Evidence of widespread conflicts of interest among NHS commissioners has prompted calls from the BMA and the Labour Party for tighter regulation.

A BMJ study found that more than a third of GPs on the new CCG boards had a financial interest in private providers of healthcare, either as shareholders or as directors.

The NHS Commissioning Board stated that transparency over potential conflicts of interest would enable CCGs to self-regulate effectively.

Shadow Health Secretary Andy Burnham commented: “There is a real risk that the doctor-patient relationship will be corroded and public trust in the NHS lost.

“At the very least, ministers must bring in new rules to ensure that no GP takes part in any decision in which they could be perceived to have a financial interest.”

The BMA expressed concern that the reputation of GPs was at risk. Laurence Buckman, Chairman of its General Practitioners Committee, said: “In our view, GPs who are directors of, or who have significant financial interests in, companies who might be awarded contracts to provide services should seriously consider their membership of CCG governing bodies. Alternatively, they should consider their position within provider companies.

“We support the principle of greater clinician involvement in commissioning, but it must not come at the expense of the trust of patients.”

According to an NHS Commissioning Board spokesman, “it is vital that everyone working for a CCG or serving on its governing body declares any interests they have. This allows the CCG to put arrangements in place to ensure that those individuals are not involved in any decisions that would give rise to a conflict.”

The Government should impose a public spending freeze, including the NHS, in order to fund major tax cuts, according to Tory backbencher Dr Liam Fox.

Speaking to the Institute of Economic Affairs, Fox called for an end to protection of the NHS budget and a “systematic dismantling of universal benefits”.

While PM David Cameron immediately dismissed the possibility of cuts in NHS funding (apart from the existing ‘Nicholson challenge’), the speech has been taken as a sign that the public are being prepared for changes in health policy.

Fox, who resigned his cabinet role in 2010 over corruption allegations, said he may stand for the Conservative Party leadership after the 2015 General Election.

His speech proposed a public spending freeze of three to five years, overriding the current policy of ring-fencing health, education and overseas aid budgets.

He also called for universal benefits, such as winter fuel payments and free bus passes for pensioners, to be scrapped, and for housing benefit to be available to people aged under 25 only in exceptional cases.

The capital freed by these cuts, he argued, should be used to fund a temporary abandonment of capital gains tax and to end taxation on savings.

Admitting that the recession will last many more years, Fox stated: “We must ask whether ring-fencing departmental budgets makes sense in a period of prolonged austerity.”

Cameron insisted that he “would not listen” to advice that meant abandoning the promised annual [0.1%] increase in the NHS budget.

However, under his leadership, over £5bn per year cut from NHS spending via the ‘Nicholson challenge’ has been passed on to the Treasury instead of being reinvested in services.

It is possible, therefore, that Fox’s proposals and Cameron’s policies merely occupy different points along a scale of changing NHS policy.

Major pharma companies are paying multi-million dollar fines for alleged bribery in emerging markets, but these markets remain highly profitable.

Recent payments by Pfizer ($60m) and Johnson & Johnson ($70m) to settle charges under the Foreign Corrupt Practices Act (FCPA) represent only a small fraction of their revenue from the countries where the alleged offences took place.

However, steep increases in FCPA fines have been threatened if evidence suggests that pharma corporations regard them as a manageable cost.

Comparable European legislation, such as the Bribery Act in the UK, is tightening the net around overseas sales operations that pander to a culture of ‘goodwill’ gifts and other inducements.

Pfizer’s income from emerging markets is predicted to reach $10bn, while J&J has reported $6.5bn sales in Brazil, Russia, India and China.

Global Data analyst Michael Leibfried said: “The $60 million fine for Pfizer to a lay person sounds like quite a bit of money, but in perspective it took less than two days of Lipitor sales during its peak. It’s really just chump change for them.”

However, according to Kara Brockmeyer, chief of FCPA investigations within the Securities and Exchange Commission, no FCPA prosecution has so far needed to be repeated.

“I would hate to think the companies view enforcement actions as the cost of doing business,” she commented. “If we find that out, it will certainly increase the size of the penalty.”

In relation to the Pfizer settlement, she noted that a number of the company’s overseas subsidiaries “had bribery entwined in their sales culture”. Pfizer has since introduced an anti-corruption audit programme.

