Proactively Managing International and Foreign Corrupt Practices Act Compliance Risks - The Third Annual FDA Regulatory

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Proactively Overseeing Universal and Remote Degenerate Practices Act Consistence Dangers - The Third Yearly FDA Administrative and Consistence Symposium. Gary F. Giampetruzzi, Pfizer Inc Collaborator General Insight and Appointee Consistence Officer Keith M. Korenchuk Covington and Burling LLP

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Proactively Managing International and Foreign Corrupt Practices Act Compliance Risks - The Third Annual FDA Regulatory and Compliance Symposium Gary F. Giampetruzzi, Pfizer Inc Assistant General Counsel and Deputy Compliance Officer Keith M. Korenchuk Covington & Burling LLP Cambridge, Massachusetts, August 23, 2007

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Anti-Bribery/Anti-Corruption (ABAC) Real Life Lessons What are the ABAC rules? The Compliance Framework

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How Companies Get in Anti-renumeration/Anti-defilement Trouble: Real World Lesson #1 Senior non-U.S. government controller looked for a beneficent commitment from a U.S. organization's European backup The philanthropy – the controller's top choice – is genuine The controller has a great deal of impact over the auxiliary's business He clarifies that it would be to the auxiliary's advantage if the commitment is made Total commitment surpasses the director's approval So the commitment was made in a few littler installments Not portrayed legitimately in the bookkeeping records

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How Companies Get in Anti-gift/Anti-defilement Trouble: Real World Lesson #1 Consequences: Anti-pay off/Anti-debasement VIOLATION: mistaken bookkeeping records Anti-renumeration/Anti-debasement VIOLATION: deficient inward controls FINE: $500,000 (Schering-Plow, 2004)

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How Companies Get in Anti-pay off/Anti-defilement Trouble: Real World Lesson #1 Lesson : Companies must have standard due determination methodology and controls administering magnanimous commitments

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How Companies Get in Anti-pay off/Anti-debasement Trouble: Real World Lesson #2 Several auxiliaries of a U.S. human services organization gave commissions and "blessings" to non-U.S. specialists Cash, Computers, Digital cameras, Wine, Wristwatches Leisure travel and supporting extravagant get-togethers Officers of the U.S. parent organization thought about the endowments The blessings were not legitimately Recorded as capital or operational expense On the books of an outside backup (requirement was less strict)

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How Companies Get in Anti-renumeration/Anti-debasement Trouble: Real World Lesson #2 Consequences: Anti-pay off/Anti-defilement VIOLATION: hostile to pay off arrangements Anti-pay off/Anti-debasement VIOLATION: bookkeeping and inward controls arrangements FINES & PENALTIES: $2.5 million EXTERNAL Anti-pay off/Anti-debasement MONITOR (Syncor, 2002)

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How Companies Get in Anti-pay off/Anti-defilement Trouble: Real World Lesson #2 Lesson : Companies must have clear strategies and systems representing blessings and stimulation gave to non-U.S. human services suppliers and other government authorities

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How Companies Get in Anti-renumeration/Anti-debasement Trouble: Real World Lesson #3 A U.S. maker had a worldwide appropriation system of free merchants One merchant paid influences to government authorities to dodge punishments for late conveyance Executives of the producer knew there was a high likelihood of renumeration were paid, and made no move In one case, they even approved installments that financed the merchant's cost for paying the rewards They likewise knew there was a high likelihood that comparable installments were made in different markets

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How Companies Get in Anti-gift/Anti-debasement Trouble: Real World Lesson #3 Consequences: Anti-pay off/Anti-defilement VIOLATION: hostile to pay off arrangement Anti-pay off/Anti-debasement VIOLATION: wrong bookkeeping records, deficient inner controls DISGORGEMENT OF PROFITS: $618,000 CIVIL PENALTY: $500,000 MONITORING: External consistence screen forced on organization for a long time ENFORCEMENT ACTION: Sales Manager accused of Anti-pay off/Anti-defilement infringement; $65,000 fine (Invision, 2005)

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How Companies Get in Anti-pay off/Anti-debasement Trouble: Real World Lesson #3 Lesson : Companies must have standard due industriousness strategies and controls for choosing, holding and administering wholesalers, specialists, and other key outsiders

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How Companies Get in Anti-pay off/Anti-debasement Trouble: Real World Lesson #4 An organization was offering in a creating nation Company supported "preparing" projects and go for a few government representatives who were in charge of assessing the organization's offer Company paid all costs and "routine set of expenses" installments to the administration workers of $120-$200 every day The normal salary in the administration representatives' nation was under $800 every year The "outlay" installments were dispersed in real money from a paper sack and were masked utilizing false solicitations

