Foreign Markets: Proceed with Caution
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That was the conclusion of top health care business leaders who discussed the strategies they use to mitigate risk, at a panel titled “New Markets, New Challenges: Ethical and Regulatory Hurdles Facing the International Pharmaceutical and Medical Device Industry,” at the University of Miami Global Business Forum, held Jan. 12–14, 2011.
“In Brazil, 30 million people cross from poverty to the middle class every year. This is a very attractive market and it’s growing. But with these opportunities, we also have to face challenges,” said Rogerio Ribeiro, president for Latin America and the Caribbean for GlaxoSmithKline, which sponsored the panel.
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Panelists (L-R) Rogerio Ribeiro, President, Latin
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Many panelists expressed concern about the seriousness of corruption. Carlos Alonso, president of renal operations for Baxter Healthcare, said he’s had to rebuild two operations, in Brazil and in Argentina, in the wake of misconduct.
Clivetty Martinez, Johnson & Johnson’s vice president of Health Care Compliance and Privacy in Latin America, noted that the issue is complicated by the different laws, standards, regulations and cultures throughout the region. Providing a dramatic example, Martinez displayed a color-coded analysis from Transparency International, which tracks the perception of corruption around the globe. “The more red you are, the higher the perception of corruption. I work in Latin America and we have a lot of red, but other areas of the world also have a lot of red,” she said.
While multinationals are accustomed to complying with the U.S. Foreign Corrupt Practices Act, which holds them responsible for their actions whether they operate in the U.S. or abroad, today’s investigatory climate is even harsher, thanks to the introduction of the U.K. Anti-Bribery Act and growing interest by local governments.
“Although these countries haven’t enforced these laws in the past, what we are seeing now is piggybacking. The DOJ [U.S. Department of Justice] goes into [a country and] looks into a case, and when the case gets out to the local media, then [the local] government says, ‘Oh yeah, we’re looking into it too,’” Martinez said.
U.S. companies must ensure that their suppliers and distributors abroad are beyond reproach as well. “I know that in the past, companies may have complied with the FCPA, but when it came to the distributor, there was a ‘don’t ask, don’t tell’ policy,” Alonso explained. “That is not acceptable anymore. You are just as responsible for a third party as for yourself, and that’s a big challenge.”
Bidding is another potential quagmire, especially in Latin American countries, where the government typically administers about 80 percent of health care. “It’s very important to train your people well,” advised Martinez. They have to be very well prepared” and work closely with your in-house lawyers.
Alonso agreed: “With some interactions, it’s absolutely required to bring an attorney with you, so make sure you create a crack legal team that can work side by side with your business team.”
It’s also important that companies clearly spell out their compliance procedures. Alonso explained that Baxter’s begin with a mission statement that takes into account not only the company’s business goals but also its pledge to do right by patients. “Where the rubber meets the road is that you translate your values and your mission, and