Agnes Shanley , Editor09.08.14
For the past few years, the pharmaceutical industry has been challenged to develop and maintain strong ethics and compliance programs. News headlines continue to reflect a struggle: off-label sales and marketing, noncompliance with current good manufacturing practices (cGMPs), data integrity problems, bribery and fraud, negative public opinion.
Recent research by Price Waterhouse Cooper (PwC) suggests that effective ethics and compliance programs cannot be artificial or bolted on, or assigned as “add-ons” to legal or other departments1. Instead, they must grow out of a company’s business goals and become ingrained in its culture.
The best corporate ethics and compliance programs are linked with a good understanding of risk, and of quality. In fact the four pre-requisites for a strong ethics and compliance program and culture are no different from what determines a culture of quality, according to consultant Ajaz Hussain, who gave a talk on building a quality culture at a Patheon seminar in New Jersey over the summer.Hussain sees the keys as leadership emphasis, message credibility, peer involvement and employee empowerment. “All should be focused on reducing fear and creating a open culture of error management,”he says.
Pharma’s training in each of these areas may not always be up to the challenge. Some past cGMP False Claims Act whistleblower cases, for example, suggest that some companies have had employees “sign off” on cGMP training, or on standard operating procedures that they may not have fully understood, or even viewed as an integral part of their jobs.
Other plant inspection notes in FDA Warning Letters last year suggest situations where employees operate in an atmosphere of fear, and may resort to “cooking the books” and backdating or falsifying records to maintain operating levels.
Then there is fear of the regulator. Eliminating that fear may be the key to improving pharma compliance, says NIR spectroscopist and consultant Emil Ciurczak. “When the view of FDA changes from that of the enemy to, at least, a benign supervisor, the mindset of ‘Don’t let FDA see anything’ will change to ‘Let’s see what FDA thinks about this problem.’ Then, we’ll see a surge in compliance and ethical behavior, “ he says.
When pharma ethics and compliance training programs fall short, employees can take a cynical view, as expressed by medicinal chemist and blogger Derek Lowe. “I can’t help thinking that [these training programs] are mostly there so that if something bad does happen, the company can say ‘Well, we told them, over and over, not to do these things. Here’s the training program. Here are all the presentations this person sat through, and here’s their signature saying that they understood what we told them. Don’t go after us. Go after them.’ “
Last year, as rumors surfaced at GSK and Sanofi, pharma was riveted on bribery and corruption. But these transgressions are fairly basic. As PwC noted earlier this year, companies need to go beyond these traditional problems and expand their ethics and compliance programs to focus on risks, such as those related to growth in developing nations, as well as those related to an increasingly complex regulatory environment.
In July, LRN Corp. (New York, NY), a global culture and ethics advisory firm, published results of a benchmarking surveycomparing the effectiveness of corporate ethics and compliance programs across all industries2, including pharma (defined here as pharmaceuticals, biopharmaceuticals and medical devices).
Where LRN found aerospace and defense to have the most effective ethics and compliance programs (placing it in the top quintile), pharma’s programs were below the mean (in the bottom quintile). Like other industries in the bottom quintile, Pharma was still focusing on the risk of bribery and corruption, where aerospace was looking at cost control, government contracting and the False Claims Act. Pharma has had some False Claim Act cases recently, where aerospace has not.
This may reflect the fact that formal ethics and compliance programs may have been around longer in aerospace than they have in pharma, and were mandated by past problems and poor operating practices. Nevertheless, LRN Senior Advisor Wayne Brody sees some parallels between where pharma’s ethics and compliance programs have been from the mid 2000’s to today, and where aerospace and defense’s programs were in the late 1970s and 1980s, years marked by corrupt contracts variable quality and safety, and public criticism.
Aligning Business and Performance Metrics
Some pharma companies may be focusing too closely on cost reduction and management, Brody says. He recalls one company whose management team was so desperate to make their numbers that they used their quarterly bonuses to make purchases to allow them to make their quota. “In that kind of situation, you know there’s a problem,” he says.
GSK management took decisive action after rumors of bribery and corruption surfaced, by severing the connection between salesperson compensation and market share, to reinforce the link between on-label marketing and pay. This not only enforced ethical behavior, but was a very practical step, since the company’s sales in China had decreased by 65% after bribery charges came to light.
The most effective ethics and compliance programs are not isolated, Brody says, but support the company’s strategic business goals. Performance must be judged based on values, which need to be driven by business goals, rather than policy and procedures.
