Ethics and Compliance
04 June 2010
•
Bribery is the number 1 concern in the compliance
departments of the 100 largest European companies
 Recent European corruption scandals have been
prominent in the news
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Siemens (Germany): allegations that €1.3 billion in bribes
paid to government officials; have already spent €650 million
in attorneys’ fees
BAE (United Kingdom): allegations of bribery of Saudi
government officials; major changes in compliance based on
recommendations of Lord Woolf
Alstom (France): allegations that $200 million paid in bribes
to Brazilian government officials
48% of compliance officers in these companies report
that they are spending the bulk of their time on anticorruption
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Source: New York Times, May 7, 2008
•
OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions
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30 member signatories
7 non-member signatories
•
Implement legislation similar to FCPA
•
Extra-territorial
•
Extradition and mutual legal assistance
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US Government has deferred prosecution because prosecution pending
elsewhere
Pacific Consolidated Industries case
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“Marketing agreement” with relative of gov’t official. President/part owner of
company going to serve eight months in US, UK gov’t official serving 2 years in UK
Akzo Nobel case — Akzo agreed its Dutch affiliate would enter into
disposition with Dutch authorities including $550,000 fine
Department of Justice (DOJ) – February 7, 2008
Merck to Pay $650 Million to Resolve Claims of Fraudulent Price Reporting
and Kickbacks
Xinhua General News Service – March 29, 2007
China Focus: China's drug watchdog steps up anti-corruption efforts
Wall Street Journal – February 13, 2007
J&J Reports Improper Payments…Senior Executive Resigns
Los Angeles Times – January 4, 2007
Drug firms bar gifts to doctors
Anti-Corruption Investigations of special interest…
Diagnostic Products Corporation – allegations related to payments to doctors and laboratory
personnel employed by government-owned hospitals in China, to obtain and retain business with
the hospitals, booked as commissions.
Micrus Corporation – allegations related to payments to physicians employed by governmentowned hospitals in France, Turkey, Spain, and Germany in return for the hospitals' purchase of
products. Payments were disguised as honoraria, commissions and stock options.
Schering-Plough – allegations related to a charitable organisation headed by a polish
government official who directed a government agency that influenced purchasing decisions of
government-owned hospitals.
•
FBI now has a “squad” of 10 or 11 full-time agents and 50 other agents
working on FCPA issues
•
DOJ has 12 attorneys focused on FCPA

•
In 2001 it was 2 or 3
Public Corruption is No. 4 on FBI’s list of priorities

Ahead of organised crime
•
Sharp increase in enforcement actions
•
Have openly said focusing on pharmaceutical companies
•
Focused on putting individuals in jail
•
Unprecedented cooperation with international law enforcement agencies
Slide 5
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Number of investigations continues to rise
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Should expect industry-wide investigations
FCPA investigations result in parallel civil litigation
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Securities fraud
Shareholder derivative actions
Foreign government lawsuits
Business partner lawsuits
•
Proposed legislation creating private right of action
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Due diligence is essential to defending government
investigation

•
Strength of compliance programs a consideration in
charging
Individuals are receiving substantial jail terms
Slide 6
The FCPA focuses on three primary areas:
The Accounting Provision requires companies
to keep books, records and accounts that
accurately and fairly reflect any transaction
and disposition of corporate assets in
reasonable detail.
Anti-Bribery
Provision
Accounting, Books
and Records
Provision
The Anti-Bribery Provision prohibits any
U.S. Company and its employees from
paying, or giving or promising anything of
value, directly or indirectly, to a foreign
government official, political parties or party
officials to obtain or retain business, or to gain
any improper business advantage.
Internal
Controls
Provision
The Internal Control Provision establishes
"standards of conduct and internal control
systems that are reasonably capable of
reducing the likelihood of violations of laws”.
These internal controls are not limited only to
accurate financial reporting, but extend
broadly to ensure compliance with all laws.
• National Drug Policy
• Medicines & Related Substances Act (Act 101 as
Amended)
• SA Code of practice for the marketing of
Medicines
• Guidelines on Overservicing, Perverse Incentives
and Related Matters (HPCSA 2007)
• ASA Code
9
• Foreign Corrupt Practices Act
• International Marketing Codes (IFPMA etc.)
• Global Company policies and standards
• etc.
10
Applicable to all marketers of
medicines
Aligned with International
Professional and Local Codes
and Guidelines on “Overservicing,
Perverse Incentives and Related
Matters” Policy of HPCSA
Deals with industry-healthcare
professional relationships
Advertising and promotional
activities
Part A
• Marketing & promotion
of medicines to
healthcare
professionals
Part B
• Marketing & promotion
of medicines to
consumers
Part C
• Enforcement of the
Code by the Interim
Board (MCA)
Code provisions: To ensure ethical behaviour and
eliminate any possible perversity in the relationship
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Sponsorships
Meetings – CPD & Product launches
Hospitality & Entertainment
Advertising and Promotional Material
Scientific Information Services
Sales Reps
Gifts
Grants and Donations
etc.
Sponsorships/payments

