by Deborah Portilho
Trademark World, issue 159, July/August 2003, p.34-36
This article discusses advertisements published in pharmaceutical magazines in Brazil, comparing the prices of two prescription drugs, one being the reference drug for a category of medicine, and the other a similar product.
Considering the nature of the products and the fact that comparative advertising is not a clearcut issue in Brazil, the question of the legality of advertising based on price comparisons has to be analysed not only based on the Consumer Protection and Defense Code, Industrial Property Law, and the Brazilian Advertising Self-Regulation Code, but also on the basis of the provisions of the Generics Law and the Criminal Code.
The analysis of one particular case filed before the National Council of Advertising Self-Regulation (CONAR) makes it clear that advertising prescription drugs in this manner is an illegal practice under Brazil’s Generics Law and, as such, should be prohibited by ANVISA, the National Agency of Sanitary Control of the Brazilian Ministry of Health. The case at issue involves three different advertisements, all of which compare the prices of two prescription drugs, one being the reference for the category — AMOXIL — manufactured by GlaxoSmithKline – and the other a similar, “me too” product — VELAMOX — manufactured by the Brazilian company Sigma Pharma. The active ingredient in both is amoxicilin.
These advertisements compare the prices of the VELAMOX and AMOXIL products, under different presentations (500mg, 1g, etc.), and have been periodically published in two specialized Brazilian magazines, named K@iros and Guia da Farmácia, which target pharmacies and drugstores.
For a full understanding of the case, it is important to mention that the active ingredient of the two products at issue, amoxicilin, was developed by SmithKline Beecham (predecessor of GlaxoSmithKline). For this reason, AMOXIL is the reference for the category. This means that all other products in the market, whether generics or similar, “me too” products, containing amoxicilin as their active ingredient must follow the standards of the AMOXIL product.
Brazil’s Generics Law (Law 9,787, of February 10, 1999) establishes major differences between similar and generic medicines. First, generics cannot be identified by trademarks, whereas similars must be. Furthermore, to be approved by the Government as a generic product, the “candidate” must pass bioequivalence and bioavailability tests, which are not yet required for similar products. For this reason, generics are interchangeable with the respective reference products, a characteristic that, at least from a legal standpoint, similars do not have.
Given the above, and considering that the similar product VELAMOX and the reference product AMOXIL are made of the same active ingredient (amoxicilin), may their prices be compared in advertisements? If not, why not? If so, does the price comparison benefit consumers?
Advertising law in Brazil
To answer these questions, it is necessary to make some brief comments regarding the relevant sources of law governing advertising of prescription drugs, as well as comparative advertising in general in Brazil.
In Brazil, as in most countries, advertising of prescription drugs cannot be directed at the consuming public, but only at professionals and institutions in the medical and pharmaceutical fields, and can only be made in specialized magazines specifically directed at health professionals and institutions, such as the pharmaceutical magazines K@iros and Guia da Farmácia, in which the advertisements at issue were published.
Law 9,294, of July 15, 1996, which regulates advertising of, inter alia, pharmaceutical products, does not specifically address comparative advertising. On the other hand, ANVISA Resolution No. 102, of November 30, 2000 (republished on June l, 2001), which does specifically establish rules for comparative advertising, fails to discuss price comparison advertising. Accordingly, we must look for other sources of law dealing with comparative advertising in general. To this end, it should be noted that comparative advertising is not governed by any specific piece of legislation in Brazil, but by various provisions of the Brazilian Consumer Protection and Defense Code, Industrial Property Law, and by the Advertising Self-Regulation Code, instituted by CONAR.
The Brazilian Consumer Protection and Defense Code (Law No. 8.078, of September 11, 1990) could be considered the primary source, as it specifically deals with publicity in its Section III. Its Article 37 prohibits any type of misleading or abusive publicity, including “by omission.” In this regard, Paragraph 3 of Article 37 establishes that “(…)publicity is misleading by omission when it fails to provide information about essential data regarding a product or service.”
In the present case, the “essential data” is the fact that the products shown above are different. In fact, one does not have to be specialist in the area to realize that VELAMOX 1g and AMOXIL 875mg – are not equivalent and, therefore, could not be exchanged one for the other. Furthermore, VELAMOX is not a generic, but rather a similar product, which has thus not been submitted to the bioequivalence and bioavailability tests which would prove whether it was interchangeable with the reference product AMOXIL. Therefore, even if the two products had the same presentation (both of lg or of 875mg), they would not be considered interchangeable, and failure to present these differences in the advertisements is a failure to present required “essential data.”
