AstraZeneca announced that it will be “scrapping payments for doctors to attend international medical congresses.” According to Reuters, “the move follows increased scrutiny …and could put pressure on rivals to follow suit.”
AstraZeneca chief executive David Brennan announced the change of policy in low-key fashion at an industry conference in Istanbul earlier this month. Brennan told Reuters that the company has decided to no longer pay for doctors to attend international scientific and medical congresses but will instead focus their educational efforts on local educational opportunities for healthcare professionals.
In addition, Brennan said he took the step because “AstraZeneca should not do anything that could be seen as an inducement to prescribers to use its products.”
Discussion
In the past, European and U.S. congresses on topics like cancer, heart disease and diabetes typically saw thousands of specialist physicians flown in at company’s expense to hear the latest research in their area. As a result, AstraZeneca’s “decision to stop paying for medics to fly to international medical and scientific meetings has taken things to a new level.”
Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, said their decision is “drastic,” and “another sign that industry is changing its scientific education practices.”
One of the potential reasons for AstraZeneca’s decision is the recent regulatory pressure on the drugs industry, which in the past five years has paid $15 billion penalties to the U.S. government alone for alleged violations of laws and regulations. As Reuters pointed out, “that scrutiny has been ramped up with a wave of investigations under the U.S. Foreign Corrupt Practices Act (FCPA) and the introduction of a new bribery act in Britain.”
Specifically, the Bribery Act looms even larger in some respects, “because it covers not only bribery of foreign public officials, but also commercial bribery. A recent guidance on the UK Bribery Act puts a renewed emphasis on the need for global drug and device companies to have a robust compliance program that is “effective” under the FCPA and incorporates “adequate procedures” under the Bribery Act. Moreover, according to the FCPA Compliance and Ethics Blog, the bribery act guidance focuses on six principles:
- 1. Proportionate Procedures-A company’s procedures to prevent bribery by persons associated with it should be proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organization’s activities. They are also clear, practical, accessible, effectively implemented and enforced
- 2. Top-Level Commitment-the top-level management of a company, be it a board of directors, the owners or any other equivalent body or person must be committed to preventing bribery by persons associated with it. They foster a culture within the organization in which bribery is never acceptable
- 3. Risk Assessment– a company should assess 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
- 4. Due Diligence-a company should apply 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 organization, in order to mitigate identified bribery risks
- 5. Communication (including training)-a company should seek to ensure that its anti-bribery and anti-corruption policies and procedures are embedded and understood throughout the organization through internal and external communication, including training, that is proportionate to the risks it faces.
- 6. Monitoring and Review-a company should monitor and review its procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.
The Bribery Act creates a new form of corporate liability for failing to prevent bribery on behalf of a company unless the company can establish that it had adequate procedures in place.
Consequently, “bribery legislation is an issue for pharmaceutical companies because doctors can be seen as government officials in those countries where they work for state-funded health systems.” As a result, payments to doctors could trigger questions over corruption. In fact, Johnson & Johnson last month agreed to pay $78 million to settle British and U.S. charges it paid bribes and kickbacks to win business overseas, in the first settlement by a big drug company since the United States began scrutinizing the industry under the FCPA more than a year ago.
Ultimately, companies doing business in the UK and overseas will have to respond quickly to the Bribery Act which becomes effective July 1, 2011, by making changes and improvements to their anti-corruption efforts in response to global enforcement initiatives. These are new rules, and companies are going to have to figure out whether they need to change the way they are doing business or modify their compliance efforts. These changes will likely influence the way industry funds educational, clinical and research activities. For US and International medical conferences, if other companies follow suite it could have dramatic downward effect on international attendance at scientific meetings.