Polaris is pleased to provide compliance and transparency developments and updates that took place in Q3 that may have an impact on your business:
OUS Anti-Bribery/Anti-Corruption and Foreign Corruption Practices Act
At the annual “SEC Speaks” conference in February 2016, Kara Brockmeyer, head of the SEC’s FCPA Unit, announced that the SEC “is going back to the pharma industry after a break for a period of years.”
She also noted that the SEC will be leading more of their own cases (rather than parallel DOJ cases), particularly for non-bribery related activities and less egregious conduct.
So did Brockmeyer’s warning come to fruition? Yes. To date, there have been six SEC-led FCPA enforcement actions in the pharmaceutical industry, reaching approximately $52.5 million in total settlement fines.
Relative to the past three years, 2016 has indeed shown an uptick both in terms of absolute enforcement actions and dollar settlement amounts.(1) The year of 2012, however, was a banner year for SEC-led FCPA enforcement actions – reaching over $89 million in five settlements (and $123 million including joint SEC-DOJ actions). But 2016 is not over yet so we could still reach and/or surpass 2012 in terms of dollar amounts and volume.
Brockmeyer also called out non-monetary benefits to government officials – such as employment to unqualified government officials or family members – as a focus.
More generally, she stated that the SEC would focus on “broken windows”(2) violations, as well as internal controls for financial reporting.
So what does this mean for our clients? Quick remediation of seemingly minor infractions – such as failing to record a modest business dinner with a government-employed physician – is crucial to creating and maintaining a culture of compliance and ensuring that more serious violations will not be tolerated. Moreover, addressing “broken windows” shows good faith and can mitigate the fallout from any wrongdoing if regulators come knocking.
Americas Transparency: FMV and Open Payments Data Analytics
The Polaris team has been engaged in developing a new offering, Polaris MarketINTEL™, which focuses on deriving commercial intelligence from publicly available data sources like the Open Payments databases.
We are currently working with clients to develop metrics that assess the impact of reportable spend on levels of HCP/O engagement and isolating competitive trends by HCP, company, brand, etc. We will be continually enhancing our datasets to deliver innovative insights by incorporating additional datasets to make the solution more comprehensive.
We kicked off our first Polaris MarketINTEL™ project with a top 10 global pharmaceutical company where we’ll be examining Open Payments data for competitive intelligence related to four of their oncology brands. We will compare the spend patterns and marketing strategies among our client’s oncology brands and their competitors’ brands. As a part of this project, we will identify top KOLs and their institutions (teaching hospitals and private practice) by total amount of payment received, transaction frequency, activity type (advisory boards, speaking programs, ad-hoc consulting, etc.) and associated therapies. We will also examine their business activities by transaction frequency, geographic location, and activity composition (number of associated HCPs, HCP specialty/type). In this project, we will provide a customized business intelligence report, training, and strategic guidance to support our client’s oncology’s commercial operations.
(1): 2015 (1 settlement for $14 million), 2014 (1 SEC-DOJ settlement for $55 million) and 2013 (2 settlements for $17.7 million). https://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml. (2): “Broken Windows” refers to the theory that if minor violations are ignored – like broken windows – then those small violations will act as a signal to the rest of the community that more serious violations will be tolerated without any repercussions.