such an invitation the complaint will proceed in accordance with the provisions of the Code.  Alternatively, where the non-member declines the invitation to have the complaint adjudicated by the Code Committee, the complaint may be referred to the Therapeutic Goods Administration (TGA) or to the ACCC.

2. Section 12 provides for sanctions to be imposed where breaches of the Code have been established.  Section 12.1 provides that sanctions may consist of one or more of the following under the procedures laid down in s 11:

   12.1.1The requirement that the Subject Company take immediate action to discontinue or modify any practice which is determined to constitute a breach of the Code.  Written notification of this action must be provided to Medicines Australia within 5 working days of the receipt of the decision of the Committee.

   12.1.2Retraction statements, including corrective letters and advertising, to be issued by the Subject Company.  The number, format, size, wording, mode of publication, prominence, timing and method of distribution of such statements shall be subject to the approval of the Committee or its delegate prior to release and will in general conform with the original statement.  The Committee or its delegate, pursuant to the Rules, will ensure that such statement is made.

   It is the company’s responsibility to ensure that the requirements of the Committee or its delegate are met and to immediately inform and provide evidence to Medicines Australia of their fulfilment.

   As a general rule, there is a requirement for corrective action to be taken where Moderate or Severe breaches have been found.

   Any corrective action required by the Code Committee should be completed within 30 calendar days of the company being advised of the decisions (subject to any appeal that may be lodged under Section 13 of the Code).  Companies are required to provide a statement to the effect that the action has been undertaken together with a copy of the published advertisement or a copy of the final version of a corrective letter signed by the company Managing Director or Medical Director.

   Where corrective action has not been actioned within the required 30 calendar days from receipt of the minutes of the Code or Appeals Committee meeting, the Code Committee may impose a fine of up to $50,000 for that breach of not actioning the corrective action.

   12.1.3The imposition of a fine by the Code Committee on the Subject Company in accordance with Section 12.1.4 of the Code.  The fine must be paid within 30 calendar days from receipt of the minutes of the Code Committee meeting subject to any appeal that may be lodged under Section 13 of the Code.

3. Section 12.1.4 sets out a schedule of fines that may be imposed by the Committee for breaches.  They are as follows:

   Breach  Fines
   Technical Breach
   Minor Breach  maximum of
   Moderate Breach  $100,000
   Severe Breach

   Severe Breaches where
   activities have ceased  maximum of
   Breach Repetitions   $200,000
   Repeat of Previous Breach

4. Section 12.2 provides:

   If the Code Committee believes that the breach of the Code warrants the suspension or the expulsion of the Member, it will make such a recommendation to the Medicines Australia Board.  The Board, under the Rules of the Association, may impose the following Sanctions:

   12.2.1Suspension of the Member from the Association for a period to be determined by the Board, under the provisions of the Rules of the Association.

   12.2.2The expulsion of the Member from the Association, under the provisions of the Rules of the Association.

5. Section 13 provides for appeals to be heard by an Appeals Committee.  Notification of an appeal must be lodged in writing by the respondent member within five working days of receiving advice of findings and/or sanctions.  The respondent is given five days thereafter to prepare a written response in support of its appeal.  The written appeal will be given to the complainant who is given a further five days to prepare any response.  The written appeal and any response shall be provided to the Appeals Committee.

6. There is a new provision of the Code, in s 13.1.2,  under which a complainant may also lodge an appeal in relation to the findings of the Code Committee.  When a respondent or an industry complainant lodges an appeal under s 13.1 of the Code the appellant must lodge a bond of $20,000 with Medicines Australia.  A non-industry complainant is not required to lodge an appeal bond. In all appeals an administration charge of $6,000 is automatically retained by Medicines Australia.  This does not apply to non-industry complainants who are not required to lodge any bond.  The Appeals Committee may refund all, part or none of the balance $14,000 component of the bond in the event of the appeal being successful in whole or in part (s 13.1.3).  The membership of the Appeals Committee is prescribed in s 13.2  and is set out in Annexure 1.

7. Section 14 of the Code provides for the monitoring of compliance.  There is a Monitoring Committee the membership of which is set out in the Code and reproduced in Annexure 1.   Section 14 provides, inter alia:

   To support compliance with the Medicines Australia Code of Conduct, the Medicines Australia Monitoring Committee (Monitoring Committee) will proactively monitor selected promotional material and activities of Member Companies on a regular and ongoing basis.

   The Monitoring Committee may review all forms of promotional material and activities for those identified products in light of the Code of Conduct and thereby support the Quality Use of Medicines. 

   The aims of this monitoring process are to encourage compliance with the Code of Conduct, provide advice on compliance where necessary, obtain and publish statistical data on the rate of compliance and to provide an ongoing mechanism for the identification of potential future amendments to the Code of Conduct.

8. Under s 14.1 member companies are required to submit to the Monitoring Committee ten copies of the type of promotional material identified by the Committee and which has been used over the past three months for the product under review.  If, following the review of the submitted material or activities, the Monitoring Committee considers that a breach of the Code may have occurred, the member in question will be contacted and asked to state whether the determination of the Monitoring Committee is correct and to give any necessary answer or explanation.  The Monitoring Committee may refer the matter to the Code Committee as a complaint.

9. Section 16 provides for the issue by Medicines Australia of an annual report on the activities of the Code Committee, the Appeals Committee and the Monitoring Committee which will be available to the industry, members of the healthcare profession and the general public.  The Code Annual Report will contain information relating to complaints considered by the Code and Appeals Committees during the reporting year.  The classes of information to be included in the annual report are set out in s 16.1.  There is a new requirement under s 16.2 for Medicines Australia to publish a quarterly report on the outcomes of all complaints finalised during that quarter.  The report will be available on the Medicines Australia website.  This obligation is in addition to the annual report.

   Code of Conduct – guidelines for complaints

10. Appendix 1 to the Code, which contains guidelines for complaints, includes a requirement for inter-company dialogue prior to the lodgement of an industry generated complaint.  The guidelines state that Medicines Australia will not accept a complaint from a company unless it has been clearly demonstrated that inter-company dialogue has taken place and that, despite every effort on the part of both the complainant and the subject company, resolution of the matter has not been achievable. 

11. Relevant definitions in the glossary include the following:

    “Breach repetitions” means when a company repeats the same breach in the promotion of any of the Company’s products.

    “Educational material” means any representation or literature which is intended to provide information about a medical condition or therapy which does not contain specific promotional claims.

    “Entertainment” means the provisions of any diversion or amusement.

    “Hospitality” means the provision of food and/or beverages.

    “Medical representative” means a person expressly employed by a company whose main purpose is the promoting of the company’s products to healthcare professionals.

    “Minor breach” is a breach of this Code that has no safety implications to the patient’s wellbeing and will have no major effect on how the medical profession will prescribe the product.

    “Moderate breach” is a breach of this Code that has no safety implications to the patient’s wellbeing but may have an effect on how the medical professional will prescribe the product.

    “Promotional material” means any representation concerning the attributes of a product conveyed by any means whatever for the purpose of encouraging the usage of a product.

    “Repeat of previous breach” means where the same or similar breach is repeated in the promotion of a particular product of a company which has been found in breach.

    “Severe breach” is a breach of this Code that will have safety implications to the patient’s wellbeing, and/or will have a major effect on how the medical profession will prescribe the product and/or will have a significant commercial impact on the relevant market.  A Severe breach of the Code will also be found for activities that bring discredit upon or reduce confidence in the pharmaceutical industry.

    “Starter pack” means a quantity of a product supplied without cost to medical practitioners, dentists and hospital pharmacists.  Starter packs are also referred to as “samples” by healthcare professionals.

    Intriguingly the Code defines “competition” as “any activity that includes an element of chance or random selection”.