Top management support makes a big difference in program effectiveness. “It can’t be theater,” Brody says. “Senior managers must lead by example and take quick, decisive action when issues arise,” says Joseph Colleluori, senior vice president of corporate development at Lonza Group Ltd. (Basel, Switzerland).
“Short-term setbacks, resolving quality issues, and maximizing shareholder return can be managed without conflicting ethical behavior if the executive leadership mandates a culture of standards, suggests Wayne Heminway, Business Development executive at Cook Pharmica. He suggests that they do this, not only via training programs, but by taking a non-punitive approach to individuals who challenge the status quo, and personal practice of “doing what is best for the patient.”
Compliance specialists need access to, and support from, the top level, if programs are to be effective, and key business representatives need to be present on the corporate compliance committee, according to PwC’s research. Lonza’s Colleluori, who is responsible for risk management, says he always includes corporate ethics and compliance as key review areas to discuss with the company’s executive committee and board.
Companies in any industry, he says, can be trapped into thinking that they need to do something unethical (not only bribing physicians, but giving insider information, or failing to meet quality regulations) in order to compete. “The foundation of training, checking, and review is just that—a foundation,” he says.
Ethics and compliance go far beyond compliance, and other observers see drug pricing and availability as a key ethical issue looming for pharma. 75% of top-quintile performers in LRN’s survey reported looking at cost reduction as a top goal, where only 8% of pharma companies were focusing on it.
“Everyone seems to think it’s OK for branded pharma companies to make massive profits selling to patients over a 10-15 year period, and then leave the market immediately when the patent expired,” says consultant Hedley Rees. “Other industries, such as aerospace or automotive, show far more concern for continuity and support of long term customer needs than pharma,” he says.
As one pharma cGMP qui tam claimant (who lost his case) asked: Is pharma about making money or saving lives? At times, lines between the two are blurred, and pharma companies must often make decisions within them: Should we allow an investigational treatment to treat people affected by a lethal virus for which there is no cure? There are no easy answers.
“I really don’t think that you can “teach” ethics, any more than you can teach leadership, innovation, or all those other things that consultants get a lot of money for,” says Derek Lowe. Perhaps, as Hussain points out, the best litmus test for any ethical or compliance question is asking: “Am I acting consciously in the interest of the patient, especially when nobody is watching?” What do you think? Please write in and share your thoughts.
References
Recent research by Price Waterhouse Cooper (PwC) suggests that effective ethics and compliance programs cannot be artificial or bolted on, or assigned as “add-ons” to legal or other departments1. Instead, they must grow out of a company’s business goals and become ingrained in its culture.
The best corporate ethics and compliance programs are linked with a good understanding of risk, and of quality. In fact the four pre-requisites for a strong ethics and compliance program and culture are no different from what determines a culture of quality, according to consultant Ajaz Hussain, who gave a talk on building a quality culture at a Patheon seminar in New Jersey over the summer.Hussain sees the keys as leadership emphasis, message credibility, peer involvement and employee empowerment. “All should be focused on reducing fear and creating a open culture of error management,”he says.
Pharma’s training in each of these areas may not always be up to the challenge. Some past cGMP False Claims Act whistleblower cases, for example, suggest that some companies have had employees “sign off” on cGMP training, or on standard operating procedures that they may not have fully understood, or even viewed as an integral part of their jobs.
Other plant inspection notes in FDA Warning Letters last year suggest situations where employees operate in an atmosphere of fear, and may resort to “cooking the books” and backdating or falsifying records to maintain operating levels.
Then there is fear of the regulator. Eliminating that fear may be the key to improving pharma compliance, says NIR spectroscopist and consultant Emil Ciurczak. “When the view of FDA changes from that of the enemy to, at least, a benign supervisor, the mindset of ‘Don’t let FDA see anything’ will change to ‘Let’s see what FDA thinks about this problem.’ Then, we’ll see a surge in compliance and ethical behavior, “ he says.
When pharma ethics and compliance training programs fall short, employees can take a cynical view, as expressed by medicinal chemist and blogger Derek Lowe. “I can’t help thinking that [these training programs] are mostly there so that if something bad does happen, the company can say ‘Well, we told them, over and over, not to do these things. Here’s the training program. Here are all the presentations this person sat through, and here’s their signature saying that they understood what we told them. Don’t go after us. Go after them.’ “
Last year, as rumors surfaced at GSK and Sanofi, pharma was riveted on bribery and corruption. But these transgressions are fairly basic. As PwC noted earlier this year, companies need to go beyond these traditional problems and expand their ethics and compliance programs to focus on risks, such as those related to growth in developing nations, as well as those related to an increasingly complex regulatory environment.
