Prescribed Behavior: Operating Under a Consent Decree - Pharmaceutical Executive


Prescribed Behavior: Operating Under a Consent Decree

Pharmaceutical Executive

Down, but not out

For Life Sciences companies facing a major regulatory action such as a warning letter, or full Consent Decree, business as usual is about to change significantly. The most visible impact of a CD can be seen on a company's bottom line, and the financial costs span the entire value chain. Adding together the most common financial costs such as surrender of profits, independent oversight fees, recalled/destroyed product, facility and labor overhead due to suspended operations, and lost sales, the price of a CD can easily exceed $1B for larger companies.

In addition to direct financial impact, other areas of the business may be affected just as significantly, but in less immediate ways. The black cloud of a CD hangs heavily, and can push decision-making toward conservatism, risk avoidance, bureaucracy and micromanagement. Company morale, retention and recruitment can suffer as a result of a CD, leaching talent to competitors.

It's always challenging to manage a company during a time of extraordinary change and upheaval. But companies that create and follow a strategic plan that anticipates a day when the storm clouds lift have a better chance of getting there. In summary, and in our experience, companies are most successful when they:

Create a "Consent Decree First" culture and environment

Are thoughtful and deliberate, because the Consent Decree is a marathon, not a sprint; the company is in the Consent Decree business for the long haul and should be managed with that reality in mind

Manage regulatory bodies effectively with realistic project plans that can be exceeded without major additional effort; project plans should not be reviewed and approved solely by business owners and compliance experts, but by the most senior leaders in the company ( i.e., they should not be developed in a vacuum by regulatory or quality executives)

Select effective leadership and organizational structure and align with the "Consent Decree First" culture

Develop planning capabilities, processes and tools tailored towards the new reality

Evaluate the impact to the core business, including the repercussions for customers and patients, and develop a clear strategy to mitigate negative outcomes through realistic timelines and ramp-up production schedules

By addressing these needs your company can mitigate the near-term disruptions caused by a CD and eventually emerge as a stronger, more compliant and quality conscious company well positioned for long-term success. The key is to develop realistic plans and commitments, accept the situation for what it is and make the best of a very challenging environment.

Joe Slota, Director,
, Marcos Buelvas, Senior manager,
; Sanjay Behl, Principal,
; Greg Page, Specialist leader,
; Chris Larsen, Senior manager,
, all of Deloitte Consulting LLP.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.


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