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17 July 2019 / news

Belgian Federal Agency denounces hospitals’ public procurement practices

The Federal Agency for Medicines and Health Products (the FAMHP) has published guidance on the interaction between the rules on the promotion of medicines and the public procurement rules.

Belgian Federal Agency denounces hospitals’ public procurement practices

Background

For a number of years, several Belgian hospitals request certain benefits in the framework of public tender procedures for the supply of medicines and medical devices. The requested benefits include, for example, training, educational materials, software for the follow-up of patients, but also more general proposals on R&D collaboration, clinical trials and other forms of support that may add to the hospital’s prestige. In some cases, there is no obvious link between the benefits that are requested and the supplies that are the subject-matter of the contract that is being tendered. These benefits have in many cases become an important factor in the award criteria, with a determining effect on the outcome.

Compatibility with legal framework questionable

Some suppliers have criticized these practices arguing that such requests would breach article 10 of the Belgian Act of 25 March 1964 on Medicines. Article 10 implements EU Directive 2001/83 of 6 November 2001 on the Community code relating to medicinal products for human use. It regulates the promotion of medicines and medical devices and prohibits the offering of direct or indirect premiums or benefits, whether in money or in kind, in order to promote the supply or prescription of medicines or medical devices. Sanctions for breaches include fines and prison sentences.

Article 10 provides for a number of exceptions, including (i) when the monetary value of the benefits is very limited, (ii) hospitality is offered in the framework of scientific congresses under specific circumstances or (iii) the benefit is a reasonable remuneration of legitimate activities of a scientific nature. These exceptions, which are of strict interpretation, do not seem to apply to the type of open and unspecified requests for benefits by certain hospitals.

In addition to the rules on the promotion of medicines, these practices also seem at odds with the general requirement under the public procurement rules that award criteria must be linked to the subject-matter of the contract. For example, a hospital may tender a supply contract for an existing product and request suppliers to quote a price for such products. However, it is unclear to what extent unspecified and unrelated commitments for future R&D arrangements offered by certain tenderers are a valid criterion to assess the quality of the products.

Interaction between rules on the promotion of medicines and public procurement clarified

The Belgian Commission for Public Procurement was requested by the Federal Minister of Health to comment on the matter. In an Advice of 5 March 2019, the Commission confirmed generally that the award criteria may not provide unlimited freedom of choice to the contracting authorities. However, the Commission declined to comment on the specific question of the application of article 10 of the Act on Medicines.

In its Circular n° 646 dated 21 June 2019, the FAMHP has clarified that the prohibition of article 10 also applies to additional services that are offered for free in the framework of a public supply contract for medicines or medical devices. Any benefits that are requested within the framework of a public tender procedure must be identified and priced separately. In addition, the FAMHP has clarified that any award criteria must be linked to the subject-matter of the contract. Factors that bear no relationship to the supply of the medicines or medical devices, such as the supply of software or activities that add to the hospital’s prestige, are not acceptable. Finally, hospitals must guarantee the principles of free competition and equality of the tenderers. They must verify the correctness of the information provided by the tenderers and the award criteria must allow for such verification.

The FAMHP does not exclude that hospitals may launch procurement procedures for so-called ‘mixed contracts’, combining both supplies and services. However, such procedures must in any event respect the general principles of the public procurement rules.

Do not hesitate to contact us if you have any questions on the application of the above principles. If you come across any hospital RFPs with problematic award criteria, it is important to act early in the process. We can help you responding to the hospital and asking the right questions in order to maximize your chances of winning the contract.

A Dutch version of the Circular is available at https://www.fagg-afmps.be/sites/default/files/content/DC-CT/20190625151700.pdf

A French version of the Circular is available at https://www.afmps.be/sites/default/files/content/DC-CT/20190625151638.pdf



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