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Monday, January 13, 2014

Pharmaceutical and Medical Device Manufacturers of All Sizes Should Treat Corporate Compliance as a Top Priority

Pharmaceutical and medical device companies are well aware of the great potential for revenue growth offered by the global marketplace, and are heavily investing in increasing their presence in the global healthcare market. To date, international sales for pharmaceuticals total more than US$100 billion annually.1 However, just as there is great potential for growth, there is a very real risk related to charges of corruption, particularly for companies as they research, develop, test or sell pharmaceutical products or medical devices overseas.

Risk, for pharmaceutical and medical device companies, can arise at multiple points, including the:

  • Management of foreign clinical trials
  • Funding of professional development efforts for foreign staff 
  • Selection and management of third party agents and distributors
  • Management of operating licenses and distribution permits
  • Gifts offered to foreign entities
  • Investigations resulting from whistleblowers

According to the Organization of Economic Cooperation and Development (OECD) Working Group on Bribery, 40 countries have joined the Anti-Bribery Convention. These countries generate nearly two-thirds of total world trade and 90 percent of outward foreign direct investment.2

Accusations of bribery and other corrupt activities have surfaced in many emerging countries, where healthcare organizations are state owned or nationalized entities operated by government employees who have tremendous influence over the authorization of healthcare distributors, vendors and products. Over the past few years, several well-recognized pharmaceutical and medical device companies such as Biomet, Pfizer and Smith & Nephew have paid millions of dollars in fines or settlement related to charges of bribery and corruption.3 Many of the companies under scrutiny are large multi-nationals, however, experts warn that companies of all sizes should be on notice that they are subject to the same standards and fines.

Be proactive

The best way to minimize the risk of prosecution is to be proactive and create a culture of ethical conduct that permeates day-to-day operations and ensure that it is clearly communicated to all employees and partners. This can be a complicated endeavor for multinational companies with diverse employee groups in worldwide locations. Nonetheless, a top-down program of transparency is the best protection.

There is no “one size fits all” in developing a program. A compliance risk consultant can be very helpful in devising a plan and establishing a baseline to monitor current operations and assess risks related to future ventures. Experts advise companies to strive for a balance in keeping the compliance program simple enough to be manageable, but detailed enough to deliver the required results.

Professional language translation is a critical requirement, as communication mistakes or omissions can result in serious consequences. It is wise to engage the services of a professional language solutions provider (LSP) to ensure that bribery prevention and other corporate communications are accurately and consistently translated in all required languages.

Summary

The enforcement of anti-corruption and anti-bribery laws is now a global issue. “Not knowing” is not a defensible explanation. The onus is on the company, its board of directors and management to understand and adhere to anti-bribery laws that apply in every country they do business. Clearly, language transparency is a critical component to establishing a successful anti-corruption compliance program.

 

References:

1 Alessia Bell, “LeClairRyan Webinar Highlights Ten Anti-Corruption Risks for Pharmaceutical and Medical Device Companies and Outlines the Elements of an Effective FCPA Compliance Program,” The FCPA Report, Vol. 1 No.9 (Oct. 3, 2012).

2 OECD Working Group on Bribery 2013 Annual Report, p.3

3 Doreen Edelman and Matthew Tilghman. “Pharma and Devices are Targeted Industries for Corruption Investigations,” Pharmaceutical Compliance Monitor, April 10, 2013.

 

Related Downloads

Best Practices for Corporate Compliance for Pharmaceutical and Medical Device Manufacturers
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Four Practical Steps to Minimizing FCPA risk in Cross-Border M&A
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FCPA Due Diligence in Cross-Border M&A: How to Avoid Buying a Felony
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Bribery and Corruption: A Global Problem with Local Solutions
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Bribery Act One Year On: Lessons Learned for Risk Mitigation
Find out how your company can craft a clearly defined bribery prevention and compliance program that is understandable by all employees, agents and partners. The first official year of the new UK Bribery Act may have passed in relative quiet, but experts advise against being lulled into a sense of complacency. Find out how to ensure that your company has crafted a clearly defined bribery prevention and compliance program that is understood by all employees and partners.


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