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The Fair Competition Code of the Medical Devices Industry in Japan

Notice:
This English Version of the Japanese original of "The Fair Competition Code Concerning Restriction on Premium Offers in the Medical Devices Industry" is published to meet the needs of non - Japanese speaking readers.
When and if any discrepancy arises between the Japanese original and its English translation, the former shall be considered as the proper meaning.

No part of this publication may be reproduced, stored, in a retrieval system, or transmitted, in any form or by any means, electronic, photocopying, recording, or (otherwise) used for advertising or promotional purposes, general distribution, creative new collective works, or for resale, without prior written permission of the copyright owner and publisher.

Translation
Hideaki Ogasawara
Chair, Planning & Public Relations Committee
The Japan Fair Trade Council of the Medical Devices Industry (JFTC)

CONTENTS

Notification No.8 of the Fair Trade Commission dated March 31, 2000

Restrictions on Premium Offers in the Ethical Drugs Industry, Medical Devices Industry, and Hygienic Inspection Laboratory Industry shall be partially amended as follows under the provisions within The Act Against Unjustifiable Premiums and Misleading Representations (Act No. 134, Article 3 of 1962).

Restrictions on Premium Offers in the Ethical Drugs Industry, Medical Devices Industry, and Hygienic Inspection Laboratory Industry.

The term "health services facilities for the aged defined in Article 6, Paragraph 4 of the Health and Medical Service Act for the Aged (Act No. 80, 1982) " in Paragraph 4 of the Notes shall be amended to "care and health services facilities for the aged defined in Article 7, Paragraph 22 of the Long Term Care Insurance Act (Act No.123, 1997) ".

Supplementary Provision
This Notification shall take effect on April 1, 2000.

Regulations Concerning the Medical Devices Industry and Other Similar Industries in Japan

[Notification No. 18 of the Fair Trade Commission dated November 16, 1998]

Restrictions on Premium Offers in the Ethical Drugs Industry and Hygienic Inspection Laboratory Industry (Notification No.54 of the Fair Trade Commission, 1997) shall be partially amended as follows under the provisions within The Act Against Unjustifiable Premiums and Misleading Representations (Act No. 134, Article 3 of 1962).

Restrictions on Premium Offers in the Ethical Drugs Industry, Medical Devices Industry, and Hygienic Inspection Laboratory Industry.

Those engaged in manufacturing or distributing ethical drugs, those engaged in manufacturing or distributing medical devices, and those engaged in hygienic inspection business shall not offer, as a means of unjustifiably inducing transaction of ethical drugs, medical devices or hygienic inspection, premiums to medical institutions and other similar institutions beyond the extent of articles or services necessary for use of ethical drugs, medical devices or hygienic inspection, or others found reasonable in light of normal business practices.

(Notes)

  • 1. The term "ethical drugs" as used in this Notification shall mean pharmaceutical drugs defined in Article 2, Paragraph 1 of the Pharmaceutical Affairs Act (Act No.145, 1960) and used for medical care at medical institutions and other similar institutions.
  • 2. The term "medical devices" as used in this Notification shall mean medical devices defined in Article 2, Paragraph 4 of the Pharmaceutical Affairs Act and used for medical care at medical institutions and other similar institutions.
  • 3. The term "hygienic inspection" as used in this Notification shall mean inspections defined in Article 2, Paragraph 2 concerning The Clinical Laboratory Technicians, Hygienic Inspection Technicians, and Other Similar Technicians Act (Act No. 76, 1968).
  • 4. The term "medical institutions and other similar institutions" as used in this Notification shall mean hospitals and clinics defined in Article 1- 5 of the Medical Care Act (Act No. 205, 1948), health services facilities for the aged defined in Article 6, Paragraph 4 of the Health and Medical Service Act for the Aged (Act No. 80, 1982), pharmacies defined in Article 2, Paragraph 5 of the Pharmaceutical Affairs Act, and others engaging in medical care, and contractors of hygienic inspection (including board members, medical professionals, and other employees).

Supplementary Provisions

  • 1. This Notification shall take effect on April 1, 1999.
  • 2. Premium offers which have taken place in previous transactions prior to this Notification shall be governed by pre-existing rules.

The Fair Competition Code Concerning Restriction on premium Offers in the Medical Devices Industry

[Authorized under the Fair Trade Commission on November 16, 1998 Notification No. 19 of the Fair Trade Commission dated November 16, 1998]

Article 1 (Purpose)

The Fair Competition Code (hereinafter referred to as "FCC") aims to prevent unfair inducement of customers through restrictions on unjustifiable premium offers in the medical devices manufacturing and distributing industry, and to ensure fair competition and order within the industry.

