As the industry continues to dig into the Department of Justice (DOJ)/Securities and Exchange Commission (SEC) FCPA guidance, A Resource Guide to the U.S. Foreign Corrupt Practices Act, released this past November, Pharmaceutical, Biotech and Medical Device are met with the confirmation that they operate in a high-risk environment. Unfortunately, this means that professionals in compliance, internal audit and legal functions are left to comb through the guidance in detail and reassess their anti-bribery and anti-corruption (ABAC) practices.
At the same time, disruptive market forces continue to drive pharmaceutical, biotech and medical companies to seek new market opportunities for global and product expansion. As the business continues to expand, new partnerships are being forged in all areas of the business, from R&D to commercial and beyond. With new deals continually arising, compliance leaders are tasked with the complex challenge of identifying, mitigating and managing ABAC risks of all third parties. At CBI’s ABAC 2013 – Global Third Party Diligence, Audit and Oversight conference on June 5-6, 2013 in Washington, DC, industry leaders convene to address these challenges and share strategies for ensuring proper third party oversight before, during and after the terms of each partnership agreement.
Upfront Third Party Due Diligence and Risk Assessment
In order to stay compliant with FCPA, companies are required to have risk-based due diligence policies in place. As these must cover all markets, business sectors and third parties, immense pressure is felt during the initial evaluation and contracting of potential partners. According to the DOJ/SEC FCPA Reference Guide, companies must be diligent in their assessment of all potential risk areas including “the country and industry sector, the business opportunity, potential business partners, level of involvement with governments, amount of government regulation and oversight, and exposure to customs and immigration in conducting business affairs." With so many factors to review and at an extremely detailed level, the task of ensuring proper upfront examination of potential third parties is extremely challenging. At the June meeting, Shionogi’s Associate Director of Compliance, Heather McCollum will review tactical approaches in her presentation on "Upfront Third Party Compliance and Risk Assessment.”
Post-Deal Integration for Harmonizing ABAC Programs
Once the upfront risk assessment has been conducted and the contract is signed putting a deal into place, the challenge then becomes to integrate the ABAC policies and practices of the two organizations. This is particularly taxing when working in markets and with companies whose ABAC programs are not as developed. Companies must not only assess basic compliance programs, but also take a deep dive into the accounting practices, record-keeping and internal controls to ensure appropriate levels of oversight and harmonization with the practices already in place. Taking a closer look at these challenges in the context of M&A’s Mark DeWyngaert (Huron Life Sciences), in his session he will offer methods companies can implement to better harmonize ABAC programs following an acquisition and ultimately minimize potential liabilities.
Auditing and Monitoring of Third Party Intermediaries
Once the deal is signed and the ABAC programs are unified between the partnering companies, the job is still not done for companies wanting to ensure proper ABAC compliance. Expected to continuously review its compliance controls by the SEC and DOJ, companies must constantly monitor third parties to ensure continued compliance to company ABAC processes and global regulations. With a variety of possible approaches, the June meeting will bring together experts from across the industry, with leading perspectives from Biogen Idec, BioMarin, Forest Laboratories and Hospira as they dissect various mechanisms and strategies for effectively auditing and monitoring of third party intermediaries.
The First Step for Success – Fostering a Culture for Anti-Bribery and Anti-Corruption
As made obvious by recent SEC and DOJ enforcement actions, companies are liable for any bribery and corruption on the part of their subsidiaries, distributors, agents and all other intermediaries. In order to avoid the hefty price tags of FCPA litigation that a number of Life Sciences companies have already endured, ABAC must become a part of the organizations culture, a commitment and tone from the top approach felt from senior leaders down. At The Medicines Company, their Quest Program aims to assimilate ethics and compliance thinking throughout the organization through a “work from the top” approach.
Be a part of the conversation at ABAC 2013 and learn strategies for effective third party diligence, audit and oversight within your organization!