The case should also be analyzed in the light of the provisions of Brazilian Industrial Property Law (Law 9,279, of May 14, 1996), even though the statute does not have a specific provision regarding use of comparative advertising. Article 129 of the IP Law guarantees the exclusive use of a registered mark by its owner, and Article 131 establishes that “the protection provided by this Law shall extend to the use of the trademark on papers, printed matter, advertising and documents relating to the owner’s activity.” Furthermore, Article 132 of the IP Law sets out acceptable citations of the mark by a party other than the owner and provides, in item IV that the owner may not “prevent reference to the trademark in a speech, scientific or literary work, or in any other publication, provided that [the reference is made] with no commercial connotation and without detriment to the distinctive character of the trademark.”
Based strictly on these provisions of the IP Law, comparative advertising in general should not be permitted, insofar as all advertisements, in principle, have a “commercial connotation.”
Nevertheless, comparative advertising is generally accepted by the Brazilian market and by CONAR, as long as some principles and limits established by the Brazilian Advertising Self-Regulation Code are observed. These principles and limits are listed in items “a” through “h” of Article 32 of the CONAR Code, and the subsections applicable to this case are discussed below, although not in alphabetical order.
According to item ‘g’ of CONAR’s Code, “there shall be no unreasonable (unjustified) use of the corporate image or goodwill of third parties.” In the case we have referred to, the advertiser – Sigma Pharma – was clearly using the mark and the prestige, not only of the AMOXIL product, but also of its manufacturer – GlaxoSmithKline – to promote its VELAMOX product. Therefore, the question is to determine whether said use was “justifiable.” To answer this, other questions must be asked. Are there other amoxicilin products in the Brazilian market? If só, do the manufacturers of these other products (if any) also compare the prices of their products with l that of the reference product (AMOXIL) to promote them?
The answer to the first question is yes. According to ANVISA’s database, there are 153 registered products based on the active ingredient amoxicilin, including that of Sigma Pharma. However, due to a tacit agreement among the multinational laboratories, comparative advertising is not adopted as a marketing technique. In view of this, and since Sigma Pharma is the only company which uses comparative advertising to promote its amoxicillin product (VELAMOX), this use cannot be considered “justifiable” or “reasonable” and, therefore, it violates item ‘g’ of Article 32 of the CONAR Code.
Another aspect is that, according to item ‘h’ of Article 32 of the CONAR Code, “whenever the comparison is made between products with different prices, such circumstances shall be clearly indicated in the advertisement.”As a logical corollary, if the products are different, this circumstance should also be clearly mentioned in a price comparison advertisement. However, as previously mentioned when discussing the provisions of the Consumer Protection and Defense Code, the difference between the products AMOXIL and VELAMOX is not indicated in the advertisements under discussion, but only their prices, which means that the advertisement also infringes item ‘h’ of Article 32 of the CONAR Code.
Up to this point, the case has been analyzed as any instance of comparative advertising concerning any type of product would be. In order to obtain a conclusive response, however, the matter has to be analyzed in the light of other statues that could be applied to prescription drugs: the Generics Law and the Criminal Code.
According to the Generics Law, a doctor is entitled to indicate on a prescription that the prescribed product cannot be exchanged for any other. If this disclaimer is not made, the medicine prescribed by the doctor may be substituted by a pharmacist, in which case the pharmacist’s signature and registration must be indicated on the prescription. However, the Generics Law specifically prohibits the pharmacist from recommending a similar product in substitution for the prescribed product. The substitution, if and when authorized by the doctor, can only be made for a generic product.
Aside from the above, the Brazilian Criminal Code, in its Article 280, prohibits the “furnish[ing of a] medical substance in disagreement with the doctor’s prescription,” and establishes a penalty of imprisonment of l to 3 years, or a fine. No pharmacist is therefore allowed to recommend a similar product, such as VELAMOX, instead of AMOXIL or of any other prescribed product, because the Generics Law prohibits this “recommendation” and because the Criminal Code establishes that this practice is a crime.
In view of the foregoing, a decisive conclusion can be made: if a similar product -VELAMOX – cannot be substituted for a reference product (in this case, AMOXIL), then why is Sigma Pharma suggesting such a substitution in advertisements directed to pharmacists and pharmacy attendants? Obviously the intention is to deviate the clientele of AMOXIL to VELAMOX, even though it is also encouraging violations of the Generics Law and Criminal Code.
