In our first blog, we discussed the transparency obligations incumbent upon pharma and medtech companies when certain transfers of value take place between these companies and medical professionals, such as healthcare organizations (HCOs), healthcare professionals (HCPs) and patient organisations (POs). We will revisit this issue in our third blog.
In the second and fourth blog, however, we will focus one more healthcare compliance issue, namely compliance with public procurement law. In the fourth blog, we will delve further into tender proce-dures, but in this second blog, we focus on the recent modification (1) of the Hospital law (2) and its impact on hospitals purchasing.
Goal of the modification of the hospital law
The Hospital law modification seeks to create a new high-level model of care organization, in which hospitals are required to (clinically) cooperate in so-called locoregional and supraregional hospital networks, in order to lever more qualitative and more rational care by optimizing the use of resources, such as expertise, infrastructure and medical equipment and by ensuring a complementing supply of care. This new model seeks to assure the patients choice of care, the doctor’s therapeutic freedom and the continuity of care, nonetheless, re-centering clinical care in 25 locoregional hospital networks.
These locoregional networks organize care that due to cost or urgency need to be in proximity to the patient’s residence. Supraregional care, on the other hand, is organized in a limited number of suprare-gional units, called “points of reference”, and hospitals are required to conclude agreements with these points of reference, in order to ensure the provision of specialized care. The Government will categorize specific care tasks as either loco- or supraregional.
The Act introduces a new key concept in the coordinated laws on hospital, i.e. network governance. Indeed, each locoregional network will have legal personality and its own governance structure. Though the hospitals themselves will continue to exist (as separate legal persons), the question arises whether they still have a lot of discretion left.
Impact on procurement
Before, hospital already created networks which could serve as central purchasing bodies, thus taking advantage of economies of scale in their procurement of services and goods. However, up till now, these networks worked on a voluntary basis. In virtue of the new legislation, all hospitals must become part and parcel of networks the structure of which is legally structured. The question arises whether in this reinforced centralized command structure, the particular needs of every separate hospital can be sufficiently discounted.
Moreover, the question could be raised how this centralization can be squared with doctor’s therapeutic freedom (3). When procured by a higher echelon, it cannot be excluded that hospital goods and services, such as medicine or medical equipment, are purchased in a way that is not entirely aligned with the needs on the terrain and the particular therapeutic choices of doctors.
At the same, the pharmaceutical sector might have to rethink its relationship with the hospitals. Instead of going around and about visiting separate hospitals and contacting the head pharmacist in order to build commercial relations, the pharma reps will likely now have to develop such relations with the governance body of the locoregional networks. The latter will become more powerful players on the market, given the economies of scale at hand which will likely bring about an upward shift of spending and likewise procuring by the networks themselves.
This might have unintended consequences (4) in view of (higher) expected purchasing volume or concomitant risks of stock rupture; all this might furthermore lead to a reduced accessibility to the market for smaller economic operators. In this new constellation, the current practice based on procuring on the basis of mere estimates might also find itself under pressure, when larger volumes are at stake. Indeed, without a clear view on the (grown) needs of hospital networks, it will be harder for economic players to enter the market, let alone compete.
Nonetheless, at this point, pharmaceutical companies, large and small alike, must adapt their practices to the new rules which might also create opportunities, when a procurement strategy is through through.
Steps to take by the compliance officer
From a strictly legal perspective, we would suggest paying close attention to the following three entan-gling (novel) issues:
- The Key Account Managers and reps should be informed that the head pharmacist or HCP is no longer necessarily in the 'driver's seat' anymore.
Instead, a pharmaceutical committee will likely take over and keeping a close eye on the organizational evolutions might prove to pay off.
- Close attention should be paid to the formal award procedures, also when negotiations are being had with the hospital.
For ignoring these procedures, especially in larger tendering procedures, where more disputes may be expected, could lead to contracts being null and to sales being voided.
- Moreover, the public procurement procedure must be carried through electronically, via enot.publicprocurement.be, which will be mandatary as of 1 January 2020 for all procedures.
In order to pay due heed to the aforementioned points, it pays off to adapt and implement standard operating procedures (SoP), which constitute an excellent tool for compliance officers. Should no such SoPs be in place as of now, we strongly advise you to draft and implement one, in close coordination with your public procurement specialist.
Don't forget to update your SoPs
- Inform your KAMs about the hospital networks law
- Keep an eye out for the procedures, even when you're negotiating
- Be mindful that all procedures will be tendered electronically, through enot.publicprocurement.be
Should you have any questions or if you like to check whether your SoPs still comply with the latest developments in public procurement law, or more generally, in terms of regulatory compliance, please do not hesitate to contact Jens Mosselmans (email@example.com) or Christel Brion (firstname.lastname@example.org).
Jens Mosselmans and Stef Feyen will also elaborate on the impact of the new Statute on hospital net-works in the field of public procurement on IBJ's / IJE's (Instituut voor bedrijfsjuristen / Institut des jurists d'entreprise) Day of the Practise, which will be held on 21 May at the Plaza Hotel in Brussels.
On 21 March 2019, we were very pleased to welcome Mieke Goossens amongst us at our first Healthcare Compliance Workshop. Mieke, member of the Management Committee of betransparent.be, had a discussion with Christel Brion on the transparency obligations in the pharma and medtech sector.
1) Act of 28 February 2019 modifying the coordinated laws of 10 July 2008 on hospitals and other care facilities, Belgian State Gazette 28 March 2019 (entry into force as of 7 April 2019).
2) Coordinated laws of 10 July 2008 on hospitals and other care facilities, Belgian State Gazette 7 November 2008.
3) The Court of Justice has here decided that "although, having regard to the freedom of doctors to prescribe pharmaceutical products, an urgent need for a particular pharmaceutical speciality may well arise in a hospital pharmacy, that cannot justify systematic recourse to the single-tender procedure for all supplies of pharmaceutical products and specialities to hospitals (ECJ Case C-328/92, ECR 1994 I-01569, Commission v. Spain, Summary).
4) It is strange that the legislature was of the opinion that the law wouldn’t impact access to public procurement (Parliamentary Documents Chamber of Representatives 2017-18, DOC 54 3275/001, p. 60).