FCPA whistleblowers who report healthcare companies bribing foreign regulatory officials, such as officials at the Ministry of Health (MOH), Food and Drug Administration (FDA), and Social Security Institution (SSI), may be eligible for a reward under the Dodd-Frank program. This is part two in a series that will examine international pharma corruption and how to identify reward eligible information. The first post in this series examined the many ways – both direct and indirect – pharma pays key opinion leaders and doctors to get their products placed on hospital formularies and to obtain more prescriptions and the third post examines pharma bribing doctors by hiring them and their relatives. This post will examine some of the ways pharma bribes foreign regulatory officials and the huge financial and competitive advantages pharma obtains by doing so.
Whether you are a pharma employee, a former pharma employee, or someone who is affiliated with the pharma sector, almost anyone can be a Dodd-Frank pharma whistleblower. But to do so, it is helpful to understand where the bodies are buried and what information would be most helpful to regulators.
Bribing Regulatory Officials: MOH, FDA, SSI, and Insurance Commission
Most countries have the equivalent of the MOH, FDA, SSI, and insurance commission that help regulate healthcare companies. MOH often oversees the regulatory framework and is instrumental in determining what drugs are placed on the government formularies. Drug agencies, such as the FDA, are often responsible for the registration and pricing of medicinal products. The SSI is typically responsible for reimbursement and institutional pricing (i.e. pricing to government entities) of medicinal products. Depending upon the country, these drug regulatory agencies and the insurance commission have the authority to determine which drugs are placed on the government formularies and will be reimbursed by the government or government-funded insurance. These regulatory agencies also have the authority to allow pharma to import their products into the country or require pharma to manufacture their products locally, which can have huge financial consequences for pharma.
A country’s regulatory scheme can determine whether a pharmaceutical company thrives or dies in a particular market. For example, in many countries, the SSI is an important national payer. Pharma’s ability to obtain favorable reimbursement rates from SSI can mean the difference in being profitable or potentially going out of business in a particular country.
As a result of the high stakes involved, pharma often employs local government affairs and relations personnel to deal with regulatory officials. I have seen multiple cases where generics have threatened a company’s profitability and viability in certain countries. In one case, the company’s government affairs personnel decided to hire a relative of an important regulatory official in return for that official agreeing that a particular generic – which was a lower cost substitute to the company’s most profitable drug – would not be included on the government’s formulary list. This meant that government doctors throughout the country would have only one option when treating patients in this particular area, and the company’s revenues would spike.
In another instance, a pharma company’s government affairs team decided to engage a consultant who used his “influence” to obtain both favorable pricing and reimbursement for the company’s products with SSI, MOH, and the insurance commissioner. The company paid the consultant hundreds of thousands of dollars without monitoring how the consultant actually used the funds. The consultant proved very successful and obtained pricing and reimbursement rates that greatly exceeded all of the company’s competitors in the market. This case called into question the company’s internal controls and whether it was engaged in willful blindness with respect to whether the consultant used a portion of the funds to bribe officials.
If anyone has information about any SEC-regulated company (or one of its local affiliates, subsidiaries, or agents) being involved in providing incentives to any regulatory officials and would like to discuss making a confidential or anonymous submission under the Dodd-Frank program, please feel free to contact me at firstname.lastname@example.org for a free consultation. This includes information relating to the hiring of any relatives of a regulatory official, the engagement of any government affairs “consultant” or “lobbyist,” or the provision of any gifts, trips, or payments to such officials. For more information and details about how the reward program applies to FCPA whistleblowers, please click here.