Legal analysis: compliance top of the agenda for big pharma
pharmafile | September 25, 2015 | Feature | Medical Communications, Sales and Marketing | lawyers, legal, pharma industry, reputation
Do you think big pharma suffers from a negative image, and if so, to what extent do you think this is as a result of the numerous high-profile legal cases involving its leading companies?
It is true that the big pharma’s reputation has taken a dip in recent years. Certainly, the high-profile fraud cases and huge fines imposed on big pharma have damaged the reputation of the industry in general, but it is too simplistic to say that this is the only reason that the standing of the industry has declined.
For example, the public’s falling out of love with big pharma in the western world also has a lot to do with changing social attitudes and economics. There is a modern perception that the provision of life saving drugs should be a human right, immune to any requirements of profit and shareholder return.
The recent global economic crisis has forced public healthcare bodies, such as NICE, to make increasingly difficult and very public decisions concerning which new drugs it can fund. This, coupled with the lack of transparency and education about drug pricing in general, has resulted in the public questioning why and how big pharma is able to charge so much for lifesaving drugs: the outcry after Gilead’s Solvaldi, a groundbreaking Hepatitis C drug, which was priced at US$ 1,000 per pill, is a case in point.
Such negativity could perhaps be alleviated, in part, by a greater effort by the pharmaceutical industry to be transparent and educate the public about vast costs involved with running drug discovery programmes.
Public perception of the pharmaceutical industry should improve if it continues recent efforts to clean up its act, ensuring that illegal promotion of drugs and kick-backs to doctors are simply not tolerated. The Daily Telegraph’s recent exposé of NHS staff allegedly accepting financial inducements and lavish hospitality from a pharmaceutical company emphasises the need for the industry to demonstrate it has robust policies to monitor compliance by its employees and agents.
The new ‘Sunshine Rule’, which will also require healthcare professionals to declare all gifts and hospitality that they receive from the pharma industry, will also help to improve transparency.
What are the most common types of legal issues on which pharma companies seek your advice?
It depends! In terms of compliance, we have recently advised a pharmaceutical company on the implementation of its anti-bribery scheme. More broadly, a recent snapshot of our work includes representing the UK subsidiary of an international life sciences company in a multi-million US$ ICC Arbitration claim for breach of contract arising from regulatory failures; assisting a pharmaceutical company with its entire UK warehousing and distribution arrangements; providing clients with advice surrounding IP licensing, strategic collaborations and academic partnerships, and providing trade mark infringement advice to a medical device company.
How concerned are these companies with protecting their image? Or is it more about protecting profit?
Pharmaceutical companies have to be concerned about their image, just as they have to be concerned about their requirements to deliver shareholder value. Both are not necessarily incompatible however.
Big pharma are putting compliance right at the top of their agenda. Tighter regulations mean that the industry has to be a lot more transparent regardless – for example in its interaction with healthcare organisations. GSK has gone one step further by ensuring that sales staff who work with HCPs are not incentivised on individual sales targets, but rather on their knowledge, expertise and business performance. Companies within the industry are working hard to ensure they can demonstrate to the public they have ethical business practices throughout the entire organisation. This may make the prices of new drugs a less bitter pill to swallow.
Several big pharma companies are also establishing initiatives to improve access to healthcare for patients in the developing world – a few examples include the UN’s Medicines Patent Pool, in which a number of companies have agreed to provide low royalty patent licences which enable generic suppliers to supply low cost HIV drugs to patients in the developing world; GSK helping to provide the developing world with access to relevant vaccines – for example by fast tracking its experimental Ebola vaccine in the wake of the Ebola crises early this year, and committing to making the first malarial candidate vaccine available on a not-for-profit basis; and AstraZeneca setting up a Healthy Heart Africa scheme, providing access to low-cost hypertension treatments.
Such schemes should be seen as a win-win scenario, as not only do they give millions of patients access to healthcare they could not otherwise afford; they also increase the patient pool to which big pharma has access, potentially allowing it to grow its business – even if such business does not generate the profits achieved when selling drugs in western countries. The schemes also give big pharma a human face.
Do you agree that the tougher financial and regulatory environment has made pharma a more challenging sector in which to try and make profit, and is this is in part the cause of some companies making aggressive moves like bribes to doctors and hospitals?
