Regulation & Compliance
The UK Bribery Act is expected to come into force from 1 July 2011, significantly revising and strengthening the current UK anti-bribery regulatory regime by introducing legislation that is seen to be the widest reaching of any OECD country.
This places significant requirements on UK corporates to ensure they have the necessary controls and processes in place to prevent bribery and to demonstrate compliance with the Ministry of Justice (MOJ) Adequate Procedures guidance. This guidance is principles based, and as a result, questions remain for many about how this new legislation will be enforced. Health & Life Science (H&LS) organisations clearly need to conduct their own assessments of the bribery and corruption risks they face and draw their own conclusions about the policies and procedural enhancements required to address those risks.
Notably, the H&LS sector is facing increased scrutiny in this area with Johnston & Johnston having recently settled with the US and UK authorities (£47million) in relation to charge around bribes being paid to win business overseas. Other H&LS companies are under investigation.
Why is it an issue?
- H&LS organisations will be required to consider the implications of specific areas of bribery & corruption risk for example: interactions with healthcare professionals; use of 3rd party distributors/agents; medical event sponsorship; and medical samples
- The new Section 7 corporate offence means that organisations can now be prosecuted for failing to prevent bribery occurring. The company’s defence is their ability to demonstrate adequate procedures to prevent bribery. This requires organisations to ensure they have appropriate processes and controls in place to identify and mitigate bribery and corruption risk and monitoring controls so they remain robust as their business evolves
- Key to embedding effective ABC control is a strong adoption at board level and a culture of integrity and ‘doing the right thing’. Achieving cultural alignment and consistency is extremely challenging and requires focus from very senior management to get right. Organisations need to achieve an effective balance reconciling this with other competing regulatory priorities they face
- The Act has extra territorial application, meaning it can apply worldwide and consequently has wide ranging implications for organisations operating in high risk jurisdictions and who use introducers and finders to assist them in winning business
- Deloitte can support commercial organisations to design and implement anti-bribery and corruption programmes which will ensure they have the control framework in place to demonstrate adequate procedures
- We can perform current state readiness assessments to enable organisations to identify and remediate control gaps to support them in complying with “Adequate Procedures”
- We can assist organisations in developing awareness training and specialist risk training to ensure employees understand the requirements of the UK Bribery Act and “Adequate Procedures”
- Understanding ABC risks faced and benchmarking the current control environment.
Companies in the Health and Life Sciences (H&LS) sector are facing increased compliance pressures from a number of sources:
- New laws and regulations (local country and extra-territorial e.g. UK Bribery Act)
- Increasing scrutiny by authorities and regulators (e.g. rise in off-label promotion/ABC prosecutions)
Why is it an issue?
Complying with the pressures above, together with increasing pressure on internal costs, means that now, more than ever, companies are looking to derive maximum benefit from their compliance framework and/or function. Key components of this are outlined below:
- Policy frameworks - communicating external expectations and internal rules and regulations in a manner which is effective, efficient and ultimately measurable is a balancing act that many companies struggle to achieve
- Monitoring and reporting - the introduction of Sarbanes Oxley brought with it expensive and expansive control and monitoring activities which many saw as unnecessarily complex. Implementing similar monitoring mechanisms for a compliance framework can be highly effective yet clearly a balance is required between levels of assurance and cost
- Organisation and culture - a compliance function seen as a hindrance to the business or as a means of shifting responsibility for decision-making is unlikely to be successful. A compliant organisation must have the correct profile, positioning, resources and skillsets alongside a clearly defined role and mandate if the overall compliance framework is to be effective
- Our Compliance Maturity Model allows us to benchmark and determine strengths/opportunities for improvement across the following areas: governance; culture; risk; organisation; policies & procedures; communications & training; controls & monitoring; reporting; and technology
- We have experience of working with leading H&LS organisations to define policy architectures, author codes of conduct and policies and design appropriate means of implementation and roll out
- Design and implementation of fit for purpose monitoring and reporting methodologies including technology solutions to allow consistent and efficient execution
- We have experience of working with leading H&LS organisations to align compliance organisation structures and resourcing with the increased requirements of an effective integrity and compliance programme, while providing clarity as to the roles and responsibilities of the compliance function.