PharmExec Blog

Compliance Congress: Walking the Line

Pharma industry executives, FDA officials and Department of Justice attorneys speaking last week at CBI’s 11th annual Pharmaceutical Compliance Congress (PCC) offered solutions and threats to companies hoping to avoid enforcement actions.

Once an investigation sets in, two questions often determine what sort of enforcement action will happen as a result, said Paul Fishman, US Attorney for the District of New Jersey:

1) What steps did the company take to prevent the behavior?

2) How did the company behave once it found out those preventative steps had failed?

Since there is “no shortage of qui tam [whistle-blower] referrals” coming in to Justice Department inboxes, according to Carmen Ortiz, US Attorney for the District of Massachusetts, companies are smart to review and renew compliance operations in three key areas: drug promotion, drug quality, and foreign bribery, fraud and corruption. Here are a few of the CBI PCC highlights in those areas:

Drug promotion

If you work in pharma sales and haven’t yet seen FDA’s Bad Ad continuing medical education (CME) program, have a look.

If you’re impatient, click on the Course Menu tab and skip to Module V – “real life scenarios” – then click ‘next,’ and go through each of the five compliance danger areas: a lunch and learn with emergency room clinicians; a drop-in with a neighborhood pharmacist; a quiet moment in the break room with a physician and her medical journal; a classic here-I-am! rep/physician encounter outside of the exam room; and a grand rounds speaker presentation.

Put your knowledge to the test. Hint: Don’t believe the hype about Declesau (dergrafloxacin)! How did you score? David Vance, senior director, compliance counsel at Noven Pharmaceuticals, said the Bad Ad CME better illuminates FDA’s approach to promotion than much of the written guidance the agency turns out.

Something would be amiss if Tom Abrams, director of FDA’s Office of Prescription Drug Promotion’s (OPDP), spoke at an industry conference and didn’t describe the creation of social media guidance as a “high priority.” Abrams highlighted the two most recent guidance documents addressing social media communication, but said FDA “still has work to do.” For example, OPDP is mulling over the implications of space and character limitations online, and best practices for correcting misinformation on third-party websites, he said. PDUFA V requires FDA to deliver guidance on social media by July 9, 2014. Abrams said it’s coming.

Drug quality

Last May, drug quality problems and falsified lab records earned Ranbaxy the largest quality-related generics company settlement ever, at $500 million. Dinesh Thakur, who worked as Ranbaxy’s director and global head of research information and portfolio management between 2003 and 2005, was a key whistleblower in the case and pocketed $48 million as a result, according to The Economic Times.

During his presentation, Thakur said Ranbaxy was the first Indian company prosecuted by the US, and blamed the company’s compliance issues on a “jugaad mentality.” He reminded conference attendees that over 80% of active pharmaceutical ingredient (API), and over 40% of completed prescriptions dispensed in the US, are manufactured overseas. Thakur also noted that quality standards for exporting into the US and Europe are very different than standards for exporting to other countries, which complicates quality controls. He said the Ranbaxy case was a tipping point on drug quality, akin to Vioxx for drug safety.

Indeed, a new Office of Pharmaceutical Quality is in the works at FDA, and Ilisa Bernstein, deputy director at FDA’s Office of Compliance, said the agency is exploring new assessment techniques unique to individual manufacturing plants. “Not new metrics, but new ways to use currently available data” to make assessments, she said. Data integrity is another area regulators are keeping a close eye on, said Bernstein.

Foreign bribery, fraud and corruption

Since 80% of the global middle class is expected to live outside of the US and Europe by 2030, companies have a business mandate to stay abreast of emerging policies and new enforcement actions all over the globe.

Malfeasance overseas, namely GSK’s most recent trouble, prompted Ted Acosta, a partner at Ernst & Young, to call Foreign Corrupt Practices Act (FCPA) activity in China a “game-changer” for Asia-Pacific and beyond.

In 2013, the SEC received 3,238 tips through the Dodd-Frank whistleblower program. Of those tips, 149 were FCPA-related, according to an annual report to Congress. FCPA and anti-bribery charges, along with managing an extended global organization, are the two biggest concerns for companies operating in emerging markets, according to Marc Miller, a partner at KPMG.

In addition to China’s own five-year anti-corruption plan (2013-2017), Miller pointed to other new anti-corruption laws in Brazil and Russia. Notably, Brazil’s Clean Companies Act has the power to assess fines of up to 20% of a company’s entire annual revenue, a penalty that’s completely divorced from offending brand revenues.

Corruption and bribery prosecutions will continue to target individuals whenever possible, insisted several US Attorneys, including Fishman, who cited New Jersey’s FCPA case against PetroTiger, a British Virgin Islands oil and gas company. In that case, two former CEOs pled guilty to paying off public officials in Columbia.

Recently, an anonymous compliance director said prosecutors prefer a big dollar settlement to an executive takedown, since there’s less money in locking up an individual. Asked about the merits of this argument, US Attorney Ortiz firmly disagreed. “If the evidence is there, we will go after individuals…sometimes the statute of limitations runs out before we can prosecute,” she said.

CBI, a Pharmaceutical Executive sibling company, is holding additional meetings on compliance issues in the coming months, including the 10th Annual Regulatory and Compliance Congress for Medical Device and Diagnostics (February 25-26), and Compliance Monitoring Programs (March 19-20).

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