BRACE associate Anna Ivanova’s commentary was published in the article “How to Properly Design Sponsored Advertising for Pharmaceutical Companies”, published in the Pharmaceutical Bulletin magazine.
As Anna noted, the current legislation does not contain a definition of a sponsorship agreement (SA), nor does it contain an exhaustive list of sponsored events. However, based on a systematic interpretation, a SA can be defined as an agreement between a sponsor and a sponsored party, under which the sponsor provides financial or other support for events in exchange for mandatory mention of a certain person in advertising.
Can sponsorship be considered a charitable activity? No, because charity is understood as voluntary activity for the gratuitous transfer of property, including money, selfless performance of work, provision of services, and provision of other support. While sponsorship assistance is usually provided in exchange for posting information about the sponsor. In this regard, the sponsorship agreement is qualified as a compensated transaction. If sponsorship assistance to the organizer of a medical or pharmaceutical event is provided to the recipient free of charge and without specifying any specific purpose, the agreement may be reclassified as a gift agreement (clause 1, Article 572 of the Civil Code of the Russian Federation).
If the sponsorship contribution is free of charge, but is directed towards specific purposes, the agreement may be qualified as a donation agreement. In one of the court cases, the court rejected the arguments for reclassifying sponsorship agreements as gift agreements, based on the presence of a counter-representation in the form of advertising by the sponsor. The court also concluded that reclassifying a sponsorship agreement as a gift agreement is only possible in the absence of an indication of the purpose of sponsorship, as well as the absence of a condition on compensation (decision of the Arbitration Court of St. Petersburg and the Leningrad Region dated 08/07/2020 in case No. A56-63066/2019).
In this regard, when drafting a sponsorship agreement, it is important to pay attention to the conditions on compensation and the intended use of sponsorship assistance.
Most often, pharmaceutical companies sponsor scientific medical and pharmaceutical events: conferences, webinars, symposia. Advertising must contain a mandatory mention of a specific person as a sponsor – this is the key criterion that distinguishes sponsorship advertising from any other and donations. At the same time, the distribution of sponsorship advertising for pharmaceutical companies may have its own limitations, since their activities are regulated not only by advertising, but also by legislation on the protection of public health and the circulation of medicines.
It is important to closely monitor whether the restrictions imposed on pharmaceutical organizations when interacting with medical and pharmaceutical workers are violated. In particular, medical and pharmaceutical workers are prohibited from accepting gifts and money from pharmaceutical companies and their representatives, including for entertainment, recreation, travel to a vacation spot, and from participating in entertainment events held at the expense of the said companies and representatives. An exception is remuneration under contracts for clinical trials of drugs, medical devices, as well as remuneration related to teaching or scientific activities (Article 74 of Federal Law No. 323-FZ of November 21, 2011 "On the Fundamentals of Health Protection of Citizens in the Russian Federation").
When concluding a sponsorship agreement, it is recommended to make an appropriate reservation that the organizer of the event is responsible for the execution of the agreement in accordance with the legislation on the fundamentals of health protection of citizens and the circulation of medicines. If the sponsorship agreement includes advertising of a pharmaceutical company's products, then the agreement in this part ceases to be a sponsorship agreement, since the law provides for only one counter-representation – mentioning a specific person as a sponsor, although it does not prohibit, in addition to information about the sponsor, posting information about its products.
Some courts qualify the sponsorship agreement as a contract for the provision of services for a fee, based on the counter-provision of certain services to the sponsor (Resolution of the Ninth Arbitration Court of Appeal No. 09AP-50398/2019 dated 04.02.2020 in case No. A40-75828/2019).
If the agreement specifies only the terms of advertising the pharmaceutical organization's products, then it is an ordinary agreement for the provision of advertising services. More detailed information about the article and commentary can be found on the website of the publication: https://pharmvestnik.ru/articles/Kak-pravilno-oformit-sponsorskuu-reklamu-farmacevticheskih-kompanii-Ne-korysti-radi.html, and also here.
