THIRD PARTY ANTI-BRIBERY AUDITS IN THE PHARMACEUTICAL SECTOR
The pharmaceutical industry, like many others, relies on third parties throughout its product lifecycle, from clinical research to manufacturing, marketing, promotion and distribution.
One area that is most scrutinised by regulators is third-party management – in particular for those third parties which are engaged in promoting or selling products, i.e., those who interact with patients and healthcare professionals. Over the past decade, more than 90 percent of enforcement actions executed by the US Department of Justice (DOJ) under the US Foreign Corrupt Practices Act (FCPA) involved third parties.
The FCPA, which also applies to foreign companies with securities traded on a US exchange or to other companies under certain circumstances depending on the US nexus of the transaction in question, is the primary US anti-bribery law.
In 2020, the DOJ published guidance on how it evaluates the effectiveness of corporate compliance programmes, setting out expectations and guiding principles. With respect to third parties, the guidance encourages companies to engage in ongoing, risk-based and proactive risk management of third parties throughout the life of the relationship.
Meeting these expectations poses unique challenges. How can companies understand and evaluate the ethical business conduct and practices of independent third parties and identify potential risks, while respecting antitrust and competition principles? Once risks have been identified, how can these risks be remediated while protecting the independence of the third party? Finally, how can organisations encourage third parties, some of which are large and influential, to make investments to strengthen their compliance and risk management capabilities?
Jan-Mar 2023 Issue
Novartis