    Differences between Edition 14 and Edition 15

12. A review of Edition 14 of the Code was initiated at the end of 2004.  The review process involved the issue of invitations for submissions from consumer and professional and other organisations.  Medicines Australia conducted seminars in July 2005 to discuss proposed amendments with member and non-member companies and again in October 2005 to communicate final proposed changes.  The review process led to the adoption of Edition 15 of the Code by Medicines Australia. 

13. The principal changes between Edition 14 and Edition 15 were conveniently set out in the Medicines Australia’s closing submissions.  They can be paraphrased as follows:

    1.A new provision in s 3.9 of the Code requires member companies to ensure that no advertisements are placed with clinical tools or patient education materials which may be used by a prescriber for consultation or discussion with the patient (s 2.9.1).  So if a patient is to be shown educational or informational material relating to his or her condition on the doctor’s computer screen, the relevant images should not be accompanied by advertisements for pharmaceutical company products.   This change was the result of consideration by the Code Committee of an article submitted to the Medical Journal of Australia by a healthcare professional and treated by the Code Committee as a complaint.

    2.Sales representatives and those directly involved in the development, review and approval of promotional materials are required to complete the Code module of the endorsed Medicines Australia education program within a specified time of commencing employment (ss 4.13 and 4.14).

    3.Section 5.1 is expanded to set out a detailed regime governing the supply of starter packs, including record keeping, labelling, storage and security.   This change  resulted from the adoption by the Australian Health Ministers’ Advisory Council, on 28 June 2005, of recommendations contained in the Final Report of the National Competition Policy Review of Drugs, Poisons and Controlled Substances Legislation (Galbally Review).

    4.A new s 10.6 is inserted setting out detailed principles governing consultancy arrangements including the membership of advisory boards.  This resulted from two complaints set out in the Code Annual Report 2005 and referred to later in these reasons.

    5.Section 11.2 is amended to include a representative of the TGA as a member of the Code Committee.  Up to now the representative has been an observer only.

    6.Section 12.2 is amended to include a new sanction, being a fine of up to $50,000, where a requirement for corrective action imposed as a sanction is not taken within 30 days (s 12.1.2).

    7.Section 13 is amended to allow an appeal to be lodged by a complainant without cost where the complainant is not an industry member (s 13.1.2).  The amount of the bond required to be lodged where the appeal is by a respondent company or an industry complainant is increased from $5,000 to $20,000.  $6,000 is to be retained in each case as an administration fee (s 13.1.3).

    8.Section 14 is amended to include a consumer representative as a member of the Monitoring Committee (s 14.2).  This amendment was the result of a suggestion of the Consumers Health Forum. 

    9.Section 16 is amended to require quarterly reporting of the outcomes of all complaints (ss 16.2 and 16.4).

    The authorisation applications

14. There were three authorisation applications lodged with the ACCC by Medicines Australia on 30 November 2005 in relation to its Code. 

15. The first application, No A90994, was made under subs 88(1) of the TPA for an authorisation under that subsection:

    .to make a contract or arrangement, or to arrive at an understanding, where a provision of the proposed contract, arrangement or understanding would be, or might be, an exclusionary provision within the meaning of section 45 of that Act

    .to give effect to a provision of a contract, arrangement or understanding where the provision is or may be an exclusionary provision within the meaning of section 45 of that Act.

16. The second application, No A90995, made under subs 88(1) was for an authorisation under that subsection:

    .to make a contract or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of section 45 of that Act

    .to give effect to a provision of a contract, arrangement or understanding which provision has the purpose, or has or may have the effect, of substantially lessening competition within the meaning of section 45 of that Act.

    The third application, No A90996, was made under subs 88(8) for an authorisation under that subsection to engage in conduct that would or may constitute exclusive dealing by requiring certain persons to participate in an education program endorsed by Medicines Australia from time to time, where the education program is not supplied by Medicines Australia.

17. In respect of the first application, A90994, the contract, arrangement or understanding referred to was described in the application as “Medicines Australia Code of Conduct 15^th Edition”.  The same description was applied to the contract, arrangement or understanding referred to in the second application, A90995.  The authorisation application A90996 related to Code provisions dealing with the participation of persons in an education program endorsed by Medicines Australia.  There was no authorisation sought for the guidelines prepared in relation to Edition 15 of the Code.

    The ACCC determination

18. The review process requires an application by the Tribunal of the relevant statutory tests to the conduct or proposed conduct in respect of which authorisation is sought.  It does not require a critique of the ACCC determination.  Nevertheless, the ACCC put a position to the Tribunal supportive of the conclusion reached in its determination.  The central question in this case relates to the condition imposed upon its authorisation by the ACCC and whether the conduct can or should be authorised without a condition or subject to some other condition.  A reference to the salient features of the determination by the ACCC may therefore be undertaken as a way of defining, within the framework of the relevant statutory tests, the real issues upon which the Tribunal’s attention is focussed in dealing with these applications.

19. The determination began by describing the role of the ACCC in considering an authorisation application, a description of the applications and a chronology of the ACCC’s assessment process.  There followed a brief background description of the prescription medicine industry noting, inter alia, that Medicines Australia has 39 full and 9 affiliate member companies which it states represent over 90% of the Australian prescription medicine market.  The determination then referred to Commonwealth, State and Territory laws regulating therapeutic goods and the TGA.  This external regulatory framework is considered later in these reasons.

20. The ACCC stated that the TGA is currently responsible for administering the Therapeutic Goods Act 1989 (Cth) (TG Act). The ACCC states, and it is not in dispute, that in the near future the TGA and its New Zealand counterpart, the New Zealand Medicines and Medical Devices Safety Authority, will be replaced by a joint authority known as the Australia New Zealand Therapeutic Products Authority (ANZTPA). That Authority will assume responsibility for regulating therapeutic products including prescription and over the counter medicines, complementary medicines, medical devices and blood products in both countries. It is said that the start date for the new Authority is expected to be sometime in the second half of 2007. The determination also referred to the Australian Pharmaceutical Benefits Scheme (PBS).

21. The Code was set out in overview in Pt 3. A revised version of that overview is Annexure 1 as already noted.  The substance of that overview is appended.   The determination also set out tables of statistics showing the number and source of complaints and the proportion of those complaints that resulted in the Code Committee finding a breach of the Code in the period from July 2002 to June 2005.  Statistics of the sanctions imposed in that period were recorded. 

22. Part 4 of the determination contained a list of the submissions received and Pt 5 set out the statutory tests for authorisation under the TPA together with commentary on the application of the tests, the definition of public benefit and public detriment and the approach to assessment.

23. In Pt 6 the ACCC undertook its evaluation of the applications. It made the important point, at [6.5], that when considering an application for authorisation the ACCC is required under the TPA to assess the likely benefits and detriments of the arrangements before it. It stated:

    If it is not satisfied that the arrangements are likely to result in a net public benefit, it may impose conditions.  However, its role is not designing a better code, nor considering whether other regulatory arrangements may be more or less appropriate.

    In addition the ACCC made the point, in answering a submission from the Australian Consumers Association, that the question whether self regulation of the pharmaceutical industry is appropriate is a matter for government policy and beyond the scope of the authorisation process. 

24. The ACCC defined the relevant market for the purposes of the authorisation as (at [6.12]):

    … the market for supply of prescription products used under medical supervision as permitted under Australian law…

    The characteristics of the market were discussed in terms of its regulation by Commonwealth, State and Territory legislation.  Two effects of that regulation were identified.  The first is that the retail price of approximately 80% of prescription medicines is determined by the Australian Government through the PBS.  Decisions by doctors about which medicines to prescribe for their patients are therefore unlikely to impact on the price that consumers pay for those medications.  The second effect is that consumers cannot purchase prescription medicines directly.  They must first consult a medical practitioner whose role is to determine the appropriate medicine for that person.  Consumers therefore have a limited role in product choice. 