Novo Nordisk and Teva have also undergone FCPA investigations, with Latin American markets being a particular focus.

India’s health ministry has claimed that ‘systemic improvements’ in the country’s drug approval procedures are needed, following a report on alleged corruption.

The parliamentary report alleges irregularities in the approval of drugs from major pharmaceutical companies, including major gaps in clinical evidence.

Companies including Eli Lilly and Bayer have challenged the accuracy of the report, which focuses chiefly on the failings of India’s drug regulator.

The Central Drugs Standard Control Organization (CDSCO) lacked adequate staffing or resources, the report found, and there was evidence of a “collusive nexus” between its officials, drug companies and medical experts.

An example cited was CDSCO’s acceptance of three expert opinions on Bayer’s anti-thrombosis drug rivaroxaban that were identical copies. Bayer responded that it had not played “any role in selecting these experts or evaluating their opinions”.

The report also claimed that CDSCO routinely approved drugs that were not approved in the EU or the US due to lack of clinical evidence.

Critically, it said that of 39 CDSCO-approved drugs it surveyed, 11 had not been tested on patients in different ethnic groups – a key requirement of approval in India.

An example was Lilly’s lung cancer drug pemetrexed – but the company insisted the drug had been tested on a large multi-ethnic patient base.

Irregularities claimed in the approval of drugs from Lundbeck, GSK and Novartis were similarly denied by the companies concerned.

The controversy reflects the growing importance of India and other ‘emerging markets’ for the global pharma industry.

The new Bribery Act makes UK pharma companies legally responsible for any kickbacks their reps or distributors may offer to health officials anywhere in the world. Maxine Vaccine asks whether UK politicians who point the finger at traders can really be serious.

Compliance is the new CRM. In an era of globalised pharmaceutical trading, the UK Bribery Act and the US Foreign Corrupt Practices Act have sent a shock wave of pure terror through the industry. Basically, what the new legislation means is that a company is responsible what anyone acting on its behalf, even under contract, may do to advance its business. A local sales team or freelance distributor on the other side of the world might treat a village doctor to a bottle of whisky in return for a commission – and a biotech company in Cradley Heath might find itself fined out of existence. It’s scary.

According to a new Cegedim report 94% of life science companies now enforce corporate standards for spending on HCPs, while over half have a project team to address compliance issues. However, Cegedim warns that good intentions are not enough: without robust surveillance and reporting systems, those unmarked envelopes may slip through the cracks.

Closer to home, the ABPI Code of Conduct imposes very strict limits on the industry’s freebies and favours to its customers. Marcus Brigstocke raised some nervous laughter at last week’s Pf Awards by suggesting that pharma reps might moonlight as biro salesmen. The rules on hospitality threaten drug reps with wholesale loss of mates. Bourbons are completely banned. Only digestives are permitted, and they must be from Costcutters. In fact, you can offer branded biscuits only when selling generic drugs.

Compliance means more than just obeying those rules you know about in those transactions you personally carry out. You have to find out what all the relevant rules are and then apply them to every commercial interaction that touches your company. Being compliant takes proactive commitment, intelligence and good teamwork. Though when I put ‘Totally compliant’ on my Facebook profile I got some interesting messages.

So it was with some amusement that I read a recent newspaper story: the Conservative Party’s co-treasurer Peter Cruddas told undercover journalists posing as financiers that a minimum donation of £250,000 to Party coffers would gain them direct access to the PM’s policy unit. Make with the cash, he told them, and “things will open up for you”. In case they were unsure what that might be worth, he clarified the point: “It will be awesome for your business.”

Pardon my naive attitude, but WTF? The only part of ‘Foreign Corrupt Practices’ not implied by such promises is the word ‘Foreign’. Perhaps, before they legislate to rein in pharma industry reps, some of these politicians should look in the mirror.

It’s worth noting here that the private healthcare corporations currently in line for a share of the NHS franchise now the new Health Bill has become law are major donors to the Conservative Party, just as they were to Andrew Lansley’s campaign fund when he was Shadow Health Secretary. In addition, the BMJ reports that half of the doctors on the new CCG boards have financial interests in private healthcare companies that will be bidding to provide NHS services.

