Novartis: “Zero Tolerance” Bribery Policy

In the wake of a spate of fines and sanctions against drug-makers and the embarrassing headlines that follow, Novartis has issued a stern and highly public message to its employees. The message, although carefully worded, is clear: “Bribery will not be tolerated here”

The move comes just three weeks after Pfizer was charged with violating the Foreign Corrupt Practices Act. Apparently Pfizer employees and agents in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales and increased prescriptions for its medicines. Worse still, they tried to conceal the bribes by improperly recording payments in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.

Pfizer is by no means alone. Earlier this year, Teva Pharmaceuticals and Bristol-Myers Squibb received subpoenas in relation to overseas bribery. And last year, Johnson & Johnson was fined $70 million for bribing European doctors and paying kickbacks to Iraq to illegally obtain business.

Clearly David Epstein, who heads Novartis Pharmaceuticals has been taking note. In a recent blog post he states that the company has “zero tolerance for bribery – it’s illegal, unethical and goes against the integrity and transparency we stand for.”

To ensure every Novartis employee fully understands what bribery is and how to avoid it, they’ve developed an updated version of their Global Anti-Bribery Policy.

This does not introduce new standards, but is meant to clarify, with simple language, the principles already set forth in our Code of Conduct, focusing on day-to-day situations where bribery issues may arise. This includes guidance on ensuring third parties we engage for certain common business activities operate under similar standards and principles as we do,” continues Epstein.

And just so everyone is completely clear, the policy spells it out: “Employees must not bribe and they must not use intermediaries, such as agents, consultants, advisers, distributors or any other business partners to commit acts of bribery. Novartis does not distinguish between public officials and private persons so far as bribery is concerned: bribery is not tolerated, regardless of the status of the recipient

While we applaud Novartis’s integrity, other commentators have been quick to point out that the Novartis missive amounts to little more than a smoke and mirrors.

Pharmalot’s Ed Silverman called it a smart legal move. He observes that should any trouble arise later, Novartis can point to its efforts to spell out specifics to employees.

What do you think?

Pharma Pulls the Plug on Physician Travel

In what we believe is an industry first, AstraZeneca  just announced that it will no longer be paying for doctors to attend international medical conferences. Industry observers are already speculating that this move could put pressure on competitor companies to follow suit.

AstraZeneca’s Chief Executive Officer, David Brennan, announced the change of policy in low-key fashion at a recent industry conference earlier this month.

We have decided that we will no longer pay for doctors to attend international scientific and medical congresses but will instead focus our educational efforts on local educational opportunities for healthcare professionals,” he said.

In recent years, concern has grown about financial ties between doctors and the pharmaceutical industry and ever tighter restrictions have been imposed.  Gone are the lavish entertainment and free drug lunches of the past, gone too are the pens, mugs and clocks.

Nevertheless, AstraZeneca’s decision to stop paying for doctors to fly to international medical and scientific meetings has taken things to a new level.

It is a dramatic change,” Richard Bergstrom, Director General of the European Federation of Pharmaceutical Industries and Associations, said of the AstraZeneca move. “It is another sign that industry is changing its scientific education practices and I am sure you will see more moves of a similar nature by other companies,” Bergstom continued.

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. “We start from the position that our products stand on their own merits.”

Although the move will save money, the decision was not taken on cost grounds and any savings would have no significant impact on the company’s bottom line.

AstraZeneca’s move comes at a time of unprecedented regulatory pressure on the drug industry. In the past five years companies have paid more than $15 billion in penalties to the U.S. government alone for alleged violations of laws and regulations. This 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.  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. So, payments to them could trigger questions over corruption.

Just last month, Johnson & Johnson 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 U.S. began scrutinizing the industry under the FCPA more than a year ago.

Last year AstraZeneca agreed to pay $520 million to settle claims over illegal marketing of Seroquel and is currently being investigated by the U.S. Department of Justice and the Securities and Exchange Commission in connection with the FCPA.

While SRxA’s Word on Health applauds this latest move from AstraZeneca, we can’t help wonder what it means for the medical conference industry.  If doctors have to pay for their own travel and attendance at international events will they simply stop going?

Let us know what you think.