1. The ACCC observed that medical practitioners might not always possess perfect information on the range of remedies available and may not have sufficient time to absorb the volume of scientific studies and research available on pharmaceutical products.  They might therefore rely heavily on information provided by pharmaceutical manufacturers.  Three factors reducing the impact of information imperfections on prescribing were identified ([6.16]):

   .under the TG Act, prescription medicines may only be supplied in Australia after being rigorously tested to ensure their safety, quality and efficacy

   .medical practitioners are highly trained professionals with expertise in assessing information about pharmaceutical products and

   .sections 52 and 53 of the TPA (and certain provisions of the TG Act) prevent pharmaceutical companies from engaging in misleading or deceptive conduct when promoting or providing information on medicines to medical practitioners.

2. Areas of competition between pharmaceutical companies identified related to the development of new drugs and the supply of drugs no longer subject to patent. 

3. The ACCC considered the future with and without authorisation.  At [6.20] it said:

   Based on the evidence before it, the ACCC considers that the most likely scenario is that if the ACCC does not grant authorisation, Edition 15 of the Code will not come into effect. The ACCC considers it is unlikely that Medicines Australia and its member companies would choose to enforce the Code without immunity from legal action under the TPA.

   In that event, Edition 14 of the Code would continue until the previous authorisations granted in respect of it expired on 31 December 2006.  The most likely scenario would be that the conduct of members of the pharmaceutical industry would be regulated only by existing legislation.  There was no indication that it is likely that in the absence of the Code governments would pass legislation regulating the conduct of pharmaceutical companies in respect of the matters currently covered by the Code.  The ACCC pointed to a general move away from legislated regulation of the pharmaceutical sector. 

4. The ACCC identified three main categories of conduct regulated by the Code, namely:

   .the provision of information about prescription medicines to healthcare professionals and the general public ;

   .          the provision of benefits (financial and otherwise) to healthcare professionals; and
    .         other conduct, such as the supply, storage and handling of starter packs.

   It considered claimed public benefits constituted by the reduction of misleading or deceptive conduct, the enhancement of compliance with the TG Act’s prohibition on direct to consumer advertising, the encouragement of rational prescribing practices and benefits resulting from the provision of information more generally.

5. On the topic of misleading conduct, the ACCC noted that the majority of complaints received by the Code Committee related to the provision of information by industry members to healthcare professionals and the general public. Consistently with previous authorisations, it found that the Code was likely to give rise “to a small public benefit by facilitating compliance with the general prohibitions on misleading and deceptive conduct contained in the TPA”. Some of the amendments contained in Edition 15 would impose additional requirements on the provision of information by companies. These might increase the likely public benefit by reducing the probability that companies would engage in misleading or deceptive conduct. The additional elements included ([6.36]):

   .the requirement that company commissioned articles which contain promotional claims comply with the requirements for a primary or secondary advertisement

   .the additional requirements in respect of printed promotional material and

   .the requirement that any company employees directly involved in the development, review and approval of promotional/educational materials or who have direct interaction with healthcare professionals undertake the Code of Conduct component of the Medicines Australia education program within 12 months of commencing employment.

   While acknowledging that a number of interested parties considered that the Code does not go far enough in regulating the provision of information by companies, the ACCC observed that authorisation requires assessment of the benefit and detriment of the Code as presented by Medicines Australia and not the design of an “ideal” Code. 

6. Another claimed public benefit was the encouragement of compliance with the prohibition on direct-to-consumer advertising contained in the TG Act.  At [6.44] of its determination the ACCC said:

   The ACCC notes that the prohibition on direct-to-consumer advertising is incorporated into the TG Act.  It therefore considers that if the Code encourages compliance with this legislative prohibition, it could result in a public benefit.

7. The ACCC found that a limited public benefit could result from the prohibition of advertising on electronic prescribing software.  It remained concerned that the current wording of s 3.9.1 only prohibited advertising “with clinical tools or patient education material which may be used by a prescriber for consultation or discussion with a patient”.  This prohibition would not appear to prevent advertising in other functions of software packages which might be seen by a patient even though they are not “clinical tools or patient education material”.  The section might therefore not ensure full compliance with the legislative prohibition on advertising to consumers.  By way of example, the screen displayed when a prescription is printing may contain advertisements.  The ACCC considered that the restriction on advertising in s 3.9.1 imposed by the Medical Director software was self-imposed and any benefit resulting from it could not be attributed to the Code.

8. The ACCC considered it likely that, absent the Code, pharmaceutical companies would market their products more aggressively to healthcare professionals. While such promotion would still be required to comply with the prohibitions on misleading and deceptive conduct in the TPA, the Code would require companies to include additional information in promotional materials over that required by legislation. Companies would not be required to include that information in promotional materials absent the Code. The ACCC considered that some public benefit may therefore result from these provisions.

9. Under the heading of “Provision of information more generally”, the ACCC did not dispute that the provision of balanced and impartial information on pharmaceutical products may be a public benefit. However, it considered that the benefit was likely to be nominal. Companies would be likely to provide the information regardless of the existence of the Code as it might provide them with a competitive advantage. Even in the absence of the Code the possibility of legal action under the TPA was likely to provide an incentive to ensure that information provided was not misleading or deceptive.

10. The second broad area of conduct regulated by the Code is the provision of benefits to healthcare professionals.  The ACCC referred to the pre-existing ethical obligation imposed on doctors requiring them to give primacy to the welfare of their patients and, in that context, cited guidelines produced by the Australian Medical Association (AMA) on doctors’ interactions with pharmaceutical companies.  Those guidelines provide that a doctor’s primary obligation is to the patient and that considerations involving the pharmaceutical industry are appropriate only insofar as they do not intrude upon or distort that primary obligation.  The ACCC observed however that the fact that pharmaceutical companies offer benefits indicate that they consider they can influence a doctor’s choices.  A range of organisations, including the AMA, the TGA, Medicines Australia and other similar overseas bodies, believe that at least some pharmaceutical companies are likely to engage in conduct that would result in at least some healthcare professionals inappropriately prescribing medicines.  The ACCC considered that a public benefit was likely to result from the reduction of inappropriate prescribing not based upon scientific evidence.   At the same time the ACCC expressed doubt that the Code was “actually effective at regulating companies’ conduct”.  It found therefore that the actual public benefit generated by the Code in this regard was small ([6.87]).   The preceding relates to Edition 14.

11. In this area, Edition 15 of the Code has a broader scope than its predecessor.  It regulates the provision of some types of benefits not previously covered such as medical practice activities.  At the same time there was a continuing perception, since the previous determination, that the provision of benefits by pharmaceutical companies could inappropriately influence healthcare professionals prescribing.  The view seemed to be becoming more prevalent.

12. In May 2006 the Royal Australasian College of Physicians (RACP) had updated its “Guidelines for ethical relationships between physicians and industry”.  These recommend, inter alia:

    .          … that physicians reject gifts, including items of small value

    .… that while accepting hospitality in connection with a professional educational meeting may be acceptable, ‘it is current practice for doctors to reject pharmaceutical company entertainment invitations, and this response is appropriate and expected’ and

    .… that in respect of pharmaceutical companies’ support of meetings and other educational activities, physicians exercise ‘great care’ before accepting travel sponsorship or gifts.

    The ACCC repeated its view that the amount of money that pharmaceutical companies spend on promotion is an indication of their belief that it will be effective.  It said (at [6.95]):

    In light of this information, the ACCC considers that to the extent the Code prevents the provision of benefits that are likely to inappropriately influence healthcare professionals – and thus reduce the level of inappropriate prescribing that may otherwise occur – it could result in some public benefit.  However, the ACCC still doubts whether the code can effectively regulate company behaviour without an appropriate level of transparency.