And meanwhile, we get stamped on for giving away a few biros. Are they having a laugh?

Maxine’s views are not necessarily those of Pharmaceutical Field.

Pfizer has agreed to pay over $60m to settle allegations that its sales executives paid bribes in order to secure the uptake of its products outside the US.

The pharma giant will make the payment by the end of 2011 in order to conclude federal investigations into its possible breaches of the US Foreign Corrupt Practices Act (FCPA).

The US Department of Justice (DoJ) and Securities & Exchange Commission (SEC) have recently investigated a number of pharma companies over alleged payment of bribes to foreign health officials to gain benefits such as the inclusion of drugs on formularies.

In April, Johnson & Johnson agreed to pay over $70m to settle charges that its operatives paid bribes to health officials in Greece and Iraq in return for medical device and drug orders.

The co-operation of Pfizer and J&J with US federal investigations has been credited with kick-starting an industry-wide crackdown on FCPA violations in countries where ‘informal payments’ may be common.

Following its acquisition of Pharmacia in 2003, Pfizer contacted the US authorities regarding evidence of improper payments made by executives of the company in Croatia.

Pfizer acquired Wyeth in 2009. In August this year, Pfizer said it had provided information to the DoJ and SEC regarding “potentially improper payments” made by Wyeth and Pfizer in “certain sales activities outside the US”.

The life sciences sector is one of three industries most at risk of prosecution under the new UK Bribery Act, according to a study by business analysts Ernst & Young.

The international nature of the life sciences industry makes it vulnerable to the new legislation, which means companies can be held responsible for the actions of their subsidiaries and distributors anywhere in the world.

The study used the implementation of the Foreign Corrupt Practices Act (FCPA) in the US as a guide to the likely impact of the UK Bribery Act, which will take effect from 1 July 2011. Both pieces of legislation concern the payment of bribes to health officials or healthcare providers for the purpose of gaining or keeping business.

Energy (oil and gas) companies are the sector most at risk of failing to comply with the UK Bribery Act, the study found. Life science companies and consumer product manufacturers took second and third place, followed by technology and real estate.

In the USA, Ernst & Young said, the life sciences industry accounted for 13% of all FCPA prosecutions. Criminal fines were the most likely outcome of an FCPA investigation for life science companies, followed by compliance monitors.

In their report, Ernst & Young advised all companies to review their bribery, corruption and fraud risks in the light of the guidance document published by the UK Ministry of Justice in March. Under certain conditions, any company may be affected if it “carries on a business or part of a business” in the UK.

As pharma aims for complete transparency to comply with new regulations, Guillaume Roussel explains how the right global approach to aggregating spend and customer data can give companies a significant advantage.

Pharmaceutical companies are keen to improve the industry’s image; but many are struggling with the implications, not to mention costs, associated with the emerging global compliance burden. The industry is keen to sign up to international demands to prevent corruption and bribery across the healthcare market. But with diverse regulatory requirements across every international market, achieving compliance is a complex challenge.

In the UK, the new Anti Bribery Act comes into force in April 2011 and adds even more complexity to the existing Foreign Corrupt Practices Act (FCPA), the OECD Convention or the Sunshine Act due to come into force in the US in 2013. Not only does this UK regulation apply to both public and private sector healthcare providers, but it has far tougher sanctions than other legislation: an individual convicted for failing to implement adequate measures now faces up to 10-years in prison and unlimited fines.

This is a clear message from the UK Government that bribery and corruption activity will not be tolerated. But what does this mean in practice for pharmaceutical companies?

Changing Practice

Many organisations have already made significant changes in practice. Key Account Managers for example, are unlikely to ‘wine and dine’ clinicians or health officials. Nor is the giving of gifts acceptable. Indeed, under the new UK regulations items offered to healthcare providers are limited to £6, and must be relevant to the medical practice, rather than offered for the personal benefit of the healthcare provider.

Even the use of samples is significantly reduced, with organisations now complying with the four times two standards – no more than four samples per physician for two-years after the product’s launch – laid down by the European Federation of Pharmaceutical Industries and Associations (EFPIA).

But the new regulatory implications extend far beyond traditional detailing activity and embrace every part of the organisation that has any kind of customer interaction, from engaging with customers in clinical trials, to providing grants to physicians or simply inviting a Key Opinion Leader to a progress meeting.

