Members Lounge

Past Meetings

The Importance of Corporate Culture
By Ray Chepesiuk

Biopharmaceutical company marketing practices have come into scrutiny around the world; no more so than in the United States. On April 17, an audience composed of pharmaceutical marketing, regulatory, medical and compliance personnel, lawyers, publishers, suppliers and patient advocates listened to the sage advice of Michael Loucks regarding the building and maintaining a corporate culture to ensure ethical and legal marketing practices. Mike is the First Assistant Attorney General for the federal district of Massachusetts and has a distinguished record as a prosecutor, being involved in many pharmaceutical and health care fraud cases.

Mr. Loucks was introduced by PAAB Commissioner Ray Chepesiuk who pointed out that the pharmaceutical marketing regulatory system in Canada is considerably different from the U.S. In Canada, the Rx&D Code of Conduct and the PAAB Code of Advertising Acceptance are pivotal in focusing on prevention of wrong doing, whereas in the U.S. the system is based on punishing wrong doers after the fact. Canada is privileged to have a self-regulation system recognized and respected by the federal government.

Michael Loucks asserted that American rules have an influence on the behaviour and corporate compliance efforts on the part of Canadian companies. He described in detail the American laws that are relevant to the pharmaceutical industry. They include: the anti-kickback statute, criminal and civil false claims cases, Food Drug and Cosmetic Act crimes such as manufacturing process crimes and off-label promotion crimes, and conspiring to defraud an agency by interfering with its lawful functions through trickery, fraud and deceit. Kickback payments are often disguised as something else such as: so-called consultant fees, travel reimbursement, speech, medical education, payments for another product or as reductions in price on another product.

To show the dramatic impact that recent prosecutorial action has had on the biopharmaceutical industry in the United States, Mike revealed data relating to settlements in 28 drug industry cases. From 2001 to present there has been over 10 billion dollars brought back to the U.S. Treasury as a result of civil and criminal prosecutions. By dollars, 42% of all fines were related to pharmaceutical product cases. He helped explain Corporate Integrity Agreements and the Whistleblower Act in the U.S. which has led to qui tam lawsuits.

Mike noted the pharma industry faces pressures:

• from competitors on pricing and quality
• from customers on service, delivery and pricing
• from QC on following the processes
• from regulatory affairs on following the rules

This can lead to cutting corners, sloppiness, rushing which in turn leads to criminal activity. He spoke about real life examples of cases that he was involved in. Some of the activities, like the selling of known problematic heart catheters and switching patients medications to get free samples for resale by a physician, shocked the audience.

While there are still over 150 qui tam lawsuits to be investigated by the Department of justice, there is light at the end of the tunnel. He stated, that in his experience, there appears to be a change in the attitude in the biopharmaceutical industry towards a culture of compliance. Every employee holds that responsibility. Perhaps the U.S. industry has benefited from lessons learned.

One lesson I learned is that the Canadian industry should be vigilant to preserve the self-regulation system that is in place today. Your corporate culture should be directed to that.