Bundestag passes new law to tackle corruption in healthcare

On 14 April 2016, Germany’s Bundestag passed the long-expected and much-discussed Act to combat Corruption in Healthcare.

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Update May 17, 2016: The second chamber of the German Parliament, the Bundesrat, decided on May 13, 2016 not to object against the Act so that it will come into force in its current form.

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Two new criminal offences of active and passive bribery in healthcare (Sections 299a and 299b Criminal Code) form the core of the Act. They apply to conduct in which benefits are granted to a healthcare professional when prescribing medicines or non-physician therapies or medical products or when purchasing certain medicines, therapies or aids or medical products or when assigning patients or study material, in exchange for unfairly giving preference to a provider of these services. The criminal offences apply to all medical professions for which a government-regulated education is required to. Unlike in one of the early drafts, criminal liability is not limited to members of academic medical professions, which means that in addition to doctors, dentists, pharmacists or psychotherapists, also nurses, midwives or speech therapists may be criminally liable. Similarly, any person who offers these persons an advantage in exchange for anticompetitive preferential treatment when purchasing medicines or assigning patients is criminally liable. The criminal offences do not distinguish between care by private or panel doctors.

The newly introduced rules are aimed primarily at activities connected with “pharmaceutical marketing” such as inadmissible payments for prescribing medicines in the form of discounts or kickbacks. But also “assignment bonuses” which registered doctors receive from other doctors, hospitals, laboratories or health care supply stores for assigning patients, are explicitly mentioned in the reasoning behind this draft bill.

There is a lengthy legislative background to this Act. The trigger was a judgment by the Federal Court of Justice on 29 March 2012. In its decision at the time, the Grand Criminal Panel had refuted the public-official status of registered (panel) doctors and also specified that registered doctors are not associated persons of a business (Beauftragte) within the meaning of Section 299 Criminal Code. Inadmissible payments made to registered doctors to influence their medical conduct could therefore not be defined under corruption law as commercial bribery (Sec. 299 Criminal Code), nor as bribery of a public official (Sections 331 et seq. Criminal Code). This preferential treatment under criminal law of self-employed doctors compared to hospital doctors who may qualify as public officials or in case of private hospitals as employee of a business was generally considered unjustified.

The original drafts was more comprehensive compared to the version now adopted. For example, in former versions any punishable payment or service rendered in exchange for the advantage granted covered not only anticompetitive preferential treatment when prescribing or dispensing medicines or medical products or when assigning patients, but also the breach of a professional duty. This criminal liability corresponds to the novelty which was introduced in November last year to the general offence of commercial bribery under Sec. 299 Criminal Code in the form of the so called “principal” model: In addition to anticompetitive preferential treatment, a breach of duty towards the company that one acts for is now also sufficient for criminal liability. Nevertheless, during the legislative procedure the requirement of a breach of professional duty was relaxed and ultimately removed both for active and passive bribery in healthcare. That makes sense. A general reference to professional duties would be problematic because these are defined and implemented by the relevant regional chambers of doctors or pharmacists and therefore they vary nationwide and are sometimes also fairly uncertain.

The differentiation made in a preliminary draft between prescribing and dispensing medicines (doctors) on one side and the purchase of medicines (pharmacists) on the other side was no longer necessary. This differentiation had been added to the preliminary version, in which an anticompetitive violation could relate only to the purchase of medicines (this was added to the previous version of the draft after pressure by the pharmacists’ associations), because when acquiring medicines – in other words on the purchasing side – the commercial and not the healthcare advisory role of pharmacists prevails. Here it would be inappropriate to penalise the breach of a professional duty. This is generally the case as professional duties are multi-faceted so that integrating them into the offence in the draft Sections 299a, 299b Criminal Code would have given the professional bodies an indirect authority to legislate in criminal matters. Therefore the restriction that has now been decided must be appreciated.

What is noticeable about the draft bill now adopted is that apparently the requirement to formally lodge a complaint under Section 301 Criminal Code for bribery in healthcare has also been eliminated from now on. However, this only applies to the newly introduced criminal offence of bribery and corruption in healthcare but not bribery or corruption in general commerce under Section 299 Criminal Code. The legal situation is somewhat unclear, as the recommendation of the legal committee is to “remove” Section 301 Criminal Code (see BT-Drucks. 18/8106 p. 7-8), but gives the following justification: “The new criminal offences of active and passive bribery in healthcare are not to be treated as conditional offences requiring an application for prosecution as in Sec. 299 Criminal Code, but as official offences which are always prosecuted ex officio.” (BT-Drucks. 18/8106 p. 17). This means that for “general” bribery in commerce the requirement to lodge a complaint is to be retained. This distinction would give rise to differences in evaluation: the bribed doctor of a hospital which fits prostheses directly to patients could be prosecuted without an application by the injured party (e.g. competitors) while the bribed commercial manager could only be prosecuted on application or if there is a particular public interest. However, the latter is normally confirmed by the public prosecution service anyway.

The practical implications of this Act can hardly be overestimated. For example, the common practice of “sponsoring” registered doctors, whether in the form of remunerated participation in clinical studies, in the form of advisory agreements or giving remunerated lectures as well as referral bonuses from hospitals or other doctors will in future be against the law or may at least require a critical review. A critical review must also be applied to rebates on the purchase of medicines or medical products which are designed for direct use by the medical practitioner or one of their professional assistants, such as dental implants or prostheses.

We also assume that the intensity of prosecution of practices that were previously punishable under criminal law will increase enormously once the new law comes into force. Some federal states, including Bavaria, have already announced that they will set up special public prosecution units to focus on prosecuting corrupt practices in healthcare.