MERC & CO has developed a library of anti-bribery and anti-corruption controls, templates and tools which organisations in the Pharmaceutical and Medical Device industries can tailor and provide to their highest risk third parties. For more information please contact Ross Olding (ross@mercandco.com). 

 

As Ethics & Compliance professionals, we are well aware that the majority of corruption cases involve a third party - in 2019, 80% of FCPA enforcement actions included reference to the use of a third party intermediary being involved in the bribery scheme.

 

This is an acute problem in the Pharmaceutical and Medical Device industries which arguably faces some of the most extreme risk exposures of any sector: third party seller / distributor / agent networks, often acting as an extension of your sales team and brand, usually operating in foreign markets and typically engaging Public Officials on a daily basis.

 

It is no surprise then that most Pharmaceutical and Medical Device companies have invested heavily in their third party monitoring and audit programmes in the last 5-10 years, performing periodic site visits and detailed testing on an ongoing, rotational basis.

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Take a look at our blog on the lessons we have learned in setting up and running such programmes here. 

 

But, is this really the best use of your resources? Having performed many of these audits ourselves, we frequently find:

 

• The third party is relatively small with a modest appreciation for compliance risk and controls;

• There is a lack of an agreed benchmark with which to conduct the audit, beyond broad statements of the need to comply with local / global laws and regulations, and your organisation’s ethical policy / code of conduct; and

• Recommended remediations following the audit are unrealistic given the immaturity of the third party – the ‘agreed’ actions therefore do not get implemented and the level of compliance risk remains unpalatable (only it is now also ‘discoverable’).

 

So, is there a better way, which is mutually beneficial for your company, the third party and regulators?

 

Increasingly, we see third parties requesting more proactive support from their partners, who are now more commonly responding by diverting spend originally allocated to performing audits to instead offering more advisory-type assistance.

 

In support of this change in focus, our Ethics and Compliance specialists have developed a comprehensive library of simplified compliance guidance and internal control documentation and templates, designed specifically for third party sellers / distributors / agents in the Pharmaceutical and Medical Device industries. These have been purposefully built so as to be practical for smaller companies and easy to implement, yet retaining a robustness which helps address the key bribery and corruption risks inherent in their daily business activities.

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Our third party anti-bribery and corruption (ABC) compliance library and tools includes:

 

1. An overarching Code of Conduct (CoC), with specific examples of what to do and what not to do based on common situations encountered by third party sellers acting on your behalf in the Pharmaceutical and Medical Device industries.

2. A Health Care Professional (HCP) ethical interactions policy, complementing the high-level principles set out in the CoC, but including more specific red-lines and minimum expected compliance requirements.

3. A standardised ABC Risk and Control Matrix (RACM), with granular descriptions of the key ABC controls which must be implemented. RACMs can also be used to support periodic attestation by third parties where local management certify that the key controls included in the RACM have been designed and are operating effectively, acting as a key accountability and assurance mechanism.

4. Templates to facilitate key control execution and satisfy audit trail requirements including, for example:

   • High risk HCP activity approval forms

   • HCP contractual agreement templates (e.g. for engagement for services)

   • HCP event attendance evidence forms

   • HCP expenses reimbursement request forms

   • Sample / free-of-charge product logs

5. Training materials, introducing the basics of anti-bribery and corruption, with real-world examples and scenarios taken from the industry, as well as guidance on how to execute the key controls and use the templates and other documents noted above.

 

We have also developed detailed audit test scripts which reflect the requirements in the above policies and key controls. These scripts can be executed by either your in-house third party monitoring function or local management in a self-assessment capacity. MERC & CO can also assist as a co-source or full out-sourced third party assurance partner.

 

By making available the above guidance and templates to third parties for implementation, client organisations and their third party networks can realise a range of significant benefits, including:

 

• Strengthening of third party compliance and control capabilities, supporting their own development and performance;

• Significant improvement in the focus and efficiency of subsequent third party monitoring / audits as there is a standardised control framework to test, and evidence is retained in a consistent format;

• A greater ability to spot compliance ‘red-flags’ and non-compliant behaviour through improved transparency of third party activities; and

• A clearer demonstration to regulators that the organisation has taken reasonable, practical steps to ensure the ABC framework has actually been implemented across their portfolio of third parties, rather than just being designed well.

 

If you would like to explore MERC & CO’s ABC compliance solutions for third party sellers, distributors and agents in the Pharmaceutical and Medical Device industries in more detail, including a demonstration of our ABC compliance library, please email ross@mercandco.com.

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