13. The ACCC referred to the Monitoring Committee activities and to its previous determination in which it had imposed a condition requiring that Committee to monitor members’ provision of benefits to healthcare professionals.  Medicines Australia had asked that the ACCC not re-impose that condition in relation to the current applications because of its “limited benefit” and its impact on regular activities of the Monitoring Committee.  Medicines Australia told the ACCC that compliance with the condition had taken up a significant proportion of the Monitoring Committee’s meetings in 2004 and 2005 so that it was unable to fulfil its primary function of reviewing promotional material.  Copies of  Committee reports were supplied to the ACCC which observed that they did not provide some of the details that it had requested be included, such as the number of meetings that raised concerns, nor what aspects of the meetings were of concern.  It was difficult to determine the effectiveness of the Code in regulating the provision of benefits to healthcare professionals and so the likely extent of any public benefit.  Following the release of its draft determination the ACCC formed the view that in order to be satisfied of the Code’s effectiveness in this regard there should be greater disclosure of the details of each event.  This view lies at the heart of the condition in contention in this application. 

14. The regulation of members’ conduct in other regards was considered with particular reference to so called “starter packs” or free samples.  The distribution, storage and information included with clinical samples is dealt with in s 5 of the Code.  This section was revised and expanded as a result of the Galbally Review.  That Review recommended that States and Territories repeal legislation relating to the supply of samples of medicines and poisons and that Medicines Australia amend its Code to include those standards.  The recommendation was accepted by the Australian Health Ministers’ Council Working Party.  State and Territory Health Departments supported the amendments to the Code as they appeared to improve accountability and standards around the possession and handling of starter packs.  The ACCC considered that s 5 of the Code was likely to result in some public benefit particularly if the anticipated repeal of State and Territory legislation proceeded. 

15. The ACCC assessed the effectiveness of the Code and said that the extent to which the benefits it had identified would flow would be determined by its effectiveness in regulating the conduct of pharmaceutical companies.  If not effective, the companies would be unlikely to comply with it and the public benefit would, in all likelihood, be minimal.  In its determination in relation to the 14^th Edition, the ACCC had expressed concern about practical enforcement of the Code and found that the actual public benefit generated by it was small.  Criticisms of the Code referred to the vagueness of its terms which were capable of easy interpretation in favour of the industry.  Some interested parties considered the Code ineffective because of flaws in its administration including the following:

    .the complaints process is too onerous (particularly for consumers) and not transparent

    .the sanctions imposed by the Code committees are not significant, and hence do not deter companies from breaching

    .there is a lack of transparency surrounding the Code processes

    .the committees that enforce the Code are not independent

    .the monitoring undertaken by the Monitoring Committee is ineffective and

    .the processes for reviewing the Code are inadequate.

16. The ACCC’s view of these criticisms, reflected in its determination, may be summarised as follows:

    1.The vast majority of complaints made under the Code are made by pharmaceutical companies.  It is difficult to determine whether the lack of complaints by others and particularly consumers is due to a lack of awareness of the existence of the Code or difficulty in accessing its mechanism ([6.141]).  Some amendments to Edition 15 including the provision of independent facilitators may improve accessibility for non-industry complainants.  While Medicines Australia advised that further changes are to be implemented to improve the complaints process, it is difficult to determine that these changes have actually had an effect until they have been operating for a period of time.

    2.The sanctions recorded thus far indicates it is far more likely that the Code Committee will require a company to take corrective action, including the withdrawal of material, than it will be to impose a fine.  Nearly all the fines imposed were at the lower end of the range.  It was a matter of concern that the Code and Appeals Committees did not appear to impose heavy sanctions in any circumstances.  This would raise some doubt about the effectiveness of the Code.

    3.Code Annual Reports indicated that some companies had been found to breach the Code a number of times.  Although it was said that these tended to be those with a greater product range, it was still a matter of concern that they were regularly breaching the Code and that the penalties imposed did not appear to reflect this.

17. The ACCC remained concerned about the general level of transparency surrounding the activities of pharmaceutical companies and, in particular, whether the Code was effective in regulating what it regarded as a key area for potential public benefit, namely the provision of benefits to healthcare professionals.  It found that the level of complaints about this area of conduct continued to be low.  This could be due to a high level of compliance by member companies or a low level of awareness of what benefits companies are providing to healthcare professionals.

18. Importantly, the ACCC said (at [6.149]):

    The ACCC considers that it is difficult to determine the level of compliance in the absence of published information on the details of meetings.  Without this information, it is difficult for outside groups to access information on what activities companies are engaging in, or to understand the standards applied by the Monitoring Committee when assessing whether companies are complying with the Code.  This is particularly relevant as many of the standards are subjective (eg whether meals provided are ‘extravagant or exceed standards which would meet professional and community scrutiny’).

    The ACCC stated that it was therefore imposing the condition which is in contention.

19. The ACCC acknowledged the continuing role of the Monitoring Committee in the review of companies’ promotional material.  It noted that Edition 15 does not specify the amount or subject matter of material to be reviewed each year.  However Medicines Australia had stated that, at a minimum, it would review:

    .          one type of promotional material in three different therapeutic classes;
    .          three different promotional activities across all therapeutic classes.

    This appeared to be less than that required by Edition 14.  The ACCC nevertheless considered it might be more useful for the Monitoring Committee to assess a wider variety of promotional activities than similar promotional activities over different therapeutic classes.  It particularly encouraged the review by the Monitoring Committee of “non-traditional” promotional activities such as company websites. 

20. The ACCC then expressed the view that the Code’s effectiveness in actually modifying the conduct of pharmaceutical companies remained unclear.  It was therefore difficult to determine the extent of any public benefit ([6.155]).

21. The ACCC accepted that the sections of Edition 15 of the Code regulating the provision of information were unlikely to significantly affect competition.  While there had been some amendments to those provisions, particularly in the additional information companies are required to include in their advertisements, these were not likely to have a significant impact on competition ([6.171]). 

22. In connection with the regulation of provision of benefits to healthcare professionals, no interested party had considered that these provisions of the Code were likely to result in a lessening of competition.  The ACCC considered that the anti-competitive detriment resulting from the sections of the Code regulating the provisions of benefits to healthcare professionals was likely to be minimal ([6.181]).  It came to the same conclusion in relation to the regulation of the use of starter packs.

23. The ACCC did not identify any other likely public detriment. 

24. In considering the balance of benefit and detriment, the ACCC said it considered that the Code could result in some public benefit through:

    .enhancing compliance with the legislative prohibitions on misleading or deceptive conduct

    .enhancing compliance with the legislative prohibition on direct-to-consumer advertising and

    .encouraging rational prescribing practices.

    It remained concerned about the Code’s effectiveness in regulating the conduct of pharmaceutical companies.  It considered that the extent of the public benefit that would actually result from the Code was uncertain particularly with respect to its regulation of the provision of benefits to healthcare professionals.  This was an area which the ACCC identified as a “key area of possible public benefit” ([6.197]).  It also considered that the Code was likely to result in minimal public detriment, particularly as its effect on competition between pharmaceutical companies was likely to be negligible. 

[40]  Explanatory note, section 4.11.

Education of company representatives[41]

[41]  Sections 4.12-4.14.

3.27All company representatives are required to have completed or be currently undertaking an endorsed Medicines Australia program for representatives (the endorsed program).  All representatives entering the Australian prescription pharmaceutical industry for the first time must enrol in the Code of Conduct component of the endorsed program within the first six months of employment, and must complete the full program within two years.