Article 2 (Definition)

  • 1. The term "medical devices" as used in the FCC shall mean medical devices defined in Article 2, Paragraph 4 of the Pharmaceutical Affairs Act (Act No. 145, 1960) and used for medical care at medical institutions and other similar institutions.
  • 2. The term "medical devices manufacturers" as used in the FCC shall mean entities who are engaged in manufacture or import of medical devices in their business operations and who adhere to the FCC.
  • 3. The term "medical devices distributors" as used in the FCC shall mean entities who are engaged in distribution of medical devices in their business operations and who adhere to the FCC.
  • 4. The term "business entities" as used in the FCC shall mean medical devices manufacturers, and distributors and those engaged in related activities.
  • 5. The term " medical institutions and other similar institutions" as used in the FCC shall mean hospitals and clinics defined in Article 1-5 of the Medical Care Act (Act No.205, 1948), health services facilities for the aged defined in Article 6, Paragraph 4 of the Health and Medical Service Act for the Aged (Act No. 80, 1982), and others engaging in medical care and shall include board members, medical professionals, and other employees.
  • 6. The term "premiums" as used in the FCC shall mean any articles, money, or other kinds of economic benefits which business entities (medical devices manufacturers and distributors and those engaged in related activities) may offer, irrespective of methods employed, to the other parties in connection with transactions of their medical devices as a means of inducing customers, (with the exception of premiums that do not include any economic benefits such as discounts or after- sales services in light of normal business practices, nor any economic benefits which are found as belonging to the medical devices in light of normal business practices) as listed below;
    • (1) Goods, land, buildings and other structures
    • (2) Money, money certificates, bank deposit certificates, lottery certificates, bond or share certificates, shopping certificates, and other securities
    • (3) Entertainment (including invitation free of charge or with favorable fees to movies, shows, sports, travel, and other amusements)
    • (4) Conveniences, labors, and other services

Article 3 (Principle of Restriction on Premium Offers)

The business entities shall not offer premiums to medical institutions and other similar institutions as a means of unjustifiably inducing transactions of medical devices.

Article 4 (Restricted Premium Offers)

Examples of premium offers that violate the provisions of Article 3 are as follows;

  • (1) Money and articles, travel, entertainment, conveniences and labors, and other services offered as a means of inducing selection or purchase of the medical devices to medical doctors, dentists or other medical professionals belonging to medical institutions and other similar institutions.
  • (2) Gratuitous offer of medical devices, conveniences and labors, and other services to medical institutions and other similar institutions as a means of inducing selection or purchase of the medical devices.

Article 5 (Unrestricted Premium Offers)

Examples of offers of premiums or economic benefits that do not violate the FCC are as follows;

  • (1) Offer of articles or conveniences or other services required for proper use of medical devices marketed by a company or to cope with an emergency
  • (2) Offer of medical information or supply of explanatory leaflets or materials for medical devices marketed by a company
  • (3) Offer of sample medical devices in compliance with the standards stipulated in the Enforcement Rule
  • (4) Payment of remuneration and expenses for research or study regarding medicine or medical devices such as post-marketing surveillance or clinical studies of the medical device consigned to medical institutions and other similar institutions
  • (5) Offer of articles or services not considered extravagant or excessive pertaining to seminars or the like, organized for the medical institutions and other similar institutions, to deepen understanding of the medical devices marketed by a company or payment of attending expenses thereto

Article 6 (Restriction on Premium Offers to Medical Devices Distributors)

Medical devices manufacturers shall not offer premiums to medical devices distributors in violation of the provision of Article 19 (Prohibition of Unfair Trade Practices) concerning The Prohibition of Private Monopoly and Maintenance of Fair Trade Act (Act No. 54, 1947).

Article 7 (Fair Trade Council)

  • 1. The Japan Fair Trade Council of the Medical Devices Industry (hereinafter referred to as "JFTC") shall be established in order to achieve the objectives of the FCC.
  • 2. The JFTC shall be composed of business entities and associations of business entities participating in the FCC.
  • 3. The JFTC shall perform the following functions;
    • (1) Matters pertaining to promotion of greater awareness and understanding of the FCC.
    • (2) Matters pertaining to counseling, guidance and disposition of complaints on the FCC.
    • (3) Matters pertaining to investigation of suspected violations of the FCC.
    • (4) Matters pertaining to action against business entities who violate the FCC.
    • (5) Matters pertaining to promote greater awareness on The Act Against Unjustifiable Premiums and Misleading
      Representations and laws and regulations on fair trade, and toward prevention of violations thereof.
    • (6) Matters pertaining to liaison and coordination with government agencies concerned.
    • (7) Other matters pertaining to the enforcement of the FCC.

