This is Part III of a three-part series of the key takeaways from CBI’s 16th annual Pharmaceutical Compliance Congress was April 16th – April 18th.
Takeaway #3 – Given all the legal action in the industry, large pharma companies fear the cost of non-compliance far more than the cost of their compliance and training. Can the smaller companies keep up?
The large pharma companies have a lot of money and resources for compliance and ethics training, but how effective are their compliance and training programs when they are playing whack-a-mole with government regulators worldwide. The compliance programs are getting more sophisticated with the use of artificial intelligence, but the data can be overwhelming and requires detailed analysis. These larger companies are willing and able to spend what it takes to limit their legal liability and reputational harm.
The smaller and medium size pharma companies seemed shell shocked at the conference about the risks they are facing. Their companies appear unlikely to have the money for data mining and compliance software, but it seems doubtful that any government agency will give them a break when an allegation arises. Given the costs to bring new drugs to market and the scarcity of capital, management has hard decisions to make about where to invest scarce cash.
What should pharmaceutical and life science companies do to reduce risk?
Government prosecutors and regulators will not be letting up their scrutiny in this industry, and these companies will require aggressive compliance oversight and training at all levels of the organization. To limit risk, pharma companies must be looking at and analyzing the massive reams of data they are collecting, and assume that their data will be used against them. AI might be a tool gaining more use in the industry, but nothing beats human action based on reasoned analysis.
We don’t know how many of the actions giving rise to the settlements mentioned above could have been avoided with more aggressive ethics and code of conduct training. We do know that the SEC and DOJ consider ethics in the corporate culture when negotiating settlements. Companies are well-served if they can prove that bad actors in their organization are outliers and ignored company training and guidelines. Massive settlements are often the result of massive integrity failures. Effective ethics training has a high ROI if just one ethics breach is avoided. How will you prepare for a sudden revelation of a scandal in your organization?