In light of the above and of the provisions of Article 195 of the Industrial Property Law, which establish that a crime of unfair competition is committed by whoever “uses fraudulent means to divert another person’s clientele, for his own benefit or for the benefit of someone else,” the advertisements under study can be considered unfair competition.
In this regard, the advertisements further infringe the provisions of items ‘f’ and ‘a’ of the CONAR Code, which establish, inter alia, that “there shall be no unfair competition,” and that the primary purpose of a comparative advertising should be clarification or consumer protection, which is certainly not the case here.
CONAR’s decision
It is important to understand what type of organization CONAR is, before discussing its decision in this case. CONAR is a private non-profit entity comprised of advertising agencies, advertisers, media interest groups and advertising associations, which was formed in 1980 for the purpose of establishing ethical rules for the self-regulation of disputes related to the advertising industry. As a private entity, CONAR has no administrative or legal authority, although its decisions are followed by its members, and recognized and guaranteed by the market and society as a whole. In view of this and of the speed of its decisions, the matter was filed with CONAR, instead of being filed as a lawsuit.
It is also important to mention that CONAR notified Sigma Pharma requiring it to answer GlaxoSmithKline’s complaint, and it failed to do so. Furthermore, Sigma Pharma’s representatives did not appear at the hearing.
The case was analyzed by eight CONAR counselors. The judgement and comments of the Council’s Reporter were as follows:
“Although comparative advertising is permitted, this Reporter believes that, in this case, provisions pertaining to this kind of advertisement have not been complied with. In fact, the lack of a clearcut interpretation as to letter h of Article 32 [whenever products are compared on the basis of prices, such circumstances shall be clearly indicated in the advertisement], prevents compliance with the provisions of letterg, and even though this is not intended, it constitutes a violation of letter f [there shall be no unfair competition, denigration of the product’s image or another company’s product] and jeopardizes compliance with that provided in letter a [the advertisement’s primary purpose shall be clarification or consumer protection].
It is known that due to all of its implications, comparative advertising must be used with maximum care to abide by, in an unquestionable manner, what is established by Article 32, main section and its subsections.
The panel then continued to conclude: “In view of the above and under the terms of this opinion, the provisions of letter c of Article 50 of the Brazilian Code of Advertising Self-Regulation [recommendation to the media to suspend the broadcasting of the advertisement suspension] are to be applied to the advertisement under examination.”
Conclusion
The first important conclusion that can be drawn from this case and CONAR’s decisions is that, to properly evaluate comparative advertising involving prescription drugs, regardless of whether prices are being compared, the Generics Law and Article 280 of the Criminal Code must be used to support the statutes which deal specifically with advertising and industrial property rights.
According to the provisions of the Generics Law, similar and reference prescription drugs are not interchangeable and, therefore, cannot be exchanged by pharmacists. Since this is exactly the purpose of any comparative advertisement, this type of publicity cannot be made in respect of these classes of prescription drugs.
The second conclusion is thus a consequence of the first: advertisements comparing prices of similar and reference products directed to the pharmaceutical market should be prohibited by ANVISA. In this regard, on August 12, 2002, a notice was published in the newspaper Gazeta Mercantil, informing that ANVISA was executing a partnership agreement with CONAR to resolve conflicts relating to the advertising of pharmaceutical products.
It is therefore hoped that the decision rendered by CONAR in this particular case will serve as a model for future cases, so that comparative advertising issues concerning prescription drugs may be readily resolved administratively by CONAR, with ANVISA’s assistance, without the need to resort to litigation.
In summary
– Advertisements comparing the prices of different presentations of GlaxoSmithKline’s category leader AMOXIL with a “me too” drug from Brazilian manufacturer Sigma Pharma, VELAMOX, have been periodically published in two specialized Brazilian magazines targeting pharmacies and drugstores
– Arguments comparing the merits of the advertisements are reviewed under Brazil’s Consumer Protection and Defense Code, Industrial Property Law, and the Brazilian Advertising Self-Regulation Code, the provisions of the Generics Law, and the Criminal Code
– The author concludes that an analysis of the case argued before Brazil’s National Council of Advertising Self-Regulation reveals that advertising of pharmaceuticals based on a comparison of prices for a branded product and a generic alternative is illegal under Brazilian law, and should be prohibited.
