Payments to doctors caught in UK's crosshairs
June 15 2011
Over the past several years, the industry has paid about $15 billion in penalties to the US government for cases involving off-label marketing and, more recently, the US Foreign Corrupt Practices Act (FCPA).
Now we find another government anxious to collect by prosecuting the industry. The UK's Bribery Act, which goes into effect July 1, is causing concerns for medical products companies. One problem for firms is that doctors can be seen as government officials in countries with state-funded health systems. This means that payments to doctors internationally could trigger questions over corruption.
This concern has already caused AstraZeneca to eliminate payments for doctors to attend international scientific and medical congresses. If other companies follow this trend, it could have a negative impact on international research, education and product development.
“Corporate Offense”—one of four distinct offenses of The Bribery Act—applies to companies from outside the UK who are carrying on business in the UK. The only defense to the Corporate Offense is if organizations can show they had adequate procedures in place to prevent bribery. However, what constitutes “adequate procedures” varies upon the size of the business.
As a result, the UK Serious Fraud Office (SFO) will look at whether the company had procedures in place to prevent bribery and steps taken to prevent a recurrence, among other things.
The Act establishes that senior officers of the corporation will be individually accountable if evidence shows that an executive had knowledge of bribery. Penalties include prison sentences.
The guidance also says that bona fide hospitality and promotional business expenditures—improving the image of the organization, better presenting products and services, and establishing cordial relations—will not be prosecuted, so long as they are “reasonable and proportionate.” Nevertheless, SFO noted that these expenses could still be used as a cover for a bribe and thus, the higher the cost and more lavish the hospitality, the easier it will be to draw such an inference.
Ultimately, companies will need to have a robust compliance program that is effective under the FCPA and incorporates “adequate procedures” under the Bribery Act. This will likely influence the way pharma funds international educational, as well as clinical and research activities, which could have a downward effect on international attendance at scientific meetings.
Tom Sullivan is president of Rockpointe Corporation