3.28Any person who is directly involved in the development, review and approval of promotional materials and educational material for the general public, or has direct interaction with healthcare professionals must similarly complete the Code of Conduct component of the endorsed program within the first twelve months of commencement of employment.[42] The Guidelines state that this requirement does not apply to third party contractors (such as advertising agencies) although they are also encouraged to undertake the Code of Conduct component.[43]

[42]  Section 4.14 (new).

[43]  Guidelines, p26.

Research[44]

[44]  Section 8.

3.29These provisions apply whether the research is carried out directly by a company or by an organisation acting under its direction.  Companies must ensure that private legislation is complied with.

3.30The provisions relate to the conduct of post-marketing surveillance studies and market research but do not apply to evaluations being carried out under the approval of a human research ethics committee in a hospital or clinical trials of products approved for registration.

Post marketing surveillance (PMS) studies[45]

[45]  Section 8.1.

3.31PMS studies are defined as research intended to generate data on safety parameters of a product that has been approved for registration.  They should have scientific or medical merit and objectivity and not be designed or conducted as a promotional exercise.  The involvement of medical representatives is limited to identifying healthcare professionals to participate in the study, which must be otherwise managed by the company’s medical department.

3.32PMS studies must have a formal protocol, a requirement for data collection and generation of a report.  Companies intending to undertake a PMS study must advise ADRAC[46] of their intention.

[46]  The Adverse Drug Reactions Advisory Committee of the Australian Drug Evaluation Committee.

3.33No starter packs or free trade packs should be distributed as part of the study, and any payment to the medical profession must be commensurate with the work involved and not based on the number of prescriptions written.

Market research[47]

[47]  Section 8.2

3.34The Guidelines state that this section is primarily directed at research conducted with healthcare professionals, but recognises that market research may also be undertaken with members of the general public on occasion.[48]

[48]  Guidelines, p34.

3.35The sole purpose of market research must be to collect data and not a means to promote or reward healthcare professionals.  Promotion should not be represented as market research or research of any type.

3.36Any payment (whether cash or voucher in lieu of cash) must be kept to a minimum and should not exceed a level commensurate with the work involved.  If a voucher is provided to a healthcare professional, it must be valid only to obtain an item that is directly relevant to the practice of medicine or pharmacy. A donation to a registered charity in lieu of cash payment is acceptable if the amount remains commensurate with the work undertaken.[49]

[49]  Explanatory note, section 8.2.2.

Product starter packs[50]

[50]  Section 5.

Supply

3.37A starter pack is defined as a quantity of a product supplied without cost to medical practitioners, dentists and hospital pharmacists.[51]

[51]  Glossary.

3.38Starter packs can only be supplied by representatives employed by the holder of a manufacturer or wholesale dealer’s licence or by authorised company representatives (including agents working under a contract to, but not directly employed by, the holder of a manufacturer’s licence or wholesale dealer’s licence).  They can only be supplied to authorised healthcare professionals at their request, and only if he/she has legal authority to prescribe the product.[52]

[52]  Code of Conduct Guidelines (Guidelines), p27.

3.39The maximum quantity supplied must be at the healthcare professional’s discretion and should reflect his/her needs until the next visit by the company representative.  The company representative must not supply starter packs without a signed request from an authorised person.

3.40Leaving starter packs with a receptionist for the attention of a healthcare professional without a signed request is a breach of the Code.

3.41The Code also describes requirements for the labelling of starter packs and ensuring the security of starter packs whilst in the company representative’s possession.

Size, labelling, storage, records to be kept etc

3.42The size of starter packs should not exceed 1/3 of the PBS primary quantity for each strength of a product, except where this is practical such as ear or eye drops.  For non-PBS products, starter packs should be no larger than 1/3 of the smallest trade pack.

3.43Labelling of all starter packs must comply with the current Therapeutic Goods Order on labelling.  In addition, the representative should supply labels for the medical practitioner to label the starter pack with certain details for a specific patient, including their name and dosage instructions.  The specified fields may alternatively be pre-printed on the product label.

3.44Representatives must take adequate precautions to ensure the security of starter packs in their possession.  The Code sets out the way they must be transported and stored, including when they are in a vehicle and when they are sent by mail.

3.45On request, companies must promptly accept the return of starter packs.  They must be disposed of in an environmentally sound manner according to the requirements in each state and territory.

3.46Company representatives must keep records of every sample received or supplied.  Companies must keep all records of the request, supply, return and disposal of starter packs for at least three years in a way that they are available for inspection by the appropriate authorities.

Product Familiarisation Programs (PFPs)

3.47Product Familiarisation Programs (PFPs) are defined as programs run by a company with the aim of allowing the medical profession to evaluate and become familiar with a product.  Under a PFP a company may make starter packs available to doctors for up to 10 patients to allow them to prescribe the product without cost to the patient whilst gaining an understanding from their own experience of the efficacy and side effects of the new medicine.

3.48Companies should develop a rationale for each PFP which describes the clinical rational for the program, the total number of patients to be enrolled and the duration which the medicine will be provided to each patient, based on a clinical rationale. 

3.49A PFP may only be initiated in the first twelve months following first supply after registration,  or the approval of a new indication and the enrolment period must not exceed 6 months.

3.50Companies should not offer any monetary or other type of reward to healthcare professionals, their families and/or employees for taking part in PFPs.

3.51The company will provide an information document for the healthcare professional to give to the patient which explains that the medication will be provided under the PFP for a fixed period, after which it may only be available on a private prescription if it is not reimbursed under the PBS.

3.52No individual patient data may be collected, although aggregated data on a healthcare professional’s experience with the product may be. 

Relationship with the general public

3.53Companies cannot promote prescription products to the general public (including on the internet[53]), but may provide them with educational material.

[53]  Section 9.6.

Medicine delivery devices

3.54Promotion of a medicine delivery device to the general public is permitted in restricted circumstances.  A medicine delivery device which is used for the administration of a prescription medicine, including Schedule 3 medicines that are predominantly prescribed by a medical practitioner, is permitted if it is:[54]

[54]  Explanatory note, section 9.4 (amended).

.distributed independently from the active ingredient

.not branded with the name of particular medicine and

.listed with the TGA as a device.

Media Statements[55]

[55] Sections 92.-9.4.

3.55A media release to the lay media will be allowed if the product has been registered for use in Australia and the medical profession has been supplied with the appropriate information.  The media release may include the product’s brand name, the Australian approved name and must indicate any PBS listings.  It must also be accompanied by a copy of the current consumer medicine information.  The media release must not include any material that could be considered promotional or comparative with other products.

3.56Companies are always responsible for all material prepared for them by the agencies they engage.

General Media Articles[56]

[56]  Section 9.3

3.57Companies should not attempt to encourage the publication of general media articles with the aim of promoting their products, but may offer to provide educational material or review copy to ensure accuracy.

Patient Support Programs[57]

[57]  Section 9.8.

3.58Companies may arrange or become involved in Patient Support Programs, which are programs for patients already prescribed a prescription-only medicine, with the aim of improving compliance by patients (eg by reminding them to take their medicine) and positive health outcomes.  They usually involve providing educational materials for consumers which are provided by the healthcare professional who prescribes the medicine.[58]

[58]  Medicines Australia 8 March 2006, p15.

Administration of the Code[59]

[59]  Section 11.

3.59The administration of the Code is supervised by the Code of Conduct Committee (the Code Committee), responsible to the Medicines Australia board.

