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Last year, the spotlight came down on a few well-known pharmaceutical companies when allegations of bribery prompted them to rethink the way they interact with healthcare professionals. GlaxoSmithKline, for example, was troubled by allegations of bribery by its Chinese executives: by the end of the 2013, the company announced that it is stopping payments to doctors to attend medical conferences and will drop prescription targets for its sales staff.

In the UK, the fight against bribery has been an ongoing challenge:  the introduction of the UK Bribery Act 2010 in July 2011 provided more stringent measures to combat bribery in the public and private sectors. However, some of the provisions of the Association of the British Pharmaceutical Industry’s (ABPI) Code of Practice have the potential to overlap with the requirements of the Bribery Act. So the question is: how do the two regulations work together to keep bribery at bay in the pharmaceutical industry?

The basic elements of the Act

The Bribery Act is enforced by the UK’s Serious Fraud Office (SFO), which values the self-regulation put in place by the pharmaceutical industry, leaving the onus of the policing of payments to Healthcare Professionals (HCPs) and Health Care Organisations (HCOs) to the industry itself.

The UK Bribery Act is made up of two general offences covering the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accepting of a bribe (passive bribery). The Act also makes it illegal to bribe a foreign official in order to get or keep business or to gain an advantage in carrying out business. In addition, a new form of corporate liability is created by the Act, for failing to prevent bribery on behalf of a commercial organisation. This encourages companies to put in place procedures to prevent bribery by persons associated with them.

Importantly, for pharmaceutical companies working outside of the UK, the UK courts have a jurisdiction over offences that are committed in the UK and also those outside the UK, where the person committing them has a close connection with the UK, for example is a British National or ordinarily resident in the UK.

The area of the Act covering hospitality and promotional expenditure is of particular interest to pharmaceutical companies. The Act itself recognises that bona fide hospitality, promotional and other business expenditure which seeks to improve the image of a commercial organisation, better present products or services, or establish cordial relations are all important part of doing business and should not be criminalised. However, there is an emphasis on “reasonable and proportionate” expenditure, so that extravagant and inappropriate gestures will be questioned. Under the Act, it is made clear that hospitality and promotional or other business expenditure can be used as bribes.

The Bribery Act sets out a list of six procedures that pharmaceutical organisations wishing to prevent bribery being committed on their behalf should implement.

Principle  1: Proportionate procedures: A commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities. They are also clear, practical, accessible, effectively implemented and enforced.

Principle 2: Top –level commitment: The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.

Principle 3: Risk Assessment: The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.

Principle 4: Due diligence: The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.

Principle 5: Communication (including training): The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training that is proportionate to the risks it faces.

Principle 6: Monitoring and Review: The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

It is important that pharmaceutical companies carry out anti-bribery and corruption risk assessments, whether in the UK or abroad, in order to prevent the recent examples we have seen in the news. This is particularly in the light of the large amounts of money that are being paid by companies to HCPs and HCOs. For example, in the UK alone, pharmaceutical companies are paying an estimated £40 million to British doctors in service fees, flights, hotel and other travel expenses, according to the ABPI. Back in 2011, shortly after the introduction of the Bribery Act, KPMG Consultants carried out a survey suggesting that a third of all UK companies had not carried out anti-bribery and corruption risk assessments. In the light of increased transparency in the pharmaceutical industry, it is important that pharmaceutical companies lead the way in this area and it would be interesting to know how many companies in 2014 are up to speed with this.

How the APBI code works alongside the Bribery Act

In a memorandum of understanding between the SFO, the PMPCA and the APBI, there is agreement that SFO will not routinely intervene in matters covered by the ABPI Code but reserves the right to take action if the issue is deemed serious enough to merit SFO investigation. Complaints will be submitted to the Prescription Medicines Code of Practice Authority (PMCPA), a separate entity from the ABPI that administers the code, when appropriate. The SFO will not seek to prosecute unless it considers this is in the public interest and, in reaching such a decision, the SFO will take into account relevant action taken by the PMCPA.

Recent changes to the ABPI Code of Conduct in in November last year, to come in line with changes to the European Federation of Pharmaceutical Industry Associations (EFPIA) Disclosure Code, will mean that by 2016, the individual names of healthcare providers and organisations that receive money from pharmaceutical companies will be published. These measures, alongside the watchful eye of the SFO, will be a strong step in the right direction to ensure that bribery is eradicated throughout the pharmaceutical industry.

Ruth Knowles.

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