Article 8 (Obligation to Cooperate)

Business entities shall cooperate with the JFTC in order to ensure smooth enforcement of the FCC.

Article 9 (Investigation of Violations)

  • 1. When the JFTC suspects a violation of the provisions of Article 3 of the FCC, it may convene parties concerned to hold hearings, refer necessary matters to parties concerned, seek opinion from witnesses and conduct other necessary investigation.
  • 2. Business entities shall cooperate with any investigation the JFTC conducts pursuant to the preceding provision.
  • 3. In the event that business entities refuse to cooperate with an investigation under the provision of Paragraph 1, the JFTC may warn the business entities involved, in writing, that they should cooperate with the investigation. In the event that business entities do not comply with the warning, the JFTC may impose a penalty of up to エ100,000 or expel them from the FCC.

Article 10 (Penalties for Violations)

  • 1. In the event that a violation of the provisions of Article 3 is found, the JFTC may warn the violator in writing, that necessary action shall be taken to eliminate the violation, that the same or similar type of violation shall not be repeated, and other related remedial actions shall be taken.
  • 2. In the event that it is found that the business entity warned under the provision of the preceding paragraph has not complied with the warning, the JFTC may impose it a penalty of up to エ 1,000,000, or expel from the FCC, or request the Fair Trade Commission to take appropriate regulatory action.
  • 3. The JFTC, when issuing a warning, or imposing a penalty on a violator, or expelling from the FCC in accordance with the provision of Paragraph 3 of the preceding article or Paragraph 1 or 2 of this article, shall notify the Fair Trade Commission of said action in writing without delay.

Article 11 (Procedures for Violations)

  • 1. In case action (excluding warning) is to be taken in accordance with provisions of Paragraph 3 of Article 9, or Paragraph 2 of the preceding article, the JFTC shall draw up a draft (hereinafter referred to as "Draft Decision")and send it to the said business entity.
  • 2. The said business entity may file a written appeal with the JFTC within 10 days after receipt of the Draft Decision.
  • 3. When such an appeal has been made, the JFTC shall give the said business entity an opportunity to make and prove its assertions, conduct additional review of the case based on the new materials provided and thereupon make a formal decision accordingly.
  • 4. When no opposition has been filed pursuant to the provision of Paragraph 2 of this article, the JFTC shall make the same decision as set forth in the Draft Decision.

Article 12 (Establishment of Enforcement Rule)

  • 1. The JFTC may establish an enforcement rule on matters relating to the enforcement of the FCC.
  • 2. The JFTC shall obtain approval of the Fair Trade Commission in advance before establishing or revising an enforcement rule.

Supplementary Provisions

  • 1. The FCC shall take effect on April 1, 1999 except Article 7 (other than Paragraph 3, Items 3 and 4) and Article 12 which shall take effect on the date of notification by the Fair Trade Commission.
  • 2. When the system on benefits of medical devices in medical care covered by health insurance is revised, the FCC shall be reviewed accordingly to ensure fair competition in the medical devices industry.

Enforcement of the Fair Competition Code on Premium Offers in the Medical Devices Industry

[Approved by the Fair Trade Commission on December 2, 1998]

Article 1. (Meaning of Terns)

  • 1. The meaning of terms used in the Fair Competition Code (hereinafter referred to as "FCC") concerning Restriction on Premium Offers in the Medical Devices Industry and this enforcement rule shall be as follows;
    • (1) All the medical devices used for medical care at the medical institutions and other similar institutions shall be included as medical devices in the FCC, no matter whether they are covered or not covered by health insurance.
    • (2) The term "those engaged in related activities" used in Article 2, Paragraph 4 of the FCC refers to persons who market medical devices with their own trade mark or name on by contracting out manufacturing of medical devices to other manufacturers or sole agents or persons under special contract with medical devices manufacturers who are recognized to be engaged in practically the same business as the manufacturers (e.g. seller), and who adhere to the FCC.
    • (3) The term "medical institutions and other similar institutions" defined in Article 2, Paragraph 5 of the FCC shall include medical doctors, dentists, pharmacists, and other medical professionals belonging to a medical institution or the like, and board members, employees and others who participate in selection or purchase of medical devices at the said institutions (including "person engaged in medical administrative operations").
    • (4) The term "any economic benefits which are considered after-sales services used in normal business practices" stipulated in the proviso in Article 2, Paragraph 6 of the FCC shall mean articles, conveniences, and other services necessary for trading or use of medical devices (e.g. handling and operating explanation, maintenance and inspection, repair and the like within the guaranteed period)
    • (5) The term "any economic benefits which are considered to be collateral to medical devices used in normal business practices" specified in the proviso in Article 2, Paragraph 6 of the FCC shall mean articles or conveniences or other services which need to be provided with medical devices because of their structure or function (e.g. attachment / installment / wiring / operation adjustment of the equipment, the storage container or the like).