Membership of the Code Committee

3.60The following are members of the Code Committee:

Full membership         .  Chairman (lawyer with trade practices experience selected from a panel of five)

.One representative from each of the AMA, RACGP, ADGP, ASCEPT and the TGA

.A specialist nominated by the Royal Australasian College of Physicians (RACP)

.A consumer representative nominated by the CHF

.Three Medicines Australia company Association Representatives

.Two Medicines Australia member company Medical/Scientific Directors

Observers.  Maximum of two employees of Medicines Australia

(no voting rights)          member companies

.One observer nominated by Medicines Australia

3.61The Explanatory Notes set out the procedures by which the members are appointed.  There is a process set out for ensuring that members of the Code Committee hearing a complaint do not have a conflict of interest.[60]

[60]  Section 11.3 (new).

Referral of complaints

3.62Upon commencement of the Australia New Zealand Therapeutic Authority (ANZTPA), complaints about advertisements for prescription medicines directed to members of the general public that are submitted to Medicines Australia will be referred to the Central Complaints Panel. Complaints about advertisements for prescription medicines directed to healthcare practitioners will also be referred to the Central Complaints Panel if they involve matters of serious public health and safety. [61]  Medicines Australia may also refer complaints against members who are also members of the Australian Self-Medication Industry (ASMI) to that association for consideration under its Code having regard to the category of product and the target audience for the promotion subject to complaint.[62]

[61]  Section 11.6 (new).

[62]  Section 11.7.

Complaint handling procedure

3.63The Code sets out the procedure for dealing with an alleged breach of the Code by members. If a complaint is received about a non-member, it can either be dealt with under the Code (if the non-member agrees), or Medicines Australia can (but is not obliged to) forward the complaint to the TGA or the ACCC (if it relates to a possible breach of the TPA).[63]

[63]  Section 11.5.

3.64Appendix 1 sets out guidelines to try and resolve the complaint prior to a formal complaint being lodged with Medicines Australia.

3.65Where a complainant is external to the industry, Medicines Australia may provide assistance, including providing access to an independent facilitator to assist them in submitting their complaint.  However, it first encourages the complainant to contact the company that is the subject of the complaint (the subject company) either individually or through the independent facilitator.

3.66Medicines Australia will not to [sic] accept anonymous complaints.  If an individual or healthcare professional wishes have his/her identify protected, the Medicines Australia Secretariat will work with that person to ensure that his/her concerns are addressed.

3.67Where a complaint is made by another company (whether or not a member), the complainant company must seek to resolve the complaint through inter-company dialogue before Medicines Australia will accept the complaint.  The procedures for engaging in inter-company dialogue are set out in Appendix 1.  The only exception to this requirement is when there is an allegation of a repeat breach.[64]

[64]  New section.

3.68The main stages of the complaint handling procedure are:

.The complaint is received, and acknowledged in writing.  The information that must be included with the complaint is set out in Appendix 1.

.The subject company is invited to comment on the complaint.  It should provide certain information, the requirements of which is set out in Appendix 1.

.The subject company and complainant then provide the information necessary to fully investigate the complaint.  This is provided to the Code Committee, along with any explanation provided by the subject company.  The Code Committee can also make any further inquiries if necessary or desirable.  It then makes a determination on whether or not there has been a breach of the Code.

.If the Code Committee finds that the company breached the Code, the subject company will be notified within two working days of what section it has been found to breach and the sanction that has been imposed.  Within 10 working days of the meeting, the CEO will provide the subject company and the complainant with copies of the extracts of the minutes, including a full explanation of the decision and the form of any sanction to be imposed.

.If the Committee does not find a breach, the parties will be informed of this and supplied with the minutes within 10 working days.

.The full reasons for the decision will be supplied to the subject company and the complainant within 10 working days.

3.69All findings and/or sanctions shall remain confidential and not be released to any third parties until after the subject company and the complainant have exhausted all appeals procedures and the outcome of any appeal is known.

3.70If the Code Committee requires a company to cease or withdraw a promotional activity, the company must comply with the ruling at once pending any appeal against the decision of the Code Committee pursuant to the Rules.  The promotional activity in question cannot be reactivated before the appeals process has been concluded.

3.71The Code Committee may refer questions on the interpretation of the Code to the Medicines Australia Board for determination.

Frivolous and vexatious complaints[65]

[65]  Section 12.3

3.72Where a company lodges a complaint that the Committee considers to be frivolous or vexatious, the Committee may request the complainant member to show cause why the Committee should not impose upon it a fine of a maximum of $200,000 for abuse of the Code.

Sanctions[66]

[66]  Section 12.

3.73The Code Committee can impose any of a range of sanctions for a breach, including that the subject company:

.take immediate action to discontinue or modify any practice constituting a breach of the Code

.issue retraction statements, including corrective letters and advertising (this is generally required for moderate or severe breaches).  If corrective action is not taken within 30 days, the Code Committee can impose a $50,000 fine.[67]

[67]  Section 12.1.2 (new).

.pay a fine as determined by the Code Committee.  Broadly, this can be up to $100,000, or $200,000 for a repeat breach.

3.74The Code Committee can also recommend that the Medicines Australia Board suspends or expels a member.

Appeals[68]

[68]  Section 13.

3.75The subject company can appeal the Code Committee’s decision that there was a breach, and/or the sanction imposed.  The complainant can also appeal the decision.

3.76When a subject company or an industry complainant lodges an appeal, they must lodge a bond of $20,000 with Medicines Australia.  This requirement does not apply to non-industry complainants.  The bond is used to defray the costs of the Code and Appeals Committee meetings and contribute to Code education programs.

3.77An administration charge of $6,000 will automatically be deducted from this.  The Appeals Committee then has the discretion to refund all, part or none of the remaining $14,000 if the findings/sanctions are changed/lifted.

3.78The following are members of the Appeals Committee:

.Chairman (lawyer with trade practices experience selected from a panel and must not have chaired the Code Committee at which the original complaint was heard)

.One representative from the College and/or Society from the therapeutic class of the product subject to appeal, the target audience to which the activity was directed (eg AMA, RACGP, ADGP)

.A representative of ASCEPT (must not have a conflict of interest with the subject product/company)

.A consumer representative nominated by the Consumers’ Health Forum of Australia (CHF)[69]

[69]  Section 13.2 (new addition to membership).

.Two Medicines Australia company Association Representatives

.One Medicines Australia member company Medical/Scientific Director

3.79The Chair and the members from the industry and college/society must not have sat on the Code Committee that heard the original complaint.[70]

[70]  Explanatory note, section 13.2.

3.80The Appeals Committee has the power to affirm, set aside or vary the findings and/or any sanction imposed by the Code Committee if it is persuaded that the Code Committee’s findings involved an error.

3.81The Code sets out the procedure that will be followed when an appeal is lodged.  Broadly, this allows both parties to prepare written submissions and also make oral submissions before the Appeals Committee.

3.82The Appeals Committee has the discretion to receive new evidence, but otherwise shall determine the appeal on the evidence before the Code Committee and that provided by the parties’ submissions.  It may refer questions on the interpretation of the Code to the Medicines Australia Board for determination.

3.83There is a process set out for ensuring that members of the Appeals Committee hearing a complaint do not have a conflict of interest.[71]

[71]  Section 13.3 (new).

Monitoring[72]

[72]  Section 14.

3.84The Medicines Australia Monitoring Committee (Monitoring Committee) will monitor selected promotional material and activities of member companies on a regular basis.  It will review different therapeutic classes[73] and types of promotional material each year.  Medicines Australia states that it intends that the Monitoring Committee will each year undertake as a minimum:

[73]  See Explanatory note, section 14.1 for the list of therapeutic classes.

.the review of one type of promotional material in three different therapeutic classes and

.a review of three different promotional activities covered by the Code across all therapeutic classes, which would include the review of company sponsored educational meetings and symposia.[74]

[74]  Medicines Australia, 4 May 2006, p2.