Company X sponsored Dr. Hyde to an
Independent Meeting; while most of his
expenses were pre-paid, he had some additional
expenses such as movie rentals and ground
transportation expenses for which he paid in
cash and and now wants to be reimbursed.
Company X.....
1.
Cannot reimburse any of those expenses;
Must ask him to provide the receipt for all of
them and, if presented, reimburse him
Must proceed to reimburse only the ground
transportation if Dr. Hyde can provide the
actual receipt.
2.
3.
Sponsorships/payments

Company X sponsored Dr. Hyde to an
Independent Meeting; while most of his
expenses were pre-paid, he had some additional
expenses such as movie rentals and ground
transportation expenses for which he paid in
cash and and now wants to be reimbursed.
Company X.....
1.
Cannot reimburse any of those expenses;
Must ask him to provide the receipt for all of
them and, if presented, and reimburse him
Must proceed to reimburse only the ground
transportation if Dr. Hyde can provide the actual
receipt.
2.
3.
Payments

Company X's Regional Medical Group is planning a
research award in the Diabetes field. What are the
criteria that are applicable?
1.
Evaluation by a Company X-invited independent panel
Public announcement of opportunity to apply for the
award
Regional approval and legal review
All of the above
1 and 2 only
2 and 3 only
2.
3.
4.
5.
6.
Payments

Company X's Regional Medical Group is planning a
research award in the Diabetes field. What are the
criteria that are applicable?
1.
Evaluation by a Company X-invited independent panel
Public announcement of opportunity to apply for the
award
Regional approval and legal review
All of the above
1 and 2 only
2 and 3 only
2.
3.
4.
5.
6.
Promotional & Educational Materials

Which items need to go via the local promotional and educational material review
process?
1.
Promotional speaker slide sets and videos
Press releases and reprints
Internet sites
All of the above
All of the above excluding internet sites
2.
3.
4.
5.
Promotional & Educational Materials

Which items need to go via the local promotional and educational material review
process?
1.
Promotional speaker slide sets and videos
Press releases and reprints
Internet sites
All of the above
All of the above excluding internet sites
2.
3.
4.
5.
Promotional & Educational Materials

Slide sets approved on a global/regional level
need to undergo local approval process before
use in a promotional meeting?
1.
Yes, local approval is always required
No, global/regional approval is sufficient
Yes, but excluding the situation when the
speaker has been provided a slide set during
global/regional speaker training
2.
3.
Promotional & Educational Materials

Slide sets approved on a global/regional level
need to undergo local approval process before
use in a promotional meeting?
1.
Yes, local approval is always required
No, global/regional approval is sufficient
Yes, but excluding the situation when the
speaker has been provided a slide set during
global/regional speaker training
2.
3.
Promotional & Educational Materials

In addition to the standard approval process,
who else needs to approve to approve dosing
calculators, medical devices (including
needles and swabs) ?
1.
Medical
Compliance
Quality
Regulatory
2.
3.
4.
Promotional & Educational Materials

In addition to the standard approval process,
who else needs to approve to approve dosing
calculators, medical devices (including
needles and swabs) ?
1.
Medical
Compliance
Quality
Regulatory
2.
3.
4.
Responding to Unsolicited Requests
for Off-Label Information

Can Company X non-Medical personnel
proactively discuss off-label information with
HCPs?
1.
Yes, if done in a non-promotional manner and
allowed locally
No, they may never engage in proactive offlabel discussion
2.
Responding to Unsolicited Requests
for Off-Label Information

Can Company X non-Medical personnel
proactively discuss off-label information with
HCPs?
1.
Yes, if done in a non-promotional manner and
allowed locally
No, they may never engage in proactive offlabel discussion
2.
Responding to Unsolicited Requests
for Off-Label Information

