Comparative advertising in pharmaceuticals

Since the 90s of the last century, we Ukrainians have learned that advertising is the engine of trade. The engine has started working and at this stage of development, everyone who can uses advertising to achieve business goals – to get more profit. We see it everywhere: TV, subway, social media, billboards, newspapers and magazines. In other words, advertising is used to sell literally everything.

To summarize, from a commercial point of view, advertising is the non-personalized communication of information, usually paid for and in the nature of persuasion, about products, services or activities by advertisers to the end consumer through various media.

The legal definition of advertising in Ukraine is contained in the Law of Ukraine “On Advertising”. Thus, advertising is information about a person or product disseminated in any form and by any means and intended to create or maintain awareness of advertising consumers and their interest in such person or product.

What does television advertising offer us today? To be honest, I did not find any publicly available statistics on TV advertising by product group, but according to the AIN resource, five of the top 10 TV advertisers in 2018 were pharmaceutical companies. Therefore, the provisions of the already published Law of Ukraine No. 0953 “On Amendments to Certain Legislative Acts of Ukraine (regarding harmonization of legislation in the field of comparative advertising with the law of the European Union)” The Law (the “Law”), which allowed comparative advertising in Ukraine, is expected to become a significant event in the media space in general and in the pharmaceutical market in particular. The Law allowed comparing goods (including medicinal products) and own activities with those of competitors in advertising.

Comparative advertising of medicines: does it work in Europe?

The purpose of the Law is to harmonize Ukrainian legislation with the EU law in the field of comparative advertising (in particular, with the requirements of EU Directive 2006/114/EC on misleading and comparative advertising and Directive 2005/29/EC on unfair trade practices). The authors of the Law believe that, under appropriate conditions, it should become a positive factor in stimulating the development of fair competition.

It is worth mentioning that comparative advertising began to be used in the world in the late 70s of the last century, with the case of Coca-Cola and Pepsi, and today the European approach to it is quite cautious.

However, for a deeper understanding, here are some examples of comparative advertising that are included in marketing textbooks around the world:

Cola’s wars in the 1980s with Pepsi. Pepsi released a series of advertisements where people caught on a hidden camera blindly chose Pepsi over its rival Coca-Cola in a taste test. The Pepsi taste test is a marketing legend.

While another Pepsi commercial was actually banned: a little boy who stepped on Coca-Cola cans to get a can of Pepsi from a vending machine. The brand’s loyal consumers did not appreciate the ad at all and found it discriminatory.

An example of indirect comparison advertising is the AHE ad against OldSpice: “For men who want to be with women, not on a horse”.

Another striking example of direct comparison with a competitor is the BMW ad: BMW, the winner of the 2006 World Car of the Year nomination, “congratulated” Audi on being named South African Car of the Year. It should be said that both automotive giants use comparative advertising quite often and successfully.  

But… there is virtually no European practice of comparative advertising of medicines (I have not found any successful examples). Since only three European countries currently have comparative advertising of medicines as such, in two of them (including Germany) comparisons can be made only by the price criterion, in the third – Croatia – comparative advertising seems to exist, but its presence is leveled by a large number of restrictions. Therefore, this means of increasing competition has not yet been properly developed in Europe. This means that the pharmaceutical community will have to develop this practice in a highly competitive market on its own. It is also worth noting that comparative advertising of medicinal products may contain images and references to the medicinal product, trademarks or other designations under which the medicinal product is being compared, the commercial (brand) name of the competitor whose activities or medicinal product is being compared. In other words, it will be possible to compare not only medicinal products or other products of a competitor, but also the activities of a competitive network. In particular, it is allowed to compare such an essential characteristic for the consumer as price.

In order for a licensee to mention a competitor’s products in a commercial, poster, billboard or other type of outdoor advertising, the advertising must not violate Ukrainian advertising law in terms of competition. The advertisement itself must compare similar goods and services objectively and without discredit. Manufacturers will compare medicinal products of the same group, especially if there is something to compare, for example, a group with the active ingredient diclofenac sodium…. In my opinion, the same medicinal product can be compared between competitive networks only by the price criterion.

Particular attention should be paid to the provision of the Law that allows the use of trademarks or other designations under which goods are produced, as well as the commercial (brand) name of a competitor in comparative advertising. Previously, the holder of a trademark certificate had the right to prohibit the use of a trademark, with certain exceptions. The Law “On Protection of Rights to Trademarks for Goods and Services” has also been amended, and now it will be possible to directly mention a competitor’s trademark or name in advertising, comparing homogeneous goods or activities covered by the same field. Specifically, it is determined that the exclusive right of the certificate holder to prohibit others from using the registered mark without his consent does not apply to the use of such mark in comparative advertising, if it is carried out in accordance with the provisions of the legislation on advertising, protection against unfair competition and such use is not considered unfair business practice.

