Business advisory experts, Nexdigm and legal experts, Shearman & Sterling, have jointly released a paper to address key compliance challenges faced by healthcare companies in India and overseas markets.
Some of the key aspects covered in this paper include – Legal Framework and Regulatory Oversight on Healthcare Companies (HCC), Avenues for Transfers of Value, Compliance Challenges and Ways to Address Them, Perspectives on Compliance Risk, Compliance Culture, and Compliance Monitoring.
The paper focuses on the compliance challenges in product promotion as well as in organizing non-promotional events with or for Healthcare Practitioners (HCPs) and proposes ways to address such challenges. It also considers legal risks in jurisdictions where HCPs are employed by government-owned hospitals or other government-owned or -controlled healthcare facilities, due to potentially applicable anti-bribery statutes that also apply across borders.
The paper examines four key compliance risk areas that HCCs typically face where the primary compliance risk arises from employees of HCC providing items/services of value to HCPs and/or government representatives, directly or through third parties, to influence pending or future decisions or reward prior decisions.
These risk areas have been categorized as – HCP interactions, third party interactions, Government interactions, and other compliance risk areas.
According to Ravi Menon, Senior Business Adviser, APAC Healthcare, South India, Nexdigm, “The healthcare industry, more than any other industry, needs to establish a positive trust balance in its favor with all its stakeholders. Be it the patients and intermediaries like doctors and hospitals, policymakers, or payors, ensuring a reputation and track record of integrity, fair dealings, and honest communication are key for long-term success and patient welfare.”
Trust needs to be built up as a key element in any healthcare organization’s culture, led by clear top management commitment and leadership and supported by well-defined policies, systems, and mechanisms which typically result in high-quality implementation through regular training, monitoring, and control. Globally, ensuring that value transfers are fair and appropriate, and that players do not engage in unethical or unfair practices, is now seen as a non-negotiable imperative in the healthcare industry, adds Menon.
The paper acutely observes that improper value transfers do not always occur in the form of outright cash payments, but in many cases occur through non-monetary or indirect avenues (e.g. inappropriate or excessive travel and entertainment, employment opportunities, prestigious speaker or publication opportunities, or improper grants and donations to foundations associated with customers or government officials).
According to Brian Burke, Partner, Litigation, Shearman & Sterling, “Now more than ever, it is critically important for companies in the healthcare industry to be on the lookout for improper transfers of value. All kinds of activities should be on a checklist – from excessive speaker fees to inflated congress sponsorships, from gifts and entertainment to kickbacks to government officials. Simply put, the pressure to procure preferential treatment is at an all-time high due to the COVID-19 pandemic, and healthcare companies would be wise to respond accordingly.”
Some of the possible risk mitigation approaches recommended by the paper include having:
Clear Policies & Guidelines: Adopt and implement clear policies covering the end-to-end process for educational programs, including ‘do’s & don’ts‘.
Training: Provide tailored training to employees involved in educational programs on applicable policies, guidelines, and criteria.
Event Owners: Designate medical teams rather than sales or marketing employees as event owners.
Review and Approval Mechanism: Establish clear approval criteria and approval levels depending on program costs and risk levels. Ensure there is a compliance approval mechanism for sponsoring events above a certain threshold.
Due Diligence: Conduct risk-based pre-event due diligence on event organizers and other third parties engaged in connection with an educational program.
Site Visits or Spot Audits: Conduct spot-checks and periodic audits with respect to educational programs, including on-site visits to events as they are being held.
Transactional Analytics: Conduct transactional analytics, benchmarking, and monitoring of transaction data to identify trends and patterns.
Monitoring of prescription data: Monitor prescription conduct of HCPs sponsored to attend or speak at educational events to identify notable increases in sales resulting from their involvement in the educational program.
The paper observes that three key aspects underline an effective culture of compliance. First, ensure that there is adequate ‘tone-at-the-top’ which requires that a company’s senior and middle management embrace and communicate the importance of compliance through their words and actions to the workforce. Second, there should be appropriate and frequent training to employees on compliance issues, and, where appropriate, this training should be customized (i.e. to function and risk). Third, a company should have in place effective and working reporting mechanisms that allow for employees and others (third parties and vendors) to raise compliance concerns anonymously, in their local language, and without fear of retaliation.
The whitepaper is open to all and can be accessed by clicking the link below:
About Nexdigm (SKP)
Nexdigm (SKP) is an employee-owned, privately held, independent global business advisory provider that helps organizations across geographies meet the needs of a dynamic business environment. Our focus on problem-solving, supported by our multifunctional expertise enables us to provide customized solutions for our clients.
We provide integrated, digitally driven solutions encompassing Business Consulting, Business Services, and Professional Services, that help businesses navigate challenges across all stages of their life cycle. Through our direct operations in the USA, India, and UAE, we serve a diverse range of clients, spanning multinationals, listed companies, privately-owned companies, and family-owned businesses from over 50 countries.
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About Shearman & Sterling
Our success is built on our clients’ success. We have a long and distinguished history of supporting our clients wherever they do business, from major financial centers to emerging and growth markets. We represent many of the world’s leading corporations and major financial institutions, as well as emerging growth companies, governments, and state-owned enterprises, often working on ground-breaking, precedent-setting matters. With a deep understanding of our clients’ businesses and the industries they operate in, our work is driven by their need for outstanding legal and commercial advice.
We are committed to forging long-term relationships with our clients, providing them with genuine insight and practical advice, and supporting them as they navigate the challenges of our 21st century global economy.