In July, LRN Corp. (New York, NY), a global culture and ethics advisory firm, published results of a benchmarking surveycomparing the effectiveness of corporate ethics and compliance programs across all industries2, including pharma (defined here as pharmaceuticals, biopharmaceuticals and medical devices).
Where LRN found aerospace and defense to have the most effective ethics and compliance programs (placing it in the top quintile), pharma’s programs were below the mean (in the bottom quintile). Like other industries in the bottom quintile, Pharma was still focusing on the risk of bribery and corruption, where aerospace was looking at cost control, government contracting and the False Claims Act. Pharma has had some False Claim Act cases recently, where aerospace has not.
This may reflect the fact that formal ethics and compliance programs may have been around longer in aerospace than they have in pharma, and were mandated by past problems and poor operating practices. Nevertheless, LRN Senior Advisor Wayne Brody sees some parallels between where pharma’s ethics and compliance programs have been from the mid 2000’s to today, and where aerospace and defense’s programs were in the late 1970s and 1980s, years marked by corrupt contracts variable quality and safety, and public criticism.
Aligning Business and Performance Metrics
Some pharma companies may be focusing too closely on cost reduction and management, Brody says. He recalls one company whose management team was so desperate to make their numbers that they used their quarterly bonuses to make purchases to allow them to make their quota. “In that kind of situation, you know there’s a problem,” he says.
GSK management took decisive action after rumors of bribery and corruption surfaced, by severing the connection between salesperson compensation and market share, to reinforce the link between on-label marketing and pay. This not only enforced ethical behavior, but was a very practical step, since the company’s sales in China had decreased by 65% after bribery charges came to light.
The most effective ethics and compliance programs are not isolated, Brody says, but support the company’s strategic business goals. Performance must be judged based on values, which need to be driven by business goals, rather than policy and procedures.
Top management support makes a big difference in program effectiveness. “It can’t be theater,” Brody says. “Senior managers must lead by example and take quick, decisive action when issues arise,” says Joseph Colleluori, senior vice president of corporate development at Lonza Group Ltd. (Basel, Switzerland).
“Short-term setbacks, resolving quality issues, and maximizing shareholder return can be managed without conflicting ethical behavior if the executive leadership mandates a culture of standards, suggests Wayne Heminway, Business Development executive at Cook Pharmica. He suggests that they do this, not only via training programs, but by taking a non-punitive approach to individuals who challenge the status quo, and personal practice of “doing what is best for the patient.”
Compliance specialists need access to, and support from, the top level, if programs are to be effective, and key business representatives need to be present on the corporate compliance committee, according to PwC’s research. Lonza’s Colleluori, who is responsible for risk management, says he always includes corporate ethics and compliance as key review areas to discuss with the company’s executive committee and board.
Companies in any industry, he says, can be trapped into thinking that they need to do something unethical (not only bribing physicians, but giving insider information, or failing to meet quality regulations) in order to compete. “The foundation of training, checking, and review is just that—a foundation,” he says.
Ethics and compliance go far beyond compliance, and other observers see drug pricing and availability as a key ethical issue looming for pharma. 75% of top-quintile performers in LRN’s survey reported looking at cost reduction as a top goal, where only 8% of pharma companies were focusing on it.
“Everyone seems to think it’s OK for branded pharma companies to make massive profits selling to patients over a 10-15 year period, and then leave the market immediately when the patent expired,” says consultant Hedley Rees. “Other industries, such as aerospace or automotive, show far more concern for continuity and support of long term customer needs than pharma,” he says.
As one pharma cGMP qui tam claimant (who lost his case) asked: Is pharma about making money or saving lives? At times, lines between the two are blurred, and pharma companies must often make decisions within them: Should we allow an investigational treatment to treat people affected by a lethal virus for which there is no cure? There are no easy answers.
“I really don’t think that you can “teach” ethics, any more than you can teach leadership, innovation, or all those other things that consultants get a lot of money for,” says Derek Lowe. Perhaps, as Hussain points out, the best litmus test for any ethical or compliance question is asking: “Am I acting consciously in the interest of the patient, especially when nobody is watching?” What do you think? Please write in and share your thoughts.
References
- The State of Compliance 2014, PWC Survey
- The 2014 Ethics and Compliance Program Effectiveness Report, LRN