Bribery and corruption are not supposed to happen, but of course they do happen and no industry is immune. In 2009, the World Health Organisation estimated that healthcare fraud and abuse can cost individual governments as much as $23 billion a year.
Fortunately, there are many rules and watchdog organisation keeping a close eye on businesses to make sure everything is honest and above board. In the UK, bribery rules have recently been strengthened by the long-awaited (or long-dreaded depending on how you look at it) Bribery Act 2010. Although it’s UK legislation, it has a long reach. It will impact any corporate entity that conducts business in the UK and applies to business interactions both inside and outside the UK.
I’m based in the UK, and recently our human resources department had to roll out a risk assessment, policy and staff training session about the Act and what it means for us. I won’t bore you with the details but I can tell you that the paperwork is probably going to be a nightmare!
All UK companies will have to (if they haven’t already) look at the Act to see how it affects business. As a brief summary, the Act repeals the common law offences of bribery and various statutory offences, but also establishes four new offenses: bribing another person, being bribed, bribing a public official and, importantly for companies, failure of a commercial organisation to prevent bribery. The Act was strengthened following pressure from the international community, particularly the Organisation for Economic Co-operation and Development and the US government.
For pharma companies, the Act raises several concerns that will need to be examined closely. Apart from issues such as corporate hospitality, which many companies regardless of their industry will have to address, pharma must also deal with more complex situations, such as the emerging markets. Emerging markets are a hot topic in the industry, but some of these markets may have local customs or practices that involve conferring facilitation payments or other benefits. Indeed, a press statement from the Information Retention & eDiscovery Exchange explained that high-profile bribery cases will not be hard to find in sectors such as pharmaceuticals that frequently use intermediaries and dealings with state-owned enterprises abroad.
Outsourcing may also be a headache for pharma companies that must comply with the UK Act. Companies will need to put measures in place to prevent bribery and may be liable for any offences committed by an associated person. According to an article published by international law firm Taylor Wessing, the definition of an associated person is broad and could include staff from contract organisations. As such, sponsor pharma companies will need to ensure that appropriate provisions and training is in place.
The Act came into effect in July, but no doubt it will take time for companies to bring themselves up to speed with the Act and what it means. Companies had better move fast though, particularly as it has been reported that the UK’s Serious Fraud Office will be watching the pharma industry carefully.
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