The sales representative is the person who acts as a highly qualified intermediary between the pharmaceutical company and those responsible for administering the drug (be it the doctor, the hospital or the pharmacy).

Although Italian jurisprudence has not entirely ruled out the applicability of agency rules to this figure, it has limited its application.

Below are some tools for understanding whether and when a sales representative should be classified as an employee, agent or self-employed person.

Sales promotion and intermediation in the pharmaceutical market is characterised by significant peculiarities. One of the main elements of atypicality of the sector is certainly to be found in the fact that the recipients of pharmaceutical products are the patients, whose relationship with the companies is, however, mediated by a third party (the doctor, the hospital or the pharmacy) to whom the legal system attributes, for a large number of drugs, the exclusive function of identifying the most appropriate therapy through prescription.

The activity of connecting the pharmaceutical cause with the person in charge of administering the drug is largely carried out by the pharmaceutical sales representative (also known as the pharmaceutical propagandist).

The pharmaceutical sales representative is regulated in our legal system by the Legislative Decree 219/2006 Art. 122This rule requires the person carrying out this activity to possess a university degree in the scientific disciplines that are strictly listed, as well as the obligation for each pharmaceutical company to notify the Agency by January of each year of the list of scientific representatives employed in the previous year.

Examination of this legislation does not reveal an obligation for pharmaceutical companies wishing to use a sales representative to classify that person as an employee, since they are free to adopt either a subordinate employment contract, an agency contract, or a self-employment contract, depending on the actual manner in which the relationship is carried out.[1]

Below are some hints and tools for understanding whether and when a sales representative should be considered an employee, agent or self-employed person.

1. Employee or agent?

Given the absolute openness of jurisprudence in holding that the scientific informant can be freely classified as an employee,[2] Should the parties choose to adopt such discipline, the applicability of the rules on agency to the relationship must certainly be excluded.

If, on the other hand, the relationship should be classified as an agency, in order to verify whether it has been correctly classified, it will be necessary to verify, in the concrete case, the actual content of the services rendered, taking into account the real attitude of the parties; in practice, ascertaining whether or not there is an effective subordination of the scientific informant to the hierarchical and disciplinary power of the entrepreneur, as well as an assumption of the risk of the activity.[3]

A rather dated cassation (Court of Cassation Civ. 1992 No. 9676), but not for this reason still not relevant today, maintained that the activity of scientific informant can take place both in the context of a self-employed employment relationship and in that of a subordinate employment relationship, pointing out how in the case of the 'agent' propagandist the relationship is characterised by aresult obligationand, in the second case, of means. Indeed, it is stated that

"depending on whether the performance of the activity is characterised - by the manner in which it is carried out - as a mere result or as provision of working energies with the insertion of the propagandist into the production organisation of the entrepreneur and subjection to the instructions given by the latter'.

In particular, it is stated by the Court that:

"from the aforementioned activity - which (carried out autonomously or subordinately) consists in persuading potential customers of the advisability of purchasing, informing them of the product and its characteristics, but without promoting (if only marginally) the conclusion of contracts - differs the activity of the agent, who, in the context of an obligation not of means, but of result, must also promote the conclusion of contracts, his remuneration being directly linked to these and commensurate with them. "

A further element that will have to be taken into account for a correct framing of the relationship certainly concerns the way in which the sales representative is remunerated. If this subject's remuneration is in no way parameterized to the sales that are made by the principal in his area, and that, therefore, the economic risk is passed on in full to this subject, it will certainly be much more complex to sustain his classification within the discipline of the agency, or in any case of a self-employed relationship.

- Read also: The agency contract and the employment relationship: distinguishing criteria and evaluation parameters.

2. Agent or self-employed?

Generally speaking, although Italian case law has not entirely ruled out the applicability of the agency rules to the pharmaceutical sales representative, it has limited its application.

The starting point of this interpretation process is the definition of 'agency' in Art. 1742 of the Civil Code, where among the characteristic services of the commercial agent is that of promoting contracts. It reads:

"With the agency contract one party permanently assumes the task of promoteon behalf of the other, towards remuneration, the conclusion of contracts in a given area. "

If, on the other hand, one analyses the activities of various scientific informants, one can see that they (and hence also the name) mainly carry out not so much the activity of promotion, but that of (different) propaganda.