Can Company X non-Medical personnel respond
to unsolicited questions on off-label information from HCPs?
1.
No, only medical personnel allowed to answer
Yes, if the non-Medical employee knows the
answer and delivers it in a non-promotional
way
Yes, if the non-Medical employee has been
trained how to answer any medical reference
on the topic available
2.
3.
Responding to Unsolicited Request
for Off-Label Information

Can Company X non-Medical personnel respond
to unsolicited questions on off-label information from HCPs?
1.
No, only medical personnel allowed to answer
Yes, if the non-Medical employee knows the
answer and delivers it in a non-promotional
way
Yes, if the non-Medical employee has been
trained how to answer any medical reference
on the topic available
2.
3.
Consumer Advertising & Promotion

Disease awareness programs developed by
External Party on behalf of Company X...
1.
Need to be reviewed and approved by Company X
Do not need to be reviewed by Company X due to
the independency of the External Party
Can be reviewed by Company X if the party will
agree
2.
3.
Consumer Advertising & Promotion

Disease awareness programs developed by
External Party on behalf of Company X...
1.
Need to be reviewed and approved by Company X
Do not need to be reviewed by Company X due to
the independency of the External Party
Can be reviewed by Company X if the party will
agree
2.
3.
Consumer Advertising & Promotion

Can you sponsor a journalist to attend a
company media event, associated with an
overnight stay?
1.
Yes
No, not allowed
2.
Consumer Advertising & Promotion

Can you sponsor a journalist to attend a
company media event, associated with an
overnight stay?
1.
Yes
No, not allowed
2.
Consumer Advertising & Promotion
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Can a PR agency buy media space ( e.g. pay a
newspaper) for a Company X-funded disease
awareness publication?
1.
Yes, provided that the publication is identified as
funded by Company X
Yes, but no Company X funding disclosure is
needed due to PR agency independence
No
2.
3.
Consumer Advertising & Promotion

Can a PR agency buy media space ( e.g. pay a
newspaper) for a Company X-funded disease
awareness publication?
1.
Yes, provided that the publication is identified as
funded by Company X
Yes, but no Company X funding disclosure is
needed due to PR agency independence
No
2.
3.
Public Relations Activities

Can you organize a 2-hour sightseeing city tour
for journalists attending a company media
event before the dinner?
1.
Yes, there are no restrictions for entertainment
to journalists
No, such entertainment is not allowed
2.
Public Relations Activities

Can you organize a 2-hour sightseeing city tour
for journalists attending a company media
event before the dinner?
1.
Yes, there are no restrictions for entertainment
to journalists
No, such entertainment is not allowed
2.
Gifts

What affiliate review is required for gifts
proposed to be given at International Meetings?
1.
Host affiliate approval is required
Attendee Home affiliate review is required
Both of the above are required
2.
3.
Gifts

What affiliate review is required for gifts
proposed to be given at International Meetings?
1.
Host affiliate approval is required
Attendee Home affiliate review is required
Both of the above are required
2.
3.
Gifts

Is it allowed to provide a medical textbook to
a HCP as a gift?
1.
Yes, provided the value limit is met
No, it should be considered as a grant
2.
Gifts

Is it allowed to provide a medical textbook to
a HCP as a gift?
1.
Yes, provided the value limit is met
No, it should be considered as a grant
2.
Educational Grants & Charitable
Donations

Which of the following would be considered a
grant?
1.
Independent Meeting – unsolicited request,
funding only and no Company X involvement
Independent Meeting – unsolicited request,
funding in form of a payment for a booth
based on organiser price list
Sponsorship of HCP to independent meeting
2.
3.
Educational Grants & Charitable
Donations

Which of the following would be considered a
grant?
1.
Independent Meeting – unsolicited request,
funding only and no Company X involvement
Independent Meeting – unsolicited request,
funding in form of a payment for a booth
based on organiser price list
Sponsorship of HCP to independent meeting
2.
3.
Educational Grants & Charitable
Donations

How should the following situation be
evaluated?
A Medical Association requests Company X to
sponsor the organisation to conduct an AIDsawareness campaign through a monetary
contribution
•
This is should be considered as a grant request
This should be considered as a partnership with an
external organization
This should not be considered at all, because this
is an area which fits in Company X's therepautic
areas
•
•
Educational Grants & Charitable
Donations

How should the following situation be
evaluated?
A Medical Association requests Company X to
sponsor the organisation to conduct an AIDsawareness campaign through a monetary
contribution
•
This is should be considered as a grant request
This should be considered as a partnership with an
external organization
This should not be considered at all, because this
is an area which fits in Company X's therepautic
areas
•
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Thank
you!