May 29, 2013

sycr.com

Authors: Kathleen Marcus Chair, Compliance Practice (949) 725-4080 kmarcus@sycr.com Jason de Bretteville (949) 725-4095 jdebretteville@sycr.com Susan Tran (949) 725-4083 stran@sycr.com

French Sunshine Act Requires Immediate Action

BRIEF SUMMARY
On May 21, 2013 France issued a decree implementing French Law No. 2011-2012 on the Strengthening of Health Protection for Medicinal and Health Products, known as the Loi Bertrand or the French Sunshine Act (the Decree). The Decree imposes a general disclosure obligation on any company manufacturing or marketing pharmaceuticals, medical devices, and cosmetics in France. The Decree includes retroactive disclosure obligations that apply to all benefits granted and agreements signed since January 1, 2012. Companies must transmit the information for 2012 to the National Council of the relevant health profession, such as the National Medical Association, before June 1, 2013. The information must be published on company websites before October 1, 2013. The Decree includes the imposition of severe penalties for failing to timely disclose the relevant data.

TO WHOM DO THE REPORTING REQUIREMENTS APPLY?

The Decree affects a broad range of health care companies, including any company manufacturing or distributing any of the categories of products listed in Article L 5311-1 of the French Code of Public Health 1 (Covered Companies). These include companies manufacturing or distributing medicines, medical devices, cosmetic products, contact lenses and tattoo products. A Covered Company is subject to the Decree even if its products are not eligible for social security reimbursement. Covered Companies must report and publish both benefits granted and agreement details, in French, with covered recipients. The Decree covers a broad range of recipients, including healthcare professionals (HCPs), associations of HCPs, medical students, patient associations, hospitals, nonprofit associations, providers of medical software, consulting companies which advise on health products, companies running a press, radio, television or online public communication service or legal entities providing or participating in the training of healthcare professionals (Covered Recipients).

Article L 5311-1 covers: Drugs including insecticides, acaricides, pest control human products, compound, hospital and pharmaceutical preparations, narcotic substances, psychotropic or poisonous substances, essential oils, medicinal plants, raw materials Contraceptive or contragestive products Biomaterials and medical devices In vitro diagnostics medical devices Labile blood products Human or animal organ tissue or cell Therapeutic cells products Breast milk Contacts lenses products Products for disinfecting sanitary rooms and vehicles Ancillary therapeutic products Non-corrective contact lenses Cosmetic products Microorganism and toxin products Tattoo products Software Devices that are not medically necessary but are used in medical biology laboratories to perform medical biology tests.

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WHAT MUST BE REPORTED?

Benefits Granted by Companies to Covered Recipients The Decree mandates disclosures of any benefit in cash or kind valued at over 10 euros, including VAT (value added tax), given to a Covered Recipient. Under French Public Health Law, the term benefits encompasses any form of payment or hospitality, including payment of a contractual fee. Benefits must be reported whether they are granted directly or indirectly to a Covered Recipient from a Covered Company, even where the Covered Recipient gives consideration or services in return for that benefit. The Covered Company must report: (1) the name and address of the Covered Recipient; (ii) the amount of the benefit; and (iii) the date and nature of the benefit. Agreements Signed Between Companies and Covered Recipients The Decree sets out the information that must be disclosed by Covered Companies regarding agreements with Covered Recipients. This includes: (1) the name and address of the parties; (ii) the date the contract is signed; (iii) the purpose of the contract; and (iv) the agenda for the event, if the contract is for hospitality related to a scientific or promotional event. Exemptions Agreements governed by the French Code of Commerce for the purchase of goods are expressly excluded from disclosure. This exclusion only applies to a sale by the Covered Company of its goods and not the provision of services by the Covered Recipient to the Covered Company. In reporting the purpose of the contract, trade or industrial secrets shall not be disclosed. Companies manufacturing or marketing cosmetic products, contact lenses and tattoo products need only publish the key elements of clinical trial agreements or agreements related to safety evaluations. For example, those companies do not need to disclose agreements not related to hospitality or advisory boards.

WHEN DOES DATA COLLECTION BEGIN?

Transitional Period Importantly, the Decree applies retroactively and requires that companies disclose all benefits and agreement details from the 2012 calendar year by June 1, 2013. As previously noted, to comply with the Decree, Covered Companies must: (1) submit the data to the National Council of the relevant health profession and (2) post the disclosures on the Covered Companys website, a website shared with other companies or via the website of the relevant industry association. Until the adoption of the national website, which will publish all the transparency data, the Decree also requires the National Council of the relevant health profession and Covered Companies to publish the information on their websites by October 1, 2013.

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Established Reporting and Publication Dates After this initial reporting period, Covered Companies must transmit the relevant information regarding agreements within 15 days after the date of the signature. Information regarding benefits derived between January 1, 2013 and June 30, 2013 must be transmitted no later than August 1, 2013 and published no later than October 1, 2013. Benefits granted during the second half of the year must be reported by February 1, 2014 and published by April 1, 2014.

IMPLICATIONS
Further guidance from the French government should be forthcoming. However, as the Decree states that Covered Companies must disclose required data by June 1, 2013, companies conducting business in France have only a few days to ensure compliance with the initial disclosure date. Covered Companies that knowingly violate the reporting obligations may be subject to a criminal fine of up to 45,000 euros and may face other sanctions, such as a ban on participating in public tenders, the suspension of business activities or the closing of facilities. Accordingly, companies conducting business in France should promptly implement reasonable policies and procedures to ensure compliance as a part of their overall compliance plan. We are here to assist with these issues and ensure you do not run afoul of these new regulations. If your office has any questions, please feel free to contact the Stradling attorney with whom you work, or: Kathleen Marcus Telephone: (949) 725-4067 Email: kmarcus@sycr.com Jason de Bretteville Telephone: (949) 725-4042 Email: jdebretteville@sycr.com

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This publication is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons. This publication should not be acted upon in any specific situation without appropriate legal advice.

COPYRIGHT 2013 STRADLING YOCCA CARLSON & RAUTH, P.C.