Advertising of medical devices comes under State Institute for Drug Control scrutiny, and the Czech competition office investigates the distribution of medicines. Stay tuned and be prepared!

State authorities have become quite active in their oversight of pharmaceuticals and medical devices. We summarize for you below the latest developments in the supervision of advertisements of medical devices carried out by the State Institute for Drug Control (the Institute), as well as in the sector inquiry of the Office for the Protection of Competition (the Competition Office) into the distribution of pharmaceuticals.

Watch out for changes in the medical device regulation on advertising

As we informed you in our May 2021 newsletter, the recent comprehensive amendment to legislation regulating medical devices includes a completely new legal framework for the advertising. November 26, 2021 marks the end of the transition period during which marketing materials for medical devices — including in vitro diagnostic medical devices (IVDs) — could still have been created and disseminated under the former legal regime. The new regulatory framework is now fully effective. Consequently, all medical device manufacturers, distributors and vendors must adapt their advertising and marketing policies to the new regulatory framework, which partially draws from the current rules on the advertising of medicinal products.

We recommend that everyone involved in the preparation and subsequent dissemination of advertisements for medical devices reviews whether their conduct complies with current legislation and aligns their advertising policy with these new (stricter) rules. Non-compliance with the new legislation may ultimately result in fines of up to several million Czech crowns per violation.

In this respect, the Institute has taken a proactive approach — it has even published several detailed guidelines on its website concerning the new regulation, including its interpretation of selected terms and provisions. These guidelines are available here (in Czech only). At the same time, the Institute has stated that it is open to discuss any ambiguities related to this new regulation.

Competition Office sector inquiry is underway

The Competition Office is currently conducting a so-called sector inquiry into the distribution of medicinal products. The primary focus of the investigation is the wholesale and retail distribution market, with a focus on the distribution of medicines covered by public health insurance and prescription medicines. In particular, the direct forms of distribution, such as direct-to-pharmacy (DTP) or direct-to-hospital (DTH). According to the Competition Office, this sectoral investigation is expected to last up to two years.

In connection with this investigation, the Competition Office is sending out extensive questionnaires to a number of stakeholders in order to analyze the market environment as it relates to the distribution of pharmaceuticals. The questionnaires are generally sent to both direct participants in the distribution chain (i.e., manufacturers, distributors, pharmacies, hospitals) as well as a number of other stakeholders, such as various industry associations, professional groups, and public authorities. These questionnaires are designed to map the market and identify any potential market shortcomings. If the Competition Office identifies any weak spots in the market during the sectoral investigation, it may initiate proceedings with particular entities suspected of potentially anticompetitive practices.

In light of this, we recommend duly preparing for communicating with the Competition Office, to avoid any suspicions of illicit conduct. First, if you have been contacted in connection with the sector inquiry it is essential that you provide the Competition Office with the necessary cooperation. Entities that fail to fully cooperate or provide true and accurate information run the risk of substantial fines. Past practice has shown that the Competition Office does not hesitate to impose considerable penalties for failure to cooperate. For example, in 2021 the Competition Office confirmed a fine of CZK 2.3 million (approx. EUR 90,000) imposed on a company because the company’s director refused to cooperate with the investigation. In addition to the above we would advise, in preparation for the sectoral investigation, that you also perform a review of your existing distribution practices and revise contractual documentation to ensure that it is fully compliant with applicable competition rules.

We will continue to keep you informed on further developments in these areas. Should you have any questions, please do not hesitate to contact us.