Article 2 (Sample Medical Devices)

The offering standards on sample medical devices stipulated in Article 5, Item 3 of the FCC shall be as follows;

  • (1) Definition of "sample medical devices"
    The term "sample medical devices" shall mean the medical devices offered free of charge to medical institutions and other similar institutions so that the medical professionals can confirm outward characteristics of the medical devices concerned such as shape or can confirm and evaluate efficacy and safety of the medical devices under clinical testing use prior to routine use of the medical devices.
  • (2) Offering Standard
    • a. Sample medical devices shall be labeled in a way that differentiates them from the marketed products.
    • b. Sample medical devices shall be supplied as per minimum quantity necessary for confirmation or evaluation of the product as stipulated in the preceding item.
    • c. Offer shall be made only when request in writing is submitted by medical doctor or like person, to use for clinical testing.

Article 3 (Remuneration for Case Reports)

Remuneration for case reports in post marketing surveillance stipulated in Article 5, Item 4 of the FCC shall be in accordance with the following standards;

  • (1) The term "case reports" shall mean that medical doctors or like persons, in accordance with the request of a medical device manufacturer, prepares a report concerning the efficacy, safety, and quality of a certain type of post marketing medical device in a particular format regarding the cases where a medical doctor or like person, has in fact used or prescribed the said medical device.
  • (2) Under the pretext of remuneration for case reports, money shall not be offered as a means of inducing selection or purchase of offererユs medical devices: therefore, the following matters shall be complied with;
    • a. No request for a case report shall be made to a medical institution and other similar institution which has not adopted nor purchased the medical device surveyed, nor on the condition that the said medical device will be adopted, continue to be purchased or increase in purchased amount.
    • b. The number of cases surveyed shall be reasonable in light of the purpose or content of the survey.
    • c. The requests shall be made to medical institutions and other similar institutions which can perform the purpose of the survey.
    • d. The requested institutions or the like shall not be biased toward particular areas or particular type of medical institutions and other similar institutions in light of the purpose of the survey.
    • e. Excessive number of case reports shall not be requested for clinical cases handled by the medical institutions, or doctors, etc.
    • f. Requests for case reports shall be made in writing.
    • g. Remuneration for case reports shall not be more than an objective and fair amount calculated reasonably.

Article 4. (Lectures and Meetings)

With respect to premium or the like, offers at lecture meetings or the like, and other purposes for medical devices marketed by a company stipulated in Article 5, Item 5 of the FCC, the following shall pertain;

  • (1) The term "lecture meetings and other purposes for medical devices marketed by a company" shall mean any meeting, irrespective of the title of the meeting such as an explanatory meeting or seminar, to explain medical devices marketed by a company to a number of medical institutions and other similar institutions.
  • (2) Attention shall be paid to the venue, facility, and other means of holding such meetings, so to avoid being misconstrued as invitations for travel or entertainment.
  • (3) The following is acceptable payment of expenses for participation;
    • a. Payment of remuneration, expenses and honoraria to a lecturer or like person, requested by a company, within the amount that is considered acceptable in light of common practices shall be permissible.
    • b. Payment of necessary minimum amount of travel expenses to the participants, other than lecturers, shall be permissible.
    • c. Receptions, not considered extravagant or excessive, held in connection with the meeting shall be permissible.

Article 5 (Premium Offers, etc.)

Economic benefits as specified below shall not contravene the Provisions of Article 3 of the FCC, even if they are considered as premium offers.

  • (1) Offer of premiums within the quantity which is considered reasonable in light of normal business practices.
  • (2) Gifts which are offered, or receptions which are held, in line with customary social gatherings and which are not considered extravagant or excessive in light of common practices.
  • (3) Gifts which are offered, or receptions which are the customary memorial ceremonies of a company or medical institution or other institution and which are not considered extravagant or excessive in light of common practices.

Article 6 (Detailed Enforcement Provisions)

The JFTC may establish detailed rules on enforcement standards or procedures to enforce the FCC and the Enforcement Rule by filing with the Fair Trade Commission.

Supplementary Provision

The Enforcement Rule shall take effect on the day the FCC takes effect (April 1, 1999).