Category Archives for "Compliance"

Apr 18

Ethics Amid the Pandemic

Compliance , Ethics , My Life Before Prison

I know there are huge pressures on every business to survive during this challenging crisis. But now is not the time to let your guard down and expose your company to financial or ethics scandals.

In solving the ethics enigma, I talk about being hijacked by outside pressures as one of those circumstances leading to unethical behavior.   Over the last six weeks, we’ve seen massive layoffs and pay cuts.  People are hurting, so the number one outside pressure for many people is financial.  Is it so hard to see where your employees may cross the proverbial line to make their quotas?  Bribery to get business is always a risk. What about padding product testing results to meet demand? 

As a kid, I remember the public service announcement, “Do you know where your children are?”, with the implication being, do you know what they are doing. 

So I ask you, do you know what your people are doing?  What is the ONE thing you can do RIGHT NOW to reduce risk and prevent a sudden revelation of a financial or ethics scandal in your organization?  This is the time to be talking to your direct reports and making sure their direct reports are talking to them to spot red flags.  This is not the time to sweep suspicious behavior under the rug.  Help your team make the right choices and stay out of prison.

May 02

Top Three Takeaways from the Pharmaceutical Compliance Congress 2019, Part III

Compliance , Ethics

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?

May 01

Top Three Takeaways from the Pharmaceutical Compliance Congress 2019, Part II

Compliance , Ethics

This is Part II of a three-part series of the key takeaways from CBI’s 16th annual Pharmaceutical Compliance Congress was April 16th – April 18th

Takeaway #2 – Expect a lot of uncertainty in how the government investigates and pursues criminal and civil allegations of wrongdoing. 

The U.S Healthcare Fraud and Enforcement Panel featured two current Assistant U.S. Attorneys (AUSAs) and three former AUSAs currently representing pharma clients.  Notably, the current AUSAs were very straight about how they source leads for investigations including whistleblowers, self-reporting, data mining, investigative reporting and public statements from pharma companies. 

The former AUSAs were not shy about pushing back against, what they consider, the lack of consistent definition and enforcement of federal laws pertaining to the pharma industry.  They pointed out that there is very little consistency between the different U.S. Attorney offices about what conduct constitutes a violation of pharma-related statutes.   The current AUSAs said that if their offices believed it was a violation, they would pursue the case regardless of what other offices would do.  This lack of consistent application of the law is a significant risk for the pharma industry, and it is easy to understand the frustration that pharma executives and counsel experience.

The DOJ encourages companies to self-report violations, and the DOJ will seek actions against individuals for personal liability.  However, pharma companies question how much cooperation credit they will receive.  There seems to be no consistent pattern of relief.

Part III will follow tomorrow.

Apr 24

Top Three Takeaways from the Pharmaceutical Compliance Congress 2019, Part I

Compliance , Ethics

CBI’s 16th annual Pharmaceutical Compliance Congress was April 16th – April 18th.  I was honored to be the keynote speaker on the last day of the conference but attended many of the sessions.  As an ethics expert, I live and breathe ethics in Corporate America, so I am always looking at the current trends.  I’ve known that the pharma industry has unique challenges, but never realized the depth of compliance and ethics risk until this month.  The pharma industry continues to get hit on all sides from the alphabet soup of government agencies including the DOJ, SEC, FDA, HHS, FTC and all 50 state AG’s, not to mention regulators in other countries where they operate.

Take-Away #1 – Recent Pharma settlements are probably an indication of risks that are not going away anytime soon.

 According to Potomac River Partners “Year-in-Review” presentation that kicked off the conference, recent US federal civil and criminal settlements include False Claim Act (FCA) violations for DJO Global ($7.6M), Alere ($33.2M), Rotech ($10M), Pfizer ($23.9M), Jazz ($57M pending resolution), Lundbeck ($52.6M pending resolution), Angiodynamics ($12.5M), Actelion ($360M) and AmerisourceBergen ($625M).  Insys settled kickback allegations for $150M.  Clovis Oncology paid $20M to settle SEC allegations.   Olympus Medical paid $85M to settle Federal Drug and Cosmetic Act (FDCA) violations.  An FCPA settlement cost Sanofi $25M.  EV3 and Covidien paid a combined $30.9 million for FDCA and FCA violations.

Some states have already passed, or are considering, bills for drug price transparency, allowance of off-label promotion, and banning manufacturer co-pay assistance for opioids.

California passed a data privacy law, so look for other states to follow suit.  Other nations are already following the EU’s GDPR guidelines on data privacy.  This area will be ripe for future enforcement.

Product liability suits have hit AbbVie’s AndroGel and J&J’s talc powder.  Anti-opioid actions enjoy bipartisan support at the federal and state level.  Expect more litigation and legislative action to crank up this year and next for these issues.

All these actions indicate the pharma industry has on-going problems with off-label selling, kickbacks related to medical provider dinners, speaking fees and grants, market access and technical violations of various federal laws.  The personnel posing the greatest risks are domestic and foreign salespeople and third-parties hired outside the U.S.

Part II will follow tomorrow.

Sep 26

Did You Know That Your Job Applicants and Employees May Be “Consumers” Under FCRA?


Do you hire or fire based on criminal background checks, credit reports or other “consumer” reports? We usually think about the Fair Credit Report Act (FCRA) regarding consumer credit, but did you know that your employees and job applicants can be considered consumers under new regulations for FCRA that went into effect on September 21st?

Ostensibly, the new regulations are meant to require credit reporting agencies to provide free security freezes to protect against identity thieves. However, you must now provide applicants and employees with a Summary of Consumer Rights notice that includes information on the availability of a security freeze if you are using these third-party reports as part of your personnel practices. Don’t forget that you must give a standalone document to the applicant or employee disclosing your intent to obtain the report for employment purposes, and secure the applicant’s or employee’s signed authorization BEFORE requesting the report.

The rules can be complicated so checkout CFPB’s press release and related links here At the very least, start using CFPB’s revised model Summary of Consumer Rights available here.