Home – Compliance Fines Take a Bite Out of Pharma Companies’ Bottom Lines

Compliance Fines Take a Bite Out of Pharma Companies’ Bottom Lines

Posted on 01-22-2016 by Ulyana Androsova


 The sharks are circling. On the heels of last fall’s announcement of a $14.7 million payment for FCPA violations in China by Bristol-Myers Squibb, compliance investigators are paying even closer attention to the Pharmaceuticals and Life Sciences industries. Forbes noted that  Teva Pharmaceuticals, Sanofi, AstraZeneca, UCB, Novartis and Eli Lilly are all reportedly under investigation for FCPA violations. While no due-diligence program can completely eliminate risk, enforcement agencies have indicated that proof of a well-designed and enforced compliance program—including vigorous due diligence—can minimize risk. Whether or not these companies will face criminal or civil penalties—and reputational damage—by the conclusion of the investigations remains to be seen, but one fact is clear: 2016 is not the year to become complacent when it comes to conducting due diligence on third-party representatives of your company. The U.S. Department of Justice (DOJ) is just getting started. According to Forbes, the DOJ is ramping up for more foreign bribery investigations having tripled the number of FBI agents assigned to investigate foreign corruption—and they’re specifically targeting “high value, high-impact” cases. Here are just a few of the fines that have been paid in recent years:


How to Mitigate Third-Party Risk in Pharma

Having policies and procedures in place won’t rescue your company if those policies go unheeded or your due-diligence processes don’t dive deep enough. When announcing the Bristol-Myers Squibb settlement, Kara Brockmeyer, the FCPA’s chief of the Enforcement Division, said, “Bristol-Myers Squibb’s failure to institute an effective internal controls system and to respond promptly to indications of significant compliance gaps at its Chinese joint venture enabled a widespread practice of providing corrupt inducements in exchange for prescription sales to continue for years.” That’s right—red flags were raised but the lack of a timely, appropriate response left the company exposed to third-party risk. What should you do? The Pharma Compliance Monitor offers a list of warning signs to watch for.

Are your representatives …

  1. Offering entertainment to reward or encourage prescribing habits?
  2. Providing entertainment wholly without a clinical component?
  3. Paying speaker fees tied to prescribing habits?
  4. Giving lavish gifts or cash to procure recommendations?

We’re going to explore the topic further—including how to right-size your due diligence to meet varying risk levels—in a blog post next week, so stay tuned.

3 Ways to Apply This Information Now

  1. Get the eBook, “Something Missing?” which outlines the unique compliance challenges Pharma and Life Sciences companies face from third parties working on their behalf.
  2. Check out this post about the importance of an effective due-diligence and on-going monitoring program.
  3. Share this blog on LinkedIn to keep the dialogue going with your colleagues and contacts.

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