Economics, Politics, and Compliance in the Pharmaceutical Industry

By Grete Dudek, CIS Compliance Specialist
gretedudek@cis-partners.com

With the stock market in a downward spiral, and the unemployment rate at 6.1%, the highest since 2003, there is no doubt that difficult financial times are upon us. Every industry has been affected, and the pharmaceutical industry is no exception. Layoffs have hit many pharma companies in the past few years, with some companies laying off over 10,000 employees (1). Even the companies not laying off their employees have slowed or frozen hiring for new and open positions. Then there are the pharmas being bought by larger companies or filing for bankruptcy.

AtheroGenics is among those filing for bankruptcy, but the company is hopeful that its products in clinical and pre-clinical studies will continue to be developed, and someday sold (2). Along with layoffs, Pfizer is narrowing its research focus by cutting current research areas, as well as embarking on projects that it hopes will be able to increase profits (1). “As part of its shift, the company will sell or share rights to at least 11 medicines in early testing for diseases the company no longer believes profitable enough” (1).

Layoffs. Bankruptcy. Selling product rights. What do these things mean for compliance?

Layoffs of older employees, who are then replaced by less experienced employees to reduce cost, mean certain roles may be filled by people who are not familiar with important compliance issues. If these employees do not follow procedures that are written to be compliant with federal statutes, the company could be vulnerable to negative audit findings, and resulting fines or sanctions imposed by the federal government.

Companies acquiring products from other pharmas as the result of a sale or bankruptcy filing must also be very proactive in assuring compliance. Any issues acquired with a product or its associated procedures will become the responsibility of the new owner, and must be dealt with immediately to prevent fines and loss of revenue.

Another factor affecting compliance issues in these unsettling financial times is the upcoming presidential election. While the presidential candidates have different ideas of how to deal with health care and the economy, they agree that something must be done. CIS posted articles exploring the Obama/Biden ticket (“Obama-Biden Ticket Planning for Change” by Clarissa Crain) and the McCain/Palin ticket (“McCain-Palin Ticket Free Market Driven” by America Castro), and Tuesday night’s debate allowed further insight into each of the candidates’ plans.

Senator Barack Obama and Senator John McCain have different opinions on how to provide choices in healthcare coverage, with Senator Obama wanting to expand federal healthcare programs to provide more coverage, and Senator McCain wanting to provide a tax credit to reduce healthcare costs. “McCain also said it was important to reform the giant benefit programs such as Medicare, Medicaid and Social Security” (4), and Obama said “we’re going to have to take on entitlements and I think we’ve got to do it quickly,” adding that he would do it in his first term as president (3). For more on each candidate’s plan, see their websites: BarackObama.com and JohnMcCain.com.

Either way, both candidates mean changes to compliance issues faced by the pharmaceutical industry. But we’ll think about that in November.


Sources:
1. Pfizer Narrows Research Focus in Chase for New Drugs (Update 1)
2. AtheroGenics Files Chapter 11 Bankruptcy
3. The Second Presidential Debate
4. McCain, Obama clash over economic crisis

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