Last week my colleague Jimmy Lin blogged about how the US Department of Justice has really ramped up their enforcement efforts regarding fraud in the healthcare industry, to the tune of $4.1 billion in penalties. After reading that post and doing some additional research, I came across a great article by Jacob Blass, president of The Ethical Advocate and the former CEO of a healthcare organization, writing for the Pharma Compliance Monitor.
The pharmaceuticals industry is as regulated and scrutinized an industry as there is anywhere in the world, ranking right up there with the financial sector. Yet, as Blass points out, pharma leaders often mistakenly think that if their company meets compliance criteria, they must be operating in an ethical environment. That’s possible, but you can operate in compliance without being ethical, and you can certainly be ethical without meeting compliance goals.
Per Blass, “Being in compliance and having proper internal controls are critically important, yet many companies who are in compliance do not devote the time, energy and intellectual commitment to a deeply embedded ethical culture. As evidenced by Enron, codes of conduct, ethics policies and compliance measures just become boxes to check and words on the wall without an ethical culture to embed it in the daily actions of the company.”
Believe me, the public at large doesn’t want its medical supply coming from a “check the box” organization. It’s not that pharmaceutical companies attract misconduct, any more than the next industry. It’s just that there is more at stake, and it comes with a higher price tag (the top 12 pharmaceutical manufacturers alone represent more than half a trillion dollars in revenue). Big fraud at a pharma is usually really big fraud.
For a while now we’ve advocated the need to approach ethics & compliance, or GRC as a whole, from a holistic perspective, developing ways to integrate and cross-check compliance data at multiple points along the operational timeline of a business. Integration across the enterprise – people, systems, processes – is a must. Blass also said this: “Where most organizations fall short is commitment, rigor and the alignment/integration between words and actions – actionable and measurable strategies and tactics.”
Compliance measures meet the risk challenge from one perspective. Only by putting in place and maintaining an ethics-driven culture, promoting ethical behavior at a people-and-processes level can you fully meet your objectives.