It has been argued that the pharmaceutical industry is one of the sectors that is remarkably vulnerable to corruption. With the prioritization of anti-corruption efforts and the concomitant increase in the number of anti-corruption regulations and legislations, pharmaceutical companies (especially multinational firms operating in a wide range of jurisdictions) appear to be straining to adopt and enforce adequate compliance policies. As a result, medicine and medical device companies occasionally find themselves linked to (if not the subject of) anti-corruption investigations. Most recently, in September 2018, an acclaimed pharmaceuticals company based in France agreed to pay USD 25.2 million to resolve bribery allegations.
The sector’s vulnerability to corruption accusations might stem from several factors, the most important of which is the highly complex and multifaceted structure of the sector itself. As is well-known, the pharmaceutical industry consists of multiple actors, high-value products and contracts, and this is particularly true in the medical device sector. Demand is generally set by the healthcare professionals to whom the pharmaceutical companies sell their products, and this demand is mostly varying and unpredictable. This complicated state of affairs creates multiple points of potential vulnerability to incidents of the bribery of public officials and other corruption risks.
The various stages in the lifespan of an essential medicine (including registration, selection and promotion) stand out in terms of their exposure and susceptibility to potential corruption. It has also been argued that pharmaceutical companies could be exposed to a certain degree of risk with regard to the activities of their distributors, as the commercial chain becomes even more complex and convoluted when it comes to the interactions of distributors with hospitals and medical practitioners in multiple geographic regions.
There are several distinct stages in the pharmaceutical supply chain, and most of them are usually within the control of governments, or at least subject to the regulations set forth by governmental bodies. It may not be so easy to grasp the details and intricacies of every country’s regulations, or to delineate the line between the private sector and the public sector in each country. Nevertheless, it would be safe to assume that healthcare officials, physicians and staff who are government employees often fall within the definition of a “government official”. Financial demands made by healthcare officials and physicians, who could be underpaid government officials and who often view these compensation arrangements (such as conference sponsorships or other benefits) as their professional privileges, can be counted among the practices that could increase the risk of running afoul of anti-corruption laws for pharmaceutical companies. The ongoing debates regarding conflicts of interest and medical ethics are also brought into the spotlight by promotional activities of pharmaceutical products to healthcare professionals. The overriding concern in such cases is that such suspicious and unrecorded transactions could influence a physician’s drug prescription decisions through a range of incentives, which could result in irrational prescriptions and increased healthcare costs.
The European Union Commission’s study on this issue1 , published in October 2017, concluded that the healthcare sector is particularly susceptible to corruption. Furthermore, the study declared that, although the relationship between physicians and the industry contributes to product development and the observation of how medicines are used in practice, and although the industry supports continuous medical education of healthcare professionals through its sponsorships, such relationships may nevertheless increase the risk of corrupt practices, such as influencing doctors’ prescription decisions. Other significant findings laid out in the study included the following: (i) bribery in the pharmaceutical sector remains one of the key challenges in the fight against corruption, especially in many Eastern and Southern European Member States, and (ii) tailoring the tender specifications or the tender process to one (preferred) supplier, has been observed to constitute a common method of influencing procurement decisions.
Transparency International’s publication on this matter, titled “Corruption in the Pharmaceutical Sector”2 published in June 2016, also addresses the issue of pharmaceutical companies influencing healthcare professionals. In this regard, the study expressed the view that pharmaceutical companies influence doctors as well as national politics as a consequence of their considerably large spending power, which they use to persuade doctors to prescribe their own drugs, even when cheaper or more useful alternatives already exist. According to Transparency International, the promotion of transparency and accountability within the sector and ensuring accountability through increased monitoring, enforcement and sanctions could help to find a solution to these illegal arrangements.
Ultimately, it seems likely that only a genuine commitment to anti-corruption policies by governments and pharmaceutical companies, collaboration, and the empowerment of whistleblowers by all the actors in the healthcare sector, as well as the implementation of a well-structured and transparent supply chain, would help to mitigate the corruption risks in the healthcare sector and alleviate the legal problems related to anti-corruption enforcement that still hang over the heads of pharmaceutical companies.
(First published by Mondaq on December 17, 2018)
1 European Commission’s “Updated Study on Corruption in the Healthcare Sector” https://ec.europa.eu/home-affairs/sites /homeaffairs/files/20170928_study_on_healthcare_c orruption_en.pdf (accessed November 11, 2018)
2 Transparency International UK’s “CORRUPTION IN THE PHARMACEUTICAL SECTOR” https://www.transparency.org.uk/publications/corrup tion-in-the-pharmaceutical-sector/#.W8oKTXszbIU (accessed November 11, 2018)