Based on my conversations with clients, there is a strong desire by middle management to comply with rules and regulations within the pharmaceutical industry. Middle level marketing, legal and compliance professionals worry about security breaches, identity theft and leaking patient information. As a result, they often hold their firms back from adopting new technologies and forms of communications, such as social media, for fear of being out of compliance.
However, by contrast, according a 2012 Study by Public Citizen “Pharmaceutical Industry Criminal and Civil Penalties: An Update”, pharmaceutical firms paid settlements of more than $30 billion from 1991 to 2012. The most common violation was defrauding Medicaid and Medicare, yet, guilty firms were not excluded from these programs as a punishment. Off-label promotion of drugs incurred the largest penalties, but enormous sums were not a deterrent either, as they are only a small fraction of overall profits. In fact, one could say, they are just another cost of doing business for the pharmaceutical industry.
In this increasingly transparent world, consumers and patients are outraged by the lack of consequences to Big Pharma and can easily use social media to demand that the government step in to better supervise the pharmaceutical industry.
Is There A Better Way?
There have been calls for higher fines, tougher enforcement, more federal and state laws and even proposed legislation requiring firms that break the law to pay a small portion of their profits to the U.S. National Institutes of Health.
All good ideas. However, ultimately, until there are personal consequences for employees of pharmaceutical firms, illegal acts will continue.
There is actually precedent for the government to hold corporate officers liable for a misdemeanors and possible felonies under the FDCA Act without proving actual involvement. Although rare, the Consumer Protection Branch of the Department of Justice can also fight fraud and hold individuals personally responsible. As the public applies more pressure, we may see the government begin to pursue criminal charges against key company employees and executives more aggressively.
Are There Lessons From Other Industries?
Sometimes solutions can come from other industries. As a result of the recent Sony breach, senior executives are beginning to understand that their own behavior can be put under a microscope and damage their personal reputations. It’s not just “an IT problem”, but an issue of personal responsibility.
Or in the case of another regulated industry, financial services, Chief Compliance Officers are held personally liable for misdeeds. In a recent case, a CCO was sanctioned by Financial Industry Regulatory Authority (FINRA) for not establishing an adequate anti-money laundering program. Although the CCO took steps to report AML risks, and warned senior management to stop certain activities, he was still personally sanctioned for “failure to supervise”. The firm was censured and fined $8,000,000. However, the CCO himself was suspended for one month and personally fined $25,000. The CCO did not lose his job, however now has a black mark on his resume for the rest of his career.
One can’t help but wonder whether a dual approach of holding both senior executives and heads of compliance departments personally liable would create a true culture of compliance. In other words, hold both the “top” and the “middle”, personally responsibility for misdeeds.
How Can Executives Avoid Personal Sanctions?
This is not an issue that is going away. As the consumers become increasingly angry about illegal activities of pharmaceutical firms, we can expect to see an increased demand for consequences that hurt. Personal sanctions can be avoided by preventing the crime in the first place. Or, in the words of Brent Snyder, Deputy Assistant Attorney General Antitrust Division U.S. Department of Justice, “Compliance is a Culture, Not Just a Policy”. Although speaking specifically on anti-trust issues, Synder shared five recommendations on how to prevent illegal activities that could result in personal sanctions:
- An effective “Culture of Compliance” starts at the top of the organization. Senior executives must demonstrate their commitment to their employees through their personal, ethical behavior.
- Senior executives must make compliance a priority for all departments, especially sales and marketing departments.
- Firms must document their compliance programs, train employees and monitor for adherence on an ongoing basis.
- Firms must develop clear cut policies for employees who violate compliance polices, including termination if appropriate.
- When violations do occur, firms must take responsibility and make every effort to prevent them from happening again.
Is your company taking compliance seriously?
This article previously appeared in Pharmaceutical Compliance Monitor.
The post Does Big Pharma Take Compliance Seriously? appeared first on Actiance.