It is worth recalling that the authority authorized to consider (evaluate) complaints regarding unfair competition in the form of comparative advertising is the Antimonopoly Committee of Ukraine (the “AMC”). The Law does not change the current legislation in this regard. As for the procedure for the AMCU to recognize comparative advertising as unfair, it is established that the legality of comparisons in advertising and liability for non-compliance with the statutory requirements for the content of comparative advertising is determined by the Law of Ukraine “On Advertising” as amended by the new Law, i.e. the AMCU will use new approaches to determine what kind of advertising it was.

So will the AMC be ready for such an additional burden? Especially if the AMCU has not yet formed its opinion on the provisions of the Law in general and comparative advertising of pharmaceuticals and pharmaceutical activities in particular. We will see. But I believe that the AMCU has the right to react now, especially if there is a resonance.

Recalling the amount of fines imposed by the AMCU, it is worthwhile to understand how to prevent the formula “Comparative advertising = unfair”. To this end, let me remind you that currently the main regulatory acts governing the advertising of medicines and its content are the Law of Ukraine “On Advertising” and the Law of Ukraine “On Medicines”. The Antimonopoly Committee of Ukraine is the controlling authority in this area. Analyzing the provisions of the Law of Ukraine “On Protection against Unfair Competition” and the provisions of Law 0953 in part of Article 19 of the Law of Ukraine “On Protection of Consumer Rights”, it is logical to conclude that unfair competition means, among other things, the use of unlawful advantages in competition through:

• discrediting a business entity (dissemination in any form of false, inaccurate or incomplete information related to the person or activities of a business entity, including its goods, which caused or could have caused damage to the business reputation of a business entity) and
• use of a competitor’s business reputation (including trademarks), etc.

Such types of unfair competition may also be expressed through advertising. Advertising that is an instrument of unfair competition is called unfair advertising.

According to the Law of Ukraine “On Advertising”, unfair advertising is advertising that misleads or may mislead advertising consumers, cause damage to individuals, the state or society due to inaccuracy, unreliability, ambiguity, exaggeration, omission, violation of requirements regarding time, place and method of distribution.

The provisions of the new version of Article 11 of the Law of Ukraine “On Advertising” stipulate that comparative advertising may contain images, references to goods, trademarks or other designations under which the goods are produced, the commercial (brand) name of the competitor whose activities or goods are compared.

The use of comparative advertising is allowed subject to the restrictions specified in the Article, namely if:

1. the advertisement does not contain any signs of unfair business practice as defined by the legislation on consumer protection;
2. advertising compares homogeneous (similar) goods that satisfy the same needs or have the same purpose, or compares activities covered by one area or one type of activity;
3. advertising objectively compares one or more essential, comparable and representative characteristics of a homogeneous (similar) product or activity, including the price, information about which may influence the consumer’s decision when making a choice;
4. the advertisement does not discredit, does not contain false information about the quality of homogeneous (similar) goods of other manufacturers or sellers, does not discredit the activities or position of other persons, the reputation of trademarks, commercial (brand) names, other features of competitors or the indication of the place of origin of the goods;
5. in case of goods with an indication (simple or qualified) of origin, the comparison shall be made with goods with a similar indication;
6. advertising does not create confusion between the advertiser and the competitor, between goods, trademarks, commercial (brand) names and other designations of the advertiser and competitors;
7. the competitor’s product protected by a trademark or trade name is not depicted in a way that is imitative.

Since almost most of the criteria that comparative advertising must meet are evaluative, it will be quite difficult to maintain the fine line between comparative advertising and unfair advertising (business practices). As a result, the implementation of the proposed innovations will lead to an increase in the number of disputes in the field of comparative advertising, as the use of such a tool by one licensee is unlikely to be positively perceived by competitors.

I would like to conclude with what I started with: advertising has always been a driving force for trade and commercial activity, a means of popularizing products or drawing attention to them, helping to identify consumer tastes and trends. Comparative advertising is a separate and ambiguous type of advertising. At the same time, the pharmaceutical business is a social business – it is about trust and hope. If comparative advertising of pharmaceuticals and pharmaceutical activities is already a reality, I recommend that you prevent your own business from being devalued in this competition and seek timely assistance from specialists.

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* In the material provided, selective quotations are taken from publications on the Internet and are in the public domain.

Olha Zakutii

Managing partner, attorney at DEXTRA LAW firm