The tougher financial environment brought on by the global economic crises has undoubtedly put pressure on all pharmaceutical companies. Furthermore, the pharmaceutical industry is also emerging from a spectacular ‘patent cliff’ in which several patents which protected blockbuster drugs (such as Pfizor’s Lipitor in 2011 and Novartis’ Diovan in 2012) expired, leaving drug companies facing a shortfall of billions of US$ in sales after generic companies legitimately launch much cheaper versions of the same drug onto the market.
Many pharmaceutical companies have found that their own research pipeline has not supplied enough products with potential to stem the shortfall. The industry has had to adapt, illustrated by the significant M&A activity to try and find ‘synergies’ between organisations, and collaborations with partners to rejuvenate product pipelines.
Examples of less legitimate activity of course include the practice of making payments and kick-backs to HCPs to secure drug sales – an example being the highly-publicised case involving GSK in China. Unfortunately, both of these approaches will have contributed to the decline of the industry’s reputation in the public eye.
Do you think pharma is over or under-regulated?
Regulators have to tread a careful balance to ensure that the public are protected from malpractice, but also to ensure that any regulatory obligations are not overly burdensome on pharmaceutical companies. We suspect that the balance of regulation and intervention is now just about right, but will need careful monitoring going forward.
One major concern people have with pharma is a perceived lack of transparency, particularly with regard to clinical trial data. Will new regulation forcing companies to publish this data help?
A number of high profile cases where drug companies were shown to withhold negative clinical data from publication has fuelled the public’s disdain for the lack of transparency about results arising from the industry’s research on drugs.
This has been recognised by some (but not all) in the industry who have taken steps to make their research data available whilst ensuring patient confidentiality and data protection regulations are adhered to – Janssen (the pharmaceutical arm of Johnson & Johnson) is one of the companies that have committed to publicly releasing clinical trial data and making detailed clinical study reports data available to those that request it.
Regulatory authorities in both the US and Europe also recognise the need for more transparency. However, there is still a lot more that could be done. Although the US requires reporting of summary results from most trials, most of the trials registered on clinicaltrials.gov have failed to post any results at all with seemingly little sanction.
The European Medicines Agency has now taken steps to ensure that more clinical trial data is made available. Since January 2015, as soon as an EU marketing authorisation for a drug is granted, the European Medicines Agency will publish all clinical trial data submitted as part of that application. Third parties will also still be able to access clinical trial data on request – a policy adopted by the European Medicines Agency in 2010. Hopefully these initiatives will increase trust and confidence in the system, and also foster innovation and drug discovery by allowing additional analysis of the data and potential cost savings in unnecessary duplicative trials.
What can you tell our readers about some of the more profile cases you have been involved with?
Most of our work is highly confidential, but members of our life sciences team have been involved in advising clients in relation to dawn raids by the SFO and other regulatory body investigations, cross border fraud cases and asset recovery.
What changes in the legal/regulatory environment are incoming that you are aware of and you believe will help ‘clean up’ the image of pharma?
The provision of hospitality, gifts or any kind of inducements to HCPs or other decision makers within HCOs by the pharmaceutical industry are strictly governed by UK law, including the Human Medicines Regulations 2012, the Bribery Act 2010 as well as voluntary industry codes of practice, namely the ABPI Code, which sets out in detail the requirements for the promotion of medicines and interactions with HCPs and appropriate administrative staff.
The ABPI Code has recently been amended to reflect changes to the European Federation of Pharmaceutical Industry Associations (EFPIA) Disclosure Code. Pharmaceutical companies are now required to document the individual names of HCPs and HCOs that are the recipient of any financial contributions – this includes any sponsorship of an HCP’s attendance at meetings and any fees/contributions paid towards the costs of meetings to HCOs or to third parties managing events on their behalf. From June 2016, there will be a requirement that this information is made publicly available.
The UK Government has also recently announced (in August 2015) provisions that will require senior HCPs in the NHS declare all gifts and hospitality they had received from the pharmaceutical industry.
Although such transparency should assist both the pharmaceutical industry and the NHS in eradicating corruption in connection with the promotion of medicinal products, it will no doubt add further burden onto already stretched compliance departments in the industry.
Gillian Johnson and Charlotte Tillett are heads of life sciences at Stevens & Bolton LLP.
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