Essentially, pharmaceutical companies now need to track every interaction and financial transaction, monitor both direct and indirect payments undertaken on behalf of the organisation, and then reconcile the expenses to each physician or official. This process becomes even more complex when considering the multi-national nature of most pharmaceutical company operations: organisations have to put in place global guidelines and consistent standards to monitor closely all interactions with healthcare professionals. They have to be able to reflect the different regulations in each country – such as the €30 gift allowance in Spain or 100 zloty in Poland. And they need to achieve this without incurring an unmanageable, expensive overhead.

Aggregating Spend

The key consideration, however, is how to streamline this process and minimise the financial overhead. At the moment, far too many pharmaceutical companies are reliant upon manual processes for capturing and analysing information. Indeed, according to research conducted on behalf of Cegedim Relationship Management, some 40% of US pharmaceutical companies are still tracking and reporting manually or with spreadsheets, although over half of these expect to move to an automated solution.

But the way in which information is captured is just half the problem. Only 37% of respondents indicate that their company enforces corporate standards for spend data capture which applies to all suppliers and staff. The remaining respondents either do not have standards or have standards which are not used universally. This is simply not a sustainable approach. If organisations are to achieve a consistent, global model for compliance, it’s essential to create a standard data capture model that also supports local rules to ensure every market is managed consistently and effectively. Critically, organisations need to consider not only spend aggregation but also robust and thorough customer data management.

One option is to put in place an aggregated spend solution that builds on existing Key Account Management (KAM) information to automate and streamline compliance monitoring and reporting. It is by leveraging this strong, accurate data source and integrating a wide range of enterprise applications for Sales Force Automation, ERP, Finance and HR, that organisations can streamline and automate the process of highlighting suspicious transactions.

Using Business Intelligence pharmaceutical companies can not only conduct the required in depth historic analysis but also put in place proactive alerts both for individuals identified as highly influential and also if payments to specific practitioners are about to hit the threshold – Fair Market Value – preventing both intentional and accidental compliance breaches.

Achieving Transparency

There is a further component to compliance activity, namely transparency. In this global operating environment organisations are increasingly looking at opportunities to drive best practice, create global policies with local implementation and improve processes, and key to this is to improve transparency.

This compliance drive is now enabling organisations to collect and share information not only with government and regulators but also internally. Indeed, the wealth of financial information collected to achieve compliance provides valuable insight into cross-organisational spend with specific healthcare providers.

Adding customer data management to the process provides a depth of information that can be analysed to assess value, understand how much is being spent at an individual level and improve resource allocation.

This improved insight also has implications for Key Account Managers. The aggregated spend information can be analysed to provide a KAM with insight into spend at a local level, such as investment in training or continuous medical communication to a physician. With a complete picture of the investment by organisation, a KAM embarking upon negotiation for a new bid or new customer is in a far stronger position to demonstrate the value being provided by the pharmaceutical company. This is a powerful tool that, if used correctly, should have a direct, bottom line impact on business.

What next?

Transforming the image of the pharmaceutical industry will take time. But the commitment being demonstrated today is positive. And whilst organisations are obviously keen to avoid the negative publicity, fines and possible court cases associated with bribery and corruption there is no doubt that organisations are also looking to derive benefits from improved transparency.

With a real opportunity for an organisation to establish a good image to the healthcare market, the industry is increasingly considering transparency as a huge competitive advantage and benefit, rather than simply an expensive and resource intensive overhead. But, while the commitment is not in doubt, organisations are still struggling to actually deliver transparency, both from a technology and business model perspective. This is a multi-disciplinary project that is not just about exploiting technology but also about driving new behaviour change and imposing compliance as a change in ethical behaviour to the customer.

Critically, global compliance and transparency demands an automated and streamlined solution: not only are the costs of a manual or spreadsheet approach too high but without some kind of automation and built in alerts that reflects different country interpretations organisations will be exposed to a high risk of compliance breach.

Now is the time to work with other organisations in the field to develop best practice, to assess how best to leverage existing CRM and information resources and put in place procedures and practices that will mitigate both the risk and cost associated with global compliance.

Guillaume Roussel is Vice President of Compliance Solutions EMEA for Cegedim Relationship Management.