To distinguish the two activities, it can be simplified by pointing out that thepropaganda activities consists essentially in illustrating, albeit also in a very analytical, detailed and scientific manner, the qualities of a given product (in this case a drug), while extolling its qualities and characteristics that distinguish it from its competitors.

On the other hand, thepromotional activitiesand consists, instead, of a series of activities aimed at stimulating demand for a product, such as, for example, launching promotional campaigns, developing marketing strategies, etc.

Therefore, on the assumption of the significant difference between these types of activities, some case law has held that the mere propaganda carried out by a scientific informant, by means of visits to doctors or medical managers,

“in order to promote the adoption of the drugs they represent should be considered as an atypical relationship, non the scheme of an agency relationshipin view of the fact that the propagandist, in addition to not entering into any contracts with clients of the publishing house, does not even carry out any activity aimed at concluding contracts, this event being external to the advertising activity and, moreover, eventual. "[4]

In particular, the Court of Cassation held that the activity of promoting the conclusion of contracts on behalf of the principal, which constitutes the agent's typical obligation, cannot consist in a mere propaganda activity, from which an increase in sales may only indirectly derive, but must consist in convincing the potential customer to place orders for the principal's products, since it is precisely with regard to this result that the agent is awarded the remuneration, consisting in the commission on contracts concluded through him and successfully concluded.

There is a further problem, or perhaps it is better to say that this problem is exacerbated and becomes even more glaring when the pharmaceutical sales representative works for hospitals or public health agencies. In that case, part of the case law even considers that the existence of a promotional activity should be ruled out a priori, since the intermediary who comes into contact with public bodies cannot in any way convince the P.A.. to order the product, in view of the constraint of administrative procedures of public evidence for the conclusion of contracts. "[5]

In other pronouncements, especially in so far as the scientific informant simultaneously performs the typical tasks of the agent, it has been held that the activity of advertising, although it cannot in itself constitute the typical activity of the agent, does integrate the prerequisite of promoting the conclusion of contracts.

It is considered appropriate to quote below an excerpt from a pronouncement of the Court, in which it is noted that, although the agent's services consist of acts of varied and non-predetermined content that all tend to promote the conclusion of contracts, the typical activity of the commercial agent does not require:

necessarily the search for the customer and is always attributable to the service under the agency agreement even where the customer, from whom the contract proposal submitted by the agent originates, was not directly sought by the agent but was acquired on the principal's instructions (or in any other way), provided that there is a causal link between the agent's promotional activity vis-à-vis the customer and the conclusion of the transaction to which the claim for commission relates.

In any event, for an agency contract to exist it is not necessary for the agent to be able to fix prices and discounts and in any case to modulate the conditions of the service to the particular needs of the clients of the service itself, since the standardisation of the sales conditions can make the action of advertising preeminent over that of preparing and setting up the contract. "[6]

It can therefore be concluded that the propaganda is a component of the promotion, considered by Art. 1742 of the Civil Code, and that it is sufficient to supplement it when it resumes, combined with other tasks typical of the agent, the function of organising and developing the placement of the product, so as to attribute to the agent the role of effective intermediary between the company and its customers, also by means of a mediated solicitation of the possible purchasers of the good or service.

In other words, the existence of an agency contract cannot be excluded a priori merely because the promotion of contracts is addressed to different persons to final customers (i.e. those persons who make the purchase of the good or service), it being necessary in the present case to ascertain whether the person performs an actual sales promotion activity, even if of an indirect nature.

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[1] On this point see Venezia, Il contratto di agenzia, p. 667, 2020, Giuffrè.

[2] Cass. Civ. 2006 no. 4271, Cass. Civ. 2001 no. 9167.

[3] Cass. Civ. 2009 no. 9696, "The distinctive element between the agency relationship and the subordinate employment relationship is to be found in the circumstance that the former has as its object the performance in favour of the principal of an economic activity exercised in an entrepreneurial form, with organisation of means and assumption of risk by the agent, which is manifested in the autonomy in the choice of the times and modes of the same, albeit in compliance - according to the provisions of Art.Article 1746 c.c. - of the instructions received from the principal, whereas the subject-matter of the second is the provision, under a regime of subordination, of working energies, the result of which falls exclusively within the legal sphere of the entrepreneur, who bears the risk of the activity carried out." Cass. Civ. 2008 no. 21380.

[4] Cass. Civ. 2006 no. 3709.

[5] Cass. Civ. 2008 no. 18686.

[6] Cass. Civ. 2018, no. 20453.