Is Euroland Following the US Disclosure Lead?

Dec 01, 2010

Making sense of the promotional spend and anti-corruption compliance burden is emerging as a key strategic issue for pharma—not just in the US but in the global market space as well, where regulatory safeguards are still porous. New survey research published by Cegedim Relationship Management documents this trend with a focused review of the growing pressure in Europe to follow the US with demands for a full tracking of how, where, and when pharma companies seek to influence the prescribing behavior of physicians and other healthcare practitioners.

Not only are the legal standards for disclosure becoming tougher in Europe, but distinct characteristics in local patterns of practice can make the process of compliance a daunting logistical and financial challenge. The survey concludes that failure to build internal capacity to address the new regulatory agenda can lead to costly citations and a sharp drop in trust and reputation. Because most European governments subsidize access to medicines through the tax or social insurance system, this can have a significant impact on commercial returns as well as the industry's overall "license to operate."

Findings of the Cegedim report are based on data and interviews conducted earlier this year among some 120 life sciences company executives with responsibility for compliance issues across Europe. An interesting observation gleaned from the research is that few companies in Europe at present have staff with specialized expertise in managing promotional and relationship development with health professionals from a regulatory perspective—it is still largely a function of the overall sales and marketing operation. This is going to have to change as the pressures on disclosure ratchet up.

Staff also worked with governments and other organizations to discern the regulatory horizon and assess the impact of new country-based initiatives like the UK Anti-Bribery Act, which enters into force in April 2011 and carries stiff criminal sanctions that can be applied to individual executives as well as entities. The European Union (EU) Commission's Competition Directorate and the Paris-based Organization for Economic Cooperation and Development (OECD) are also increasingly active. In addition, the decision of the US Department of Justice to accelerate application of the 1977 Foreign Corrupt Practices Act to specific pharmaceutical transactions will likely be most acutely felt in Europe, where the industry has extensive operations.

From a policy point of view, a major issue of debate is just how regulators in Europe will choose to apply this increased scrutiny. The region lacks the strong litigious tradition of the US and is more comfortable with setting broad standards that effectively allow industry to regulate itself under the leadership of trade and professional associations. What this means in practice is that regulation is likely to focus more on high-level governance, leaving it to companies to figure out how to build the right tools for compliance at an operational level. In the US, in contrast, such operational standards are dictated at a strict level of detail, with a fundamental emphasis on enforcement.

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