COVID-19: Ensure opportunistic product offerings are legally compliant June 2020

By BERNADETTE VERSFELD AND JODI HARDY, Published in COVID-19 Medical Law

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Demand for new products to combat COVID-19 infections presents an opportunity for businesses under strain, but they should be aware of advertising, medical and intellectual property restrictions.

Businesses are adapting their business models in an effort to remain profitable and avoid job losses through the various levels of the COVID-19 lockdown. The result is that several non-medical businesses are turning to manufacturing, distributing and/or retailing medical-related products, and are doing so in haste.

Demand for face masks, hand sanitisers and other personal protective equipment (PPE), as well as vitamins and medications which purport to boost the immune system, represents a rapidly-growing market. In response, certain alcohol and perfume manufacturers, including the likes of Absolut Vodka, Givenchy and Dior, have begun producing hand sanitisers while clothing manufacturers, such as Zara and Gucci, have also expanded their product ranges to include face masks and medical scrubs. Businesses like these need to ensure that their new product offerings comply with all applicable laws and regulations.

The Advertising Regulatory Board (the Board) is a self-regulating body which is constituted by the marketing and communications industry. Section 55(1) of the Electronic Communications Act (36 of 2005) empowers the Board to determine and administer the Code of Advertising Practice. Businesses not adhering to the Code open themselves up to the risk of a complaint being filed against them with the Board. In terms of clause 4.1.1 of Section II of the Code of Advertising Practice, businesses need to be able to substantiate any claims they make with evidence. Clause 4.2.5 of Section II of the Code also prohibits businesses from making claims that appear to have a scientific basis, which in reality they do not possess. This same clause provides that when statistics or scientific information that substantiate a claim do exist, businesses must be careful not to misuse research data, statistics or quotations in a way that implies that they have greater validity than they really do. Businesses and advertisers must also be cognisant of the overarching duty, which has been codified in clause 4.2.1 of Section II, that their advertisements should not be misleading to consumers.

Since the Board provides for a quick and cost-effective remedy for complainants who believe that advertisers have not adhered to the Code, it is imperative that businesses comply with it before launching a new product.

Businesses should not only be mindful of advertising considerations, but also the requirement to comply with the provisions of the Medicines and Related Substances Act (101 of 1965). Section 20(1) of the Act prohibits anyone from making false or misleading advertisements or claiming in an advertisement that the therapeutic efficacy of any medicine or medical device is other than that stated by the South African Health Products Regulatory Authority (SAHPRA). In terms of s30(1), perpetrators may face a fine or imprisonment of up to 10 years.

SAHPRA is empowered to monitor, evaluate, regulate, investigate, inspect and register medicines and medical devices, among other medical-related products, in terms of s2A of the Act. Section 14 provides that certain medical-related products need to be registered with SAHPRA prior to being sold, and failure to do so is an offence. Bearing the provisions of the Code and the Act in mind is more important than ever, due to the numerous businesses presently engaged in the manufacture, distribution and/or sale of medicines, vitamins, face masks, face shields, medical scrubs and other PPE.

Businesses that are venturing outside their areas of expertise must also be cautious of intellectual property laws. In the fourth industrial revolution, innovation has become increasingly imperative for businesses to remain relevant. Now, with the challenges associated with COVID-19, this imperative has become even more acute. With innovation comes the creation of IP. Businesses must ensure that in developing and launching new products, they are not infringing on third party IP rights. They must also ensure that the IP they have developed is appropriately protected by way of registration, if possible, or by way of agreement in order to safeguard their ability to exploit their IP and to avoid future costly disputes.

In summary, given the legal and reputational consequences of non-compliance with laws and regulations, businesses must not lose sight of the need to observe their obligations to comply with advertising standards, IP laws and industry-specific regulations.

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Versfeld is a Partner and Hardy an Associate with Webber Wentzel.