Grim Repercussions

By: Sabrina Skari, CIS Business Development Manager
sabrinaskari@cis-partners.com

Anyone who has ever met me knows that I am a pop culture junkie. I have no desire to live that lifestyle, I never planned a move to L.A. and I am appalled by 99% of what I see on the “entertainment news” shows. However, I continue to watch with suspended disbelief as the Hollywood elite, sports champions and billion-heir’s club continue their reign of stupidity. CNN features entertainment stories and offers Kathy Griffin hosting duties for New Year’s Eve. Barbara Walters’ “10 Most Fascinating People of 2009” included SIX from the entertainment industry in a year riddled with war, economic downturn and political regime changes.

So, one must ask why is America (including myself) along for the ride every time we hear another story that takes someone from pedestal to pedestrian? We are fascinated by repercussions. We love seeing people get their just desserts. And who doesn’t crave an “I told you so” every now and then?

When the story of Tiger Woods’ “transgressions” broke, the entire world (including the CIS office) was busy dissecting all of the measures he could have taken to prevent such a public eruption: he didn’t have to get married, he could have limited the texting, he could have limited the women and so on…Our fascination around the demise of his public image centered on the fact that Tiger Woods- the brand- is well recognized as wholesome, family-oriented and driven with purpose. But behind the scenes, Tiger Woods- the person- didn’t live up to the standards set by his brand and chances are that he heard several warnings and chose to ignore the danger signs. In the end, the repercussions of his actions have already cost him billions of dollars in endorsement deals and he has permanently altered his public image.

The same type of behavior can be true for all of us. In our personal lives, each of us has a personalized way in which we engage in “risky behavior.” Perhaps it is waiting until the last day to send in our bills, driving just 5 miles over the speed limit or having the second portion of macaroni and cheese. The repercussions for these dalliances aren’t too costly, but the point is that we know we’re doing something that is against our best interests.

Then, take it to the next level and think about these actions in a professional world…in some industries sending in an expense report late, doing personal stuff on company time or even snagging an extra half hour for lunch is as risky as it gets. However, in the pharmaceutical industry, and particularly the world of compliance, the stakes are high. When it comes to government compliance, the pharmaceutical industry can’t hold a press conference and apologize publicly for our compliance “transgressions.”

In the realm of GP compliance, there are so many crucial calculations and reporting activities that are predicated on historical data. The sheer complexity of these activities provides ample opportunity for human error, even among the most cognoscente analysts. This is the foundation upon which CIS has built its audit and assessment business, as it provides a chance for an outside party to come in with the magnifying glass and evaluate risk areas. However, after following this compliance due diligence, how many manufacturers go down the warning list of actionable items and ensure that each identified risk is mitigated effectively over the recommended timeframe? I would venture to guess that number is not 100%.

Further, let’s say that in the midst of running shadow calculations, you find a flaw or mistake. Do you go back and correct the calculation or do you correct the calculation AND also review the methodology to ensure the mistake doesn’t happen again? Then, if the methodology was incorrect, do you update the appropriate policy and procedures and notify all individuals with a hand in the process? In fact, in your procedure documentation do you have an action plan specifically laid out for instances where mistakes are found or risk areas are identified? The situations may seem circular but this is good because an effective compliance program should be a closed loop process. In the process, you are effectively closing the gap for GP compliance “transgressions.”

The same principle applies in Corporate Compliance. For example, activities are often managed by third party vendors, including Speaker Programs, Sample Accountability and Consultant Meetings. This practice is more than acceptable, there just have to be processes in place to monitor the activities and ensure compliance. Tiger relied on his associates to cover his tracks, and in the same way that it came back to haunt him, relying on others to keep you compliant will come back to haunt you. When you identify that a vendor or representative is not acting in accordance with your policies and procedures, sending a warning and insisting on change isn’t always enough. You have to track the transgressions, appropriately elevate the status for repeat offenses and track disciplinary measures. Once patterns are identified, it is the responsibility of the compliance office to heed the warning signs and identify troublesome individuals, departments or districts, or gaps in the program itself.

In the areas of manufacturing and clinical compliance, one could argue that the cost of a mistake or error has the potential to be the highest. If your company has the unfortunate circumstance of being involved in a recall by the FDA the risk can easily be millions of dollars. It may occur due to something that was not documented correctly in a clinical trial, or a manufacturing issue, but the repercussions are the same. There are fines to deal with from the FDA, not to mention potential law suits from patients who were prescribed the drug in question. In the worst case scenario, if a drug is pulled off the market, the money that was poured into its research and development is lost and there are several instances where that amount nears the $1 billion mark.

Financial losses are devastating but in many of these instances, the cost of disregarding a compliance issue can have personal repercussions as well. It may cost an individual their job and may cost a manufacturer their reputation. When all of these potential risks in different areas are combined, it’s easy to see how quickly ignoring compliance risks can have a domino effect. That said, the major differences between watching Tiger Woods’ reputation crumble in the public eye and the potential downfall of a pharmaceutical company is that the weight falls on the shoulders of many people instead of one lone individual. Also, celebrities are forced to deal with both the highs and lows as they are documented by the mainstream media. Oh, and one final piece of good news is that at least when you’re in the healthcare industry, you don’t have to worry about losing an endorsement deal with Gatorade in the process.