3.85Member companies will be required to submit copies of the selected type of promotional material (eg printed advertisements, audio-visual material) used over the past three months for the product under review.

3.84If the Monitoring Committee considers a breach of the Code may have occurred, it may (after contacting the subject company seeking an explanation) either provide advice on compliance with the Code or refer the matter to the Code Committee as a complaint.

3.87The Monitoring Committee will contribute a report to the Medicines Australia Code of Conduct annual report.  This will include the therapeutic categories and type of promotional activities reviewed, the number of items reviewed, the number and type of breaches detected and the number of Code complaints generated.

3.88The following are members of the Monitoring Committee:

Permanent.  Chairman – consultant with industry experience in

members marketing and knowledge of the Code (selected from a panel of three)

.One representative from each of RACGP and the AMA

.A consumer representative nominated by the CHF[75]

[75]  New addition to membership.

Rotating .  One representative from the college and/or society

Members.  from the therapeutic class being reviewed

.One Medicines Australia member company Medical Director and one Medicines Australia member company Marketing Director, neither of which have a conflict of interest in the therapeutic class

Advisors .  Medicines Australia Code Secretary

.Medicines Australia officer responsible for scientific and technical affairs

3.89There is a process set out for ensuring that members of the Monitoring Committee hearing a complaint do not have a conflict of interest.[76]

[76]  Section 14.3 (new).

3.90The Code provides that the operations of the Monitoring Committee will be reviewed on a regular basis.[77]

[77]  Section 14.6.

Enforcement of the Code[78]

[78]  The data in this section are sourced from the Medicines Australia Code of Conduct Annual Reports 2002-03, 2003-04, 2004-05 and Code Outcomes, July – December 2005, all downloaded from Medicines Australia’s website: of breaches

3.91Medicines Australia issues an annual report on the activities of the Code, Appeals and Monitoring Committees.  It contains information such as the complaints received and the decisions made by the Code and Appeals Committees, and the time taken to deal with complaints.[79]  Under Edition 15, Medicines Australia will also publish on its website a quarterly report on the outcomes of all complaints finalised during the reporting period.[80]

[79]  Section 16.1.

[80]  Section 16.2 (amended – previously published six-monthly).

3.92Where complaints relate to activities directed towards the general public, information about the complaints are made available on the Medicines Australia website.

Annexure 2

Results of consideration of complaints by Code Committee
1.1      Financial Year  2003-2004

Complaints finalised from 2002-20031	Number	Percentage
Breach	2	29%
Partial Breach	2	29%
No Breach	1	14%
Appeals
Appeals not upheld – breach confirmed	2	100%
Total complaints finalised from 2002-2003	7

Complaints received in 2003-2004	Number	Percentage
Breach	9	25%
Partial Breach	8	22%
No Breach	11	30%
Complaints not finalised in reporting period	2	6%
Complaints Withdrawn	6	17%
Total new complaints in 2003-2004	36	100%

¹  Complaints finalised from 2002-2003 refers to complaints received prior to the end of financial year 2002-2003 and either not considered by the Code Committee (because the date of the Code Committee meeting following receipt of the complaint was after 30 June 2003), or considered by the Code Committee but not finalised before the end of the financial year.  Complaints are deemed finalised once the subject company has received the Code Committee minutes and either no appeal is lodged, within 5 working days, or an appeal is completed.

1.1       Financial Year  2004-2005

Complaints finalised from 2003-20042	Number	Percentage
Breach	2	100%
Partial Breach	0	0%
No Breach	0	0%
Appeals
Appeals not upheld – breach confirmed	1	50%
Appeal partially upheld – some aspects confirmed	1	50%
Total complaints finalised from 2003-2004	4

Complaints received in 2004-2005	Number	Percentage
Breach	18	35%
Partial Breach	16	31%
No Breach	10	20%
Complaints not finalised in reporting period	3	6%
Complaints Withdrawn	4	8%
Total new complaints in 2004-2005	51	100%

^{2  See footnote 1 above}

1.1      Financial Year  2005-2006

Complaints finalised from 2004-20053	Number	Percentage
Breach	1	33%
Partial Breach	1	33%
No Breach	1	33%
Appeals	0
Total complaints finalised from 2004-2005	3

Complaints received in 2005-2006	Number	Percentage
Breach	6	22%
Partial Breach	3	11%
No Breach	9	34%
Complaints not heard*	2	7%
Complaints not finalised in reporting period	7	26%
Complaints withdrawn	0	0%
Total new complaints in 2005-2006	27	100%

*  Complaints same as an earlier complaint and no further action required by the complainant.

^{3  See footnote 1 above}

Annexure 3

Results of consideration of appeals by Appeals Committee

Decision	2003-2004 Number	2003-2004 Percentage	2004-2005 Number	2004-2005 Percentage	2005-2006 Number	2005-2006 Percentage
Appeal not upheld – breach confirmed	4	80%	7	64%	3	100%
Appeal partially upheld – some aspects confirmed	1	20%	3	27%	-	-
Appeal upheld – no breach	-	-	1	9%	-	-

Annexure 4

Comparison of alleged versus actual breaches of the Code

Code Section	2003 – 2004		2004 - 2005		2005 - 2006
Alleged	Actual	Alleged	Actual	Alleged	Actual
1 Promotional and medical claims	70	41	95	60	44	23
3 Promotional Material	4	4	6	6	9	5
4 Conduct of medical representatives	6	1	4	0	2	0
5 Starter packs	3	2	0	0	0	0
6 Involvement in educational meetings	1	1	1	0	4	1
6.2 Hospitality	1	0	2	0	0	0
7 Sponsorship	3	0	2	0	0	0
8 Research	0	0	4	0	0	0
9 Relationship with the general public	25	5	27	14	15	3
10 Relationship with healthcare professionals	0	0	2	0	1	1
10.1 Entertainment	0	0	0	0	1	0
10.2 Hospitality	0	0	2	0	2	0
10.4 Remuneration for services provided	0	0	2	1	0	0
10.5 Discredit to the industry	4	1	5	0	0	0

Annexure 5

Rule Creation: Comparison of Regulatory and Voluntary Code Regimes from  Webb K and Morrison M, The Law and Voluntary Codes: Examining the “Tangled Web”
Characteristics	Regulatory Regimes	Voluntary Codes
Rule-making institutions	Pre-established by State: well-known, highly credible.  State controls process, access.	May be newly established: less credible, at least at outset.  Government, business or non-governmental organizations can create.
Visibility of process	Generally high, particularly in the democratically elected rule-making organs of State.	Generally lower, but not necessarily so.
Cost	High, but usually spread across society.	Lower, but borne by a smaller group.
Development process	Difficult: highly formal, expensive, democratic (in primary rule-making bodies).  Theoretically open to all.	Possibly easier: less formal, less expensive.  May not be open to all.
Ability make amendments	Difficult (see above).	Easier (see above).
Sanctions that can be attached	Can include coercive and liberty-depriving sanctions, including imprisonment.	Primarily market-based.  May be tort and contractual liability implications.
Scope of application	Can be imposed on free riders.  Not based on contractual consent.	Difficulty with free riders.  Based on contractual consent.
Constraints on rule development/implementation	Considerable: constitutional and procedural	Few: may apply across national and provincial boundaries.
Likelihood of rules being developed through the process	Political process makes outcomes difficult to predict.	Closed, limited process may make outcomes easier to predict.
Likelihood of rigorous obligations being developed	High: obligations developed by parties other than those who will be directly affected, less chance for bias to affect obligations being developed.	Low: obligations often developed by parties whose interests are directly affected, greater chance for bias to affect obligations being developed.

