Managing High Risk Engagements

As major players in one of the most regulated industries in the world, pharmaceutical and device manufacturers are no strangers to risk. From complying with data privacy laws, to pricing litigation, to the latest opioid crisis, companies remain under pressure to develop controls around high-risk areas. 

At the recent 13th Annual Forum on Transparency and Aggregate Spend in Washington, D.C., we polled audience members and asked them the following question: 

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An overwhelming majority, 88 percent, indicated that kickbacks and bribery were the most significant legal or regulatory area of concern. It’s no surprise, considering how enforcement tied to healthcare continues to be a focus for agencies in the U.S. and abroad. In a December 2018 press release, the U.S. Department of Justice (DOJ) announced that it had recovered over $2.8 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2018.  Of that amount, $2.5 billion involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. This was the ninth consecutive year that the Department’s civil health care fraud settlements and judgments had exceeded $2 billion. 

To compound the issue even further, of the $2.8 billion recovered, $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act, issuing $301 million in whistleblower payments. That’s quite an incentive for whistleblowers to continue to cooperate with agencies by providing the evidence they need to make these cases easier to prosecute. 

For multinational pharmaceutical and device companies who engage healthcare professionals (HCPs) abroad, complying with the FCPA and other anti-bribery laws poses a different set of challenges. Local organizations tend to be less conservative in complying with anti-corruption laws, and this creates an uneven playing field. In addition, HCPs working for public medical institutions (i.e. hospitals, clinics, etc.) may be considered ‘foreign officials’ under the Foreign Corrupt Practice Act (FCPA) and other anti-corruption laws.

Managing Engagement Risks for Healthcare Professionals

Engaging HCPs to provide consulting and other services continues to be common practice and a significant area of risk for the industry. The DOJ’s Evaluation of Corporate Compliance Programs highlights the importance of implementing a well-designed compliance program with proper controls around “high-risk transactions”.

Written policies and procedures around these interactions are a key element in mitigating risks, but they need to be implemented properly in order to be effective. This requires a system of controls to ensure that employees are not only aware of the rules around engaging HCPs but also have processes in place to follow them.

A well-designed system should incorporate safeguards to ensure that there is proper review and approval of these engagements, including controls around contracting and issuing payments.

Companies are also expected to conduct proactive monitoring of high-risk transactions with “clear disciplinary procedures in place” to address any violations of these policies and procedures. 

As the DOJ and other agencies continue their focus on bribery and corruption, implementing the processes and systems needed to execute proper controls may be a solid investment in reduced liability and future exposure.

For more information on using enterprise-wide controls to ensure appropriate HCP engagements, please visit

Diana Borges

Vice President of Compliance Solutions

Posted on Sep 16, 2019 4:12:22 PM

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