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Bribery and corruption in the life sciences sector

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In 2016, approximately 25 percent of the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) Foreign Corrupt Practices Act (FCPA) enforcement actions involved life sciences companies. This underscores the reality of bribery and corruption struggles throughout the life sciences industry.

Life sciences companies, due to the nature of their business, adopt more risk than other industry segments. These companies often must interact with foreign and domestic governmental entities and officials, which exposes them to higher public corruption risks.

In many countries, state-controlled compensation and pressure on reimbursement rates have resulted in a strong incentive for medical institutions and medical professionals to look towards other sources of revenues to maintain profitability. These same markets often contain widespread reports of health care corruption.

However, significant progress has been made in terms of the robustness of programs that life sciences companies have developed to reduce corruption risks. This includes increased third-party due diligence, more robust data collection, increased use of technology and increased diversity of training. Going forward, life science organizations must focus on continually improving their compliance programs and the resulting controls to identify new and emerging risks and to prioritize limited compliance resources.

In a recent interview with Risk & Compliance magazine, RSM, along with GE Healthcare, Novartis, Baker McKenzie and Skadden, discusses the challenges life sciences organizations face in combating bribery and corruption, as well as the recommended steps to take to mitigate risk and build or enhance compliance programs.

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