The onset of draconian anti-bribery legislation is forcing pharma companies to review their compliance policies and procedures. The global crackdown on “white collar crime” presents one of the biggest challenges to the life sciences sector. Pf explores a new survey of compliance in Europe. Is your company doing enough?
Suggestions of bribery and corruption have hogged the national headlines in recent weeks, not least with England’s ill-fated bid to host the 2018 FIFA World Cup. But Panorama-style exposés into alleged inducements are not restricted to the beautiful game – the issue has been plaguing the corporate environment since time immemorial. And pharma, for one, has never escaped the insinuation. Earlier this year, Pf led with news of the US Department of Justice opening an international investigation into corruption in the pharmaceutical industry. Last month, the European Commission revealed it had carried out more antitrust raids at European offices of pharmaceutical companies. Alongside this, the global industry continues with rhetoric that places ‘trust’ at the heart of its collective strategy to improve its profile with both the public and customers alike. Yet the sense that there’s a pharma-Panorama just around the corner remains.
Next April, new Anti-Bribery legislation comes into effect in the UK. Designed to tighten ethical procedures across the corporate sector, it has been described as one of the most draconian anti-corruption laws in the world.
Crucially, it creates a new offence of “failing to prevent bribery”, making businesses with any UK interest criminally liable if staff, subsidiaries, intermediaries or “associated persons” offer bribes on their behalf across the world. Guilty individuals can face up to 10 years imprisonment. Unsurprisingly, the new legislation is creating much unrest in boardrooms across the UK.
For sure, the pharmaceutical industry is sitting up and taking note. A new survey of European life sciences companies has revealed high levels of anxiety right across the sector. The 2010 European Trends in Aggregate Spend, Transparency and Disclosure Report, conducted by Cegedim Relationship Management, found that 93% of respondents are concerned that regulatory compliance will be a major challenge to the life sciences industry in Europe over the next three years – and that it is expected to impact the industry’s image significantly. Moreover, the survey reinforced the view that the challenge of managing compliance in an environment where anti-corruption legislation is emerging globally, will drastically change the way companies interact with healthcare providers and customers.
“It came as no surprise to learn that the greatest concern is the changing compliance landscape and how this will affect daily processes and the image of the industry as a whole,” said Bill Buzzeo, Cegedim Relationship Management Vice President and General Manager, Global Compliance. “Life Sciences companies need a way to respond to a rapidly evolving industry that is presented with stiffer regulatory requirements in addition to extreme competitive pressures and market access challenges.”
In response, companies are investing heavily in compliance and assessing policies and procedures. But concerns remain about the need to extend monitoring beyond traditional sales and marketing functions. The survey indicates that European companies are already looking at what is happening in the US regulatory environment as they seek to define and establish new standards for best practice. Three quarters of respondents believe that the methods of tracking promotional spending currently being used in the US will be deployed in Europe – but the report warns that the cultural differences between Europe and the US may have implications for regulators and companies alike. “In the US, organisations must proactively disclose a large amount of information; from violations to every aspect of healthcare practitioner spend, under the Sunshine Act that comes into effect in 2013, specific to 2012 interactions with healthcare practitioners and organisations,” the report states. “This enforcement model reflects the high levels of regulation and enforcement applied across every US industry, from finance to utilities. In Europe, however, there is a far greater emphasis on self-policing. Life sciences companies are being asked by the authorities to improve information transparency and provide aggregated spend information. But at the moment, the final concept of transparency – and whether it will be enforced – is still to be determined.”
The US is, of course, ahead of its European counterparts in terms of anti-bribery regulation. Its market has been heavily regulated for many years and the imminent Sunshine Act makes even greater demands for spend transparency. In anticipation of the Act, US companies have made real progress with their operational compliance – improving data quality and regulatory reporting requirements. Evidence suggests that, as a direct result, US companies are beginning to benefit from leveraging the insights enabled by such data capture, and sharing information across their organisations to drive productivity.
In Europe, however, the report suggests that compliance officers – where they exist – are still “determining policy and assessing the implications of global, regional and local regulatory requirements.” In the UK, the ABPI has recently agreed proposals to update its Code of Practice to increase transparency and disclosure – with the changes coming into effect in 2011. As usual, the majority of change within the Code focuses on sales and marketing – notably the interactions between commercial professionals and their customers. But, the report notes, it is important to gain business-wide involvement in compliance activity – from senior management commitment, to the IT people involved in executing regulatory compliance programmes and the business people who own the data.
“In the US, it has become apparent that the most successful regulatory compliance programmes are owned and driven by business people. Following this model will help European Life Sciences companies reduce time to market and the cost of regulatory compliance,” the report states. “Furthermore, growing numbers of US companies are turning to dedicated third party solutions for support in the compliance activity – with around 44% either already using or planning to take this approach.”
The survey reveals that European companies are beginning to follow suit, although in much smaller numbers. “As the US forges ahead with operational regulatory compliance projects, it has become apparent that managing the volume of regulatory change and reconciling diverse data sources to deliver transparency, is too challenging to handle internally. The use of third party providers is becoming key in adhering to policies and procedures while effectively tracking aggregate spend, identifying suspicious financial transactions and streamlining regulatory compliance monitoring.”
But there is one area where Europe is already ahead of the game, at a planning level at least, namely, leveraging transparency and aggregate spend information to derive benefits above and beyond compliance. 83% agree the implementation of transparency guidelines will lead to better resource allocation; whilst almost two thirds (62%) agree implementation of transparency guidelines will generate promotional spend decreases.