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How Companies Get in Anti-pay off/Anti-defilement Trouble: Real World Lesson #4 Consequences: Anti-pay off/Anti-defilement VIOLATION: against pay off arrangements Anti-pay off/Anti-debasement VIOLATION: bookkeeping arrangements FINE: $13 million DISGORGEMENT: $15.5 million (Titan, 2005)

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How Companies Get in Anti-pay off/Anti-debasement Trouble: Real World Lesson #4 Lesson : Companies must have clear methods that are intended to avert and recognize possibly uncalled for sponsorship and travel uses

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Anti-Bribery/Anti-Corruption (ABAC) What are the ABAC rules?

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The Global Regulatory Maze Foreign Corrupt Practices Act OECD The WHO Criteria EU Directive 2001/83/EC Association Codes (The IFPMA Code and EFPIA Code Specific Country Laws/Guidelines

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1. The FCPA: What is it? US Foreign Corrupt Practices Act applies WORLDWIDE Prohibits pay off of remote government authorities Requires that open organizations Maintain precise books and records in all controlled substances Maintain a satisfactory arrangement of bookkeeping controls in all controlled elements

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1. The FCPA – preclusion on fixing of remote government authorities An offer, installment or endowment of any cash or thing of significant worth is made To any outside official or other individual while realizing that a few or the majority of the installment will be passed on to a remote authority For the motivation behind getting or holding business or acquiring any inappropriate favorable position Payment To outside authority To get dishonorable preferred standpoint

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1. The FCPA – disallowance on paying off of outside government authorities A "Remote Official" is anybody utilized by an administration office, or by a legislature claimed business venture, including doctors or other medicinal services suppliers The "knowing"requirement will be fulfilled if there is inability to make sensible request concerning the aims or exercises of an operator or other outsider payee Foreign Official "While Knowing"

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1. The FCPA – forbiddance on paying off of remote government authorities An installment is with the end goal of acquiring or holding business on the off chance that it is made to compensate an outside authority for utilizing or underwriting the organization's items An installment is with the end goal of getting an uncalled for preferred standpoint in the event that it is made to get a positive administrative choice Obtain or hold business Improper favorable position

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1. The FCPA – books, records and fitting control An organization and its auxiliaries must keep up exact books and records An organization and its backups must keep up proper controls Showing a pay off on the books as an installment for a counseling game plan is an infringement Supporting installment of pay off with a receipt for a counseling game plan is keeping up a false record Accurate books and records Maintain suitable control

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1. The FCPA – Permitted Payments lawful under nearby nation law Bona fide costs of government authorities for item advancement "Grease" or encouraging installments to facilitate routine legislative activity Permits, licenses, Visas, work papers Police insurance, mail pickup Phone, power or water benefit Loading freight, securing perishables

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2. OECD Convention OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (embraced 1997, went into compel 1999) 37 nations sanctioned as of June 2007 Monitoring Phase I: Implementation - assesses sufficiency of a nation's enactment to actualize the Convention Monitoring Phase II: Enforcement - evaluates whether a nation is applying its enactment effectively

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3. WHO Criteria for Medicinal Drug Promotion The World Health Organization direction is supported by the World Health Assembly and might be deliberately received by individual nations. The Guidance applies to solution and non-doctor prescribed restorative medications and in addition some other item advanced as a pharmaceutical. The Guidance offers moral direction on advancement; publicizing; free examples; medicinal agents; symposia; post-advertising examines; bundling and naming; data for patients; and advancing sent out medications.

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4. Directive 2001/83/EC of the European Parliament and of the Council, as Amended The European Union has embraced its own particular obligatory rules which apply to all Member States. These rules are found in Directive 2001/83/EC on The Community Code Relating to Medicinal Products for Human Use. It gives to a limited extent: " Where restorative items are being elevated to people met all requirements to recommend or supply them, no endowments, financial focal points or advantages in kind might be provided, offered or guaranteed to such people unless they are cheap and significant to the act of pharmaceutical or drug store."

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5. Industry Codes Many industry codes preclude promptings to recommend, supply, offer or control a therapeutic item, for instance: International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) Code of Pharmaceutical Marketing Practices (2007), Article 7 European Federation of Pharmaceutical Industries and Associations (EFPIA) Code of Practice of the Promotion of Medicines, Article 10 Association of the British Pharmaceutical Industry (ABPI) Code of Practice (2006), Clause 18.1 Swe

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