by Christian Rosa and Joaquim Queiroz
Over the past year, the pharmaceutical industry has taken center stage due to the efforts made to develop and supply vaccines, medicines and medical devices to tackle the current pandemic. However, considering the financial volume of these public purchases and the possible involvement of public officials in episodes of non-compliance, it is necessary to assess whether the integrity strategies adopted by pharmaceutical companies have been effective in curbing such situations.
Companies of various sizes have certainly made continuous efforts to establish robust integrity programs, especially since the advent of Law 12,846/2013 (Anti-Corruption Law). Indeed, this sector was one of the first to understand that, in addition to avoiding liability for wrongdoing in the many jurisdictions in which it operates, good management of corruption risks preserves the company’s reputation and, therefore, its value.
Reviewing integrity programs in light of a new business environment is healthy
Although Law 12,846/2013 was not the first rule to regulate the need to adopt compliance practices, it was the Anti-Corruption Law and its implementing decrees that defined the requirements for structuring integrity programs.
The evolution of integrity programs, however, must also be analyzed in light of the expansion of contractual relationships with the government. Indeed, given the unique nature of some of these companies’ activities, focused, for example, on the development of biological products, the share corresponding to supplies to the public administration becomes predominant, if not exclusive. Large laboratories, with diversified product portfolios and operations focused on the private market, also see opportunities in the public market.
In this scenario, interactions and negotiations with public officials deserve special attention. Due to the very nature of the parties involved, these relationships may carry a greater risk of political pressure, which may result in incestuous relationships in which the public manager, hypothetically driven by non-republican intentions, seeks to lure the private partner into irregular practices. Hence the need for these companies to develop mechanisms to make them immune to such advances.
In this context, reassessing existing integrity programs takes on particular importance. Indeed, good practice requires periodically updating the risk mapping and adopting the respective controls whenever the organization’s external context changes significantly. The circumstances that brought these contracts to the fore during the health crisis, and reports of alleged improper practices by government bodies in connection with these negotiations, are factors requiring a review of the risks of these operations.
Although they have already consolidated sophisticated and well-defined risk management models in their integrity programs, periodic review may identify blind spots and sensitive issues in contracting with the government that would not be noticed without such reassessment. The subject indeed requires laboratories to make a concentrated — and well-documented — effort to review their integrity programs and take additional steps to make their commitment to compliance unequivocal.
In this regard, many companies have been seeking the benefits of restructuring their programs in line with the international technical standard ISO 37001 – anti-bribery management system (ABMS), pursuing independent certification.
In general terms, redesigning compliance programs in line with ISO 37001 makes it possible, from the outset, to build an anti-bribery management system based on international standards, the result of the experience and broad discussion of experts from around the world, which gives it greater credibility — especially with international organizations, lenders and stakeholders. This characteristic is even more significant for companies promoting the adoption of more contemporary practices such as ESG (Environmental, Social, and Corporate Governance), as it is aligned with these purposes of accountability and transparency in private activities.
In this regard, certifying the integrity program as a robust system reduces information asymmetries, translating good governance into reputation and added value for shareholders and other stakeholders. Ultimately, whatever the level of corporate governance maturity, seeking to implement international best practices, including by meeting the requirements of the technical standards associated with anti-bribery systems, is consistent with the criteria of the Anti-Corruption Law and Decree No. 8,420/2015, providing security and sustainability for operations in Brazil.
Reviewing integrity programs in light of a new business environment is therefore healthy. In this effort, in addition to a critical analysis of the risks and controls adopted, it is advisable to go further, preparing the organization to obtain certifications such as ISO 37001, given its enormous potential to generate broad economic and governance benefits for the pharmaceutical sector.
Article originally published in the Legislação & Tributos|SP column of the Valor Econômico newspaper (in Portuguese), on 09.23.2021.
