By Samuel RubenfeldThe global pharmaceutical industry changed up its code of practice Thursday, but not before some high-profile settlements in the U.S. for breaking its foreign-bribery law.
The Geneva-based International Federation of Pharmaceutical Manufacturers and Associations said Thursday it expanded its practice code to cover all interactions with health-care professionals, medical institutions and patient organizations, including a ban on doctors from receiving payments to attend conferences.
This comes at a time when the association’s members are trying to drum up business in developing countries, some of which have state-run health systems. Employees of such systems, including doctors and nurses, can be considered foreign officials under the U.S. Foreign Corrupt Practices Act, a 1977 law that bars bribing foreign officials for business purposes.
To that end, the Securities and Exchange Commission and the Justice Department are in the midst of a sweep of the industry. In April 2011, Johnson & Johnson agreed to pay $70 million to resolve violations, and The Wall Street Journal reported in November 2011 that Pfizer Inc. will pay more than $60 million when its settlement gets finalized.
Both companies, the Journal reported, ratted on their competitors. Those competitors included AstraZeneca, Merck & Co., Bristol-Myers Squibb Co., GlaxoSmithKline PLC and others that have disclosed investigations for possible FCPA breaches. Eli Lilly & Co. was in advanced talks in April 2011 with the Justice Department, and the company said Feb. 24 in its annual results it’s at the same level with the SEC.
Letters of inquiry to several of the companies, dating back more than a year, laid out several types of of possible violations: bribing government-employed doctors to purchase drugs; paying company sales agents commissions that are passed along to government doctors; paying hospital committees to approve drug purchases; and paying regulators to win drug approvals.
And the companies aren’t just facing charges in the U.S.: AstraZeneca said in November 2011 it was indicted in Serbia over employees allegedly making improper payments to physicians at Institute of Oncology and Radiology of Serbia. A spokesman said at the time the company had filed motions to dismiss the charges.
The federation, which goes by the acronym IFPMA, is led by David Brennan, an American who is also chief executive of AstraZeneca.
Brennan announced in May 2011 that AstraZeneca would no longer pay for doctors to attend conferences, something he said to Dow Jones Newswires caused him “to take it to the IFPMA, to have them consider what the next level of agreement should be, from an industry perspective.”
He acknowledged in the interview with Newswires that as health-care costs have risen worldwide, so too have concerns about financial ties between doctors and drug makers.
The non-profit investigative news outlet ProPublica has been running stories since October 2010 in a series called “Dollars for Docs” about how industry money makes it into the hands of physicians.
“We’re trying to earn society’s trust in doing what we’re doing, because I think that trust has been broken,” Brennan said in the Newswires interview. “So when you put it into the context of how society perceives us and what can we do about it, I think a lot of companies recognize that we shouldn’t have a minimum standard but have something that goes above that.”
More from the interview with Newswires is here. Read the new code of practice below:IFPMA Code of Practice 2012