Incentives and Benefits in the Context of Public Healthcare Tenders

The Federal Agency for Medicinal and Health Products ("FAMHP") recently published a circular (Circular No 646) in which it reminds hospitals that in the context of public procurement, they are bound by the rules governing the offering of financial incentives and other benefits to institutions that prescribe, supply or administer medicinal products (Art. 10 of the Medicines Act).

In the circular, the FAMHP explains that it learned that an increasing number of hospitals are requesting additional benefits and incentives when issuing public tenders for the supply of medicinal products and medical devices and that the grant of such additional benefits is often an important criterion for award of the tender. The benefits extend beyond volume discounts to educational materials, patient monitoring software, training on the use of medicinal products and medical devices and support for outreach activities (uitstralingsactiviteiten/activités de rayonnement).

Questions surrounding the legality of this practice were raised when the federal public health minister asked the Public Procurement Commission (the "Commission") whether such behaviour complies with the public procurement legislation. The Commission published its response on 5 March 2019, stating that it lacks authority to answer the question and simply recalling the applicable rules. The question was then forwarded to the FAMHP which provided an answer in Circular No 646 of 21 June 2019. 

The FAMHP reminds hospitals that it is prohibited for them to request or accept incentives and benefits in the context of the supply of medicines and medical devices. According to the FAMHP, companies are not allowed to provide such additional services free of charge. Instead, a separate price must be charged for the services or it must be expressly stipulated that the cost of the services is included in the price of the goods. Any practice to the contrary is not in line with Article 10 of the Medicines Act and can be sanctioned by a fine of up to EUR 120,000 (Art. 16 §3(1) of the Medicines Act).

With respect to public tenders, the FAMHP confirms that the rules on public procurement must be applied correctly and that the award criteria must relate to the subject matter of the tender. Hence, the provision of items unrelated to the supply of medicines or medical devices, such as software and unrelated services, is not allowed. The FAMHP also confirms that a hospital, as the contracting authority, must protect equal access and free competition by ensuring that the tender contains no unjustified restrictions and that the award criteria are drafted in such a way as to promote free competition. A hospital may not, based on these criteria, have unlimited freedom of choice (Art. 81 §3(3) of the Public Procurement Act). The rules must be applied in accordance with the principles of transparency, non-discrimination and proportionality (Art. 4 of the Public Procurement Act). Failure to comply with these provisions may result in invalidation of the tender and cancellation of the award decision.