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?

Time to Give Pharma a Break?

The pharmaceutical industry has been under attack again this week. It’s not unusual for people to complain about the price of medicines and the fat profits of pharma, yet even when the industry tries to reduce the payment burden, or provide educational assistance, it is criticized.

First, there was a series of lawsuits filed by several union health plans against eight large drugmakers. They charge that, rather than save consumers money, prescription drug coupons illegally subsidize co-pays for brand-name meds and can actually increase health insurance premiums.

Then the US Department of Veteran Affairs issued a tough ruling on how sales reps can promote drugs to VA medical facilities in the future. One of the new restrictions concerns educational programs. Starting next month, reps will have to submit educational materials for VA review 60 days in advance of any scheduled meeting.  Additionally, materials will be approved only if industry sponsorship is adequately disclosed; if industry-sponsored data is adequately compared with non industry-sponsored data and if materials do not contain a company name or logo.

Both of these developments are worrying.  The pharmaceutical industry is already the most regulated business in the world. Further restrictions will result in fewer incentives to bring new drugs to market and will further stifle innovation.

Not convinced that it’s time to give pharma a break?  Then consider this:

During the Super Bowl, a representative of Eli Lilly posted the on the company’s corporate blog that the average cost of bringing a new drug to market is $1.3 billion. A price that would buy 371 Super Bowl ads, 16 million official NFL footballs, two pro football stadiums, pay almost all NFL football players, and every seat in every NFL stadium for six weeks in a row. This is, of course, is ludicrous.

Ludicrous and wrong!   In fact, the average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as close to $12 billion.

Company N° of approved drugs R&D Spending Per Drug ($Mil) Total R&D Spending 1997-2011 ($Mil)
AstraZeneca 5 11,790.93 58,955
GlaxoSmithKline 10 8,170.81 81,708
Sanofi 8 7,909.26 63,274
Roche 11 7,803.77 85,841
Pfizer 14 7,727.03 108,178
Johnson & Johnson 15 5,885.65 88,285
Eli Lilly & Co 11 4,577.04 50,347
Abbott Laboratories 8 4,496.21 56,202
Merck & Co Inc 16 4,209.99 67,360
Bristol-Myers Squibb Co. 11 4,152.26 45,675
Sources: InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals via FactSet Research Systems

However, in all fairness to our Lilly rep, the drug industry has been tossing around the $1 billion number for years. It is based largely on an industry sponsored study by Joseph DiMasi of Tufts University performed 12 years ago. It’s always been a nice number for the pharmaceutical industry because it seemed to justify the idea that medicines should be pricey without making it seem that inventing new medicines is so expensive an endeavor as to be ultimately futile.

But as can be seen from the table above, that figure is badly outdated.

The range of money spent is stunning. AstraZeneca has spent $12 billion in research money for every new drug approved, as much as the top-selling medicine ever generated in annual sales. Bristol-Meyers Squibb spent just $3.7 billion. At $12 billion per drug, inventing medicines is a pretty unsustainable business. At $3.7 billion, you might just be able to make money –assuming it can keep generating revenue for at least ten years.

So, why is the cost of drug development so high?  Well, a single clinical study can cost $100 million, at the high end. But the main expense, and the main reason for the differences noted above, is failure of potential new drugs during their development.

Has this blog helped to change your views on the industry? As always, SRxA’s Word on Health would love to hear from you.

Pharma Philanthropy

All too often the pharmaceutical industry is portrayed as evil and greedy. In an attempt to correct this misconception or at least redress the balance a little, SRxA’s Word on Health is pleased to bring you news of its more compassionate side.

According to figures just released by the Committee Encouraging Corporate Philanthropy poll, drug companies gave away more than $13 billion in cash and products last year.

More than half of the $2 billion increase in corporate philanthropy last year came from pharmaceutical companies donating medicine through their Patient Assistance Programs and investing in other initiatives.

While 40% of the 110 companies – polled annually for the past four years – boosted their giving last year by more than 10%, another 17% decreased their giving compared to 2009.

One of the reasons we have seen for increased giving across the board has been increased funding to serve basic needs in communities where companies are working, and pharmaceutical companies, in particular, are in a really important position to do so,” said Alison Rose, the committee’s manager of standards and measurement.

Companies in the consumer staples, financial, industrials and information technology sectors also contributed to the increase in 2010 corporate philanthropy.

So where is all this pharma money going?  According to the websites of the Top 5 global pharmaceutical companies examples of corporate giving included:

  • Johnson & Johnson contributed $588.1 million in cash and products towards 650 philanthropic programs in more than 50 countries
  • Pfizer contributed to numerous charitable projects worldwide including > $47 million for cancer and tobacco control and $7.5 million to HIV / AIDS prevention
  • Roche notes that as a result of some of their 2010 initiatives 47,000 patients received free medicines, 1,100,000 infants were tested for HIV, 11,000,000 doses of flu vaccine were donated and 2,000 orphaned children  were given primary healthcare and other services and assistance through support to the UNICEF & ECPP
  • GSK among their many programs around the world, donated more than 1.6 billion tablets of a drug used to combat intestinal worms.  In the US, GSK supported numerous cancer charities and  provided health education in non-traditional venues for African Americans, Latinos and other ethnic minority communities and set up programs across six states to help high-risk and homeless children receive the specialist medical care they need.
  • Novartis supports many programs both in the US and internationally. In the US alone, their patient assistance programs provided products worth $232 million to more than 100,000 patients in need. Additionally, they have provided free treatment for leprosy patients worldwide, leading to the cure of about 5 million patients since 2000 and has delivered more than 320 million treatments of its antimalarial drug without profit to several malaria-endemic countries

These are but a few examples of the type of corporate responsibility being shown by the pharmaceutical companies day-after-day.  Ladies and gentleman of the Industry we applaud you.