Annexure 6

Rule Administration: Comparison of Regulatory and Voluntary Codes Regimes  from  Webb K and Morrison M, The Law and Voluntary Codes: Examining the “Tangled Web”
Characteristics	Public Laws	Voluntary Codes
Institutions of rule administration	Primarily pre-established institutions.	May use newly developed institutions or existing bodies.
Visibility of rule implementation process	High: public reporting requirements.	Lower: can have procedures to ensure visibility such as public reporting requirements.
Cost	High: due to need to adhere to due process considerations and transparency obligations, but cost spread across society.	Lower: may be lesser concerns with transparency but cost borne by a small group.
Accountability	High: scrutiny by Auditor General, responsible ultimately to Minister/ Parliament.	Lower: depends on reporting requirements; the market, public and media are important.
Constraints on rule administration	Considerable: constitutional and procedural.	Few: varies by institution.
Credibility	High.	Tends to be lower.
Investigation and inspection capabilities	Subject to constitutional constraints: may have extensive powers.	Subject to consent of parties: may have extensive powers.
Sanctions for non-cooperation in administration of rules	May include coercive measures.	May be more limited: consensual system.
Formality	Normally high.	Variable.
Likelihood of rules being followed	High: in a law abiding society few wish to be seen in violation.	Lower: pressure to comply is derived primarily from peers and market perceptions.

Annexure 7

Adjudication: Comparison of Regulatory and Voluntary Code Regimes from  Webb K and Morrison M, The Law and Voluntary Codes: Examining the “Tangled Web”
Characteristics	Public Laws	Voluntary Codes
Institutions of rule adjudication	Both pre-established (courts) and new (eg regulatory tribunals).	Primarily newly established bodies, indirectly supported by courts.
Authoritativeness of determinations	High.	Variable.
Ability to enforce judgments	High: can draw on State-approved coercion.	Variable: limited ability to use coercive force; can use market-based sanctions.
Structure of adjudication	Tends to be centralized.	Variable centralization.
Application	Wide: applies to all parties, can compel attendance, impose penalties on parties who do not attend.	Variable: dependent ultimately on consent; difficulty applying sanctions to those who do not wish to participate.
Cost	High: spread across society.	Variable: borne by a small group.
Formality	Tends to be high.	Variable: may be formal or informal.
Credibility	High.	Variable.
Visibility	High.	Variable.
Constraints	Considerable: constitutional and procedural.	Variable.

Annexure 8
Summary of Cost Information in Relation to Hospitality
Provided by Pharmaceutical Companies to Healthcare Professionals

Source	Venue	Event	Pharmaceutical Company	Cost Information
RB 2-125	Flower Drum	Education event “Evolution and Future Direction of MS Treatment” held at the Flower Drum Restaurant, Melbourne – 22 February 2005	Biogen	Email of 13.9.05 states total cost of hospitality was $7,847.40, includes $6,036 for meals ($138 per head for full service) and $1838 for beverages.
RB 2-144	Bennalong Restaurant	HOTT conference dinner held at Bennalong Restaurant, Sydney, on 30 July 2005.	Roche	The set menu meal was $150 per person and the preselected wine was charged at $50 per person.
RB 2-144	The Boathouse	LyFE LyNE conference dinner held at Boathouse, Sydney on 1 August 2005	Roche	The set menu meal was $85 per person and the preselected wine was charge (sic) at $50 per person.
RB2-144	Aria	LyFE LyNE conference dinner held at Aria, Sydney on 2 August 2005.	Roche	The set menu meal was $150 per person and the preselected wine was charged at $50 per person.
RB 4-404	Bacash	Event held at Bacash Restaurant, South Yarra, Vic on 5 April 2004 re: the product Kaletra.	Abbott	Average cost per head $189
RB 4-404	Pavilion on Hyde Park	Event held at Pavilion on Hyde Park on 7 April 2004 re: the product Kaletra	Abbott	Average cost per head was $130.
RB4-404	Chifley on George St	Event held at Chifley on George Street, Brisbane on 6 April 2004 re: “Myths and realities of HIV Therapy”	Abbott	Average cost per head was $107

Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Fenix	Educational event on ‘Advances in Colorectal Therapy’ held on 6 May 2004.	Pfizer	Cost per head was $90.82.  Total cost of the hospitality was $2,270.50.
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Vue De Monde	Educational event on ‘Dietary Factors and Gastro Oesophageal Reflux Diesis’ held on 29 April 2004.	Pfizer	Cost per head was $118.39.  Total cost of the hospitality was $4143.50
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Ayers House, Adelaide	Educational event on ‘Hypertension Education Resource’. 18 May 2005	Pfizer	Cost per head $90.63.  Total cost $1,942.00.
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Bacash, South Yarra	Educational event ‘The Coxibs: Where to Now?” Held on 4 May 2005	Pfizer	Cost per head $78.08.  Total cost $1,952.00.
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Yahachi, Perth	Educational event on ‘Fat, Happy and Sexy’ held on 25 May 2005	Pfizer	Cost per head $96.00.  Total cost $2,15.00 (sic)
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Ottoman, Canberra	Educational event on ‘Intra-articular injections module’ held on 28 April 2004	Pfizer	Cost per head $78.00.  Total cost $1,982.07.
Letter from Mallesons Stephen Jaques to AGS dated 17 November 2006	Matilda Bay Perth	Education event on ‘Women’s Mental Health’ held on 8 June 2004	Pfizer	Cost per head $51.00.  Total cost $3,245.00.
RB 2-322	Matteos Ristorante, Melbourne	Educational event on ‘Interactive presentation and workshop on the identification of Early Heart Failure and its management of patients’ held on 19 May 2004.	Roche	$85.71 per head.  Total cost $1,800.
RB 2-322	Olivettos, Qld	Educational even on ‘Hepatisi (sic) C Nurses Network’ held on 20 May 2004.	Roche	Cost per head $55.80. Total cost $669.70
RB 2-323	The Old Swan Brewery, WA	Educational event on ‘Understanding and Managing the Co-morbidities of Obesity’ held on 27 April 2004.	Roche	Cost per head $78.80.  Total cost $2,680.  Room hire $300
RB 2-323	Frasers Restaurant, WA	Educational event on ‘Presentation and workshop on the identification of Early Heart Failure and its management of patients’ held on 17 May 2005.	Roche	Cost per head $71.53.  Total cost $1000.  Room hire $250.
RB 2-280	Matteos Ristorante, Melbourne	Education event on ‘Coronary artery disease’ held on 10 May 2005	Bayer	Cost of food per head - $75.00 Cost of beverages - $25.00
RB 2-280	Jacques Reymond, Melbourne	Education event on ‘Reassessing treatment for respiratory tact [sic]  infections’ held on 5 May 2005	Bayer	Cost per head - $110
RB 2-280	Swan Brewery, WA	Education event on ‘Coronary artery disease’ held on 19 April 2005	Bayer	Cost of food per head $55. Cost of beverages per head $33.00.  Room hire $500
RB 2-288	Lenzerheide restaurant. Adelaide	Educational event ‘Emerging evidence of vascular inflammation in coronary artery disease’ held on 29 June 2004.	BMS	Cost per head $77.89.  Total cost $1,713.50.  22 people attended.
RB 2-288	Chloes Restaurant, Adelaide	Education event ‘Autumn update on Cardiovascular trend and treatments’ held on 22 April 2004.	BMS	Cost per head $92.64.  Total cost $1,389.60.  15 people attended.
RB 2-288	The Manse	Educational event ‘Fireside Chat – Discuss current trends and treatments in Cardiovascular diseases’ held on 23 June 2004.	BMS	Cost per head $97.67.  Total cost $1,758.00.  18 people attended.
RB 2-295	Bacash	Educational event “Doctors Infectious Disease Meeting” held on 22 June [2005]	GSK	$65 per head for food; $37.72 per head for drinks.