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Transcript of Pharmaceutical Company
prospective employees “Transparency, ongoing learning, and dialogue.”
Internal and external auditing resources
Disciplinary action on
case-by-case basis Training workshops
-Innovative E-learning module
Code of Ethics Why is PhRMA Code of Ethics Important Need to clear standards to improve integrity
Loopholes to cover from local laws that allow legal yet unethical actions
Ensures medicines are marketed to benefit patients and enhance practice of medicine [Promote Transparency]
Help healthcare professionals obtain most accurate information of medications
Why is PhRMA Code of Ethics Important Primary Focus of sales representatives is to educate doctors on the CORRECT uses and TRUE benefits of their medicines A preventative measure pharmacecutical companies should take to ensure sales representatives are not losing focus to trivial matterls like distributing gifts Helps with advancement of medicine by allowing pharmaceutical companies take advantage of certain data, within the limits set by the code, in order to iprove education and research efforts Adherence to PhRMA's Code of Ethics Becoming standard practice for pharmaceutical companies within the US to adopt a code, yet a trend worldwide as well Some states require to abide to the PhRMA code... Preventative measure to protect pharmaceutical companies from potential misconduct that leads to lawsuits Avoid Public Scrutiny
Seen as ethically and socially responsible within the industry Benefits when pharmaceutical companies adhere to PhRMA's Code of Ethics Competitive Advantage
Saves compliant companies money that would have been used toward gifts and expensive exchanges with healthcare professionals
Other Code of Ethics to adhere to... Hospira
Pharmaceutical Company will set up their own code of ethics Major downfalls to PhRMA's Code of Ethics is that it is not specific enough and companies can have different interpretations of the guidelines...
Examples of Kickbacks Lawsuit by former Merck employee, H. Dean Steinke in Pennsylvania
(Considered a whistleblower allegation) Physicians Overcrompensated Disregarded stipulations of the Medicaid Rebate Statute Sold Zocor and Vioxx at paltry prices Merck paid $399 million plus interest in fines Lawsuit in New Orleans focused on PEPCID products Whistleblower Claim by William St. John LaCorte
-Physician from Louisiana Violated FCA by not reporting discounting prices... Stain on Merck's integrity PEPCID pricing scheme Lawsuit settled for $250 million Participated in two forms of kickbacks which focus on health care providers and physicians GSK took advantage of Medicare & Medicaid Late 2005, GSK paid over $150 million in fines due to a Medicare fraud case... GSK set aside $400 million for ongoing federal investigations... In 2008, GSK's official fourth quarter sales had a charge for $400 million which investors were unaware of... 2010- Lauren Stevens, former vice president/lawyer, charge for illegally marketing the depression drug, Wellbutrin as a weight-loss drug... Between 2009 & 2010, GSK disclosed over 10,522 payments totaling an amount of $96,373,150 Physican Payments Sunshine Act Example of an Off-Label Promotion September 2009- Pfizer makes record-breaking history with the largest US settlement in the health care history $2.3 billion fine:
illegal marketing & off-label uses
approximately $503 million in civil payments
$1.3 billion in criminal penalties “While the government said the fine was a record sum, the $2.3 billion fine amounts to less than three weeks of Pfizer’s sales” (Harris) Pfizer coached their sales representatives to encourage physicians to prescribe Bextra over Vioxx in 2002 by stating the following: I. Bextra is the most powerful painkiller ever approved by the FDA
II. Bextra is more efficacious than Vioxx
III. Bextra is more effective than Vioxx
Top managers at Pfizer coached their sales representatives to encourage physicians to prescribe Bextra over Vioxx in 2002 by stating the following:
I. Bextra is the most powerful painkiller ever approved by the FDA
II. Bextra is more efficacious than Vioxx
III. Bextra is more effective than Vioxx
Company Culture of Bextra
(Dog Eat Dog World) John Kopchinski,
former employee of Pfizer
-$51,500,999 As a result of the alarming $2.3 billion settlement, Pfizer released a press release on September 2, 2009 stating the fines and compliances the pharmaceutical company must adhere to “Commitment to ensure medicines are marketed in a manner that benefits patients and enhances the practice of medicine.”
Safety of patients
Advancement of medicine
Preventative measure Importance of the Code Certification and recognition
Becoming standard practice
More favorably standing (enforcement agencies)
Competitive advantage Adherence Voluntary
Not specific enough
Lacks real authority
Heightened scrutiny Forgoing Adherence Translating words into actions
-Spending a day with a patient
-Not being exclusively concerned with money
-Employee survey rating company’s performance
-Triple Bottom Line reporting
-PhRMA and AdvaMed member
-Dow Jones Sustainability Index Translating words into actions -Spending a day with a patient
-Not being exclusively concerned with money Transparency -Employee survey rating company’s performance
-Triple Bottom Line reporting Benchmarking -PhRMA and AdvaMed member
-Dow Jones Sustainability Index A Truly Ethical Company “The Novo Way of Management” Company culture that promotes ethical behavior and prevents misconduct "Organizations that take action and encourage employees to speak up about corporate misbehavior experience fewer workplace violations and higher shareholder returns" American Society for Training and Development Know what it looks like! - seven characteristics that drive corporate integrity * Comfort in speaking up
* Trust in colleagues
* Relationship with direct manager
* Tone at the top
* Clarity of expectations around compliance behaviors
* Openness of communication
* Organizational justice KPMG "Profile of a Fraudster Survey" -- Prevention Thorough assessment of fraud and misconduct risk Possess and thoroughly implement a code of conduct Involvement of employee and third party due
diligence in the company's prevention strategy Establish a training and communications program
Pre-established detection methods
Auditing and monitoring plans
Forensic data analysis tool What if misconduct still occurs? Post-Detection Investigate thoroughly at the
time of discovery Pre-established disciplinary system To disclose or not to disclose?
(That is the question) Remedial actions "The presence or absence of strong leadership and role models […] have an impact on the organizational climate and the way the employees behave" (Lasthuizen) RECOMMENDATIONS Questions? Reasons for Misconduct The Fraud Triangle Opportunity
Rationalization Conflicts of Interest Organizational Structure and Dynamics Four Challenges Feeding the Hog Silent Saboteurs capegoating: blaming failure on someone or something else.
bdicating: not accepting responsibility for decision making.
udgeteering: manipulating budgets and expenses.
verpromising: making commitments one intends to ignore.
urf guarding: hoarding resources and/or control.
mpire building: accumulating power and control.
nderachieving: doing the minimum needed to get by.
isk avoiding: taking the safe position even when it is wrong.
harp penciling: making results look better than they are S
S Ethics in the
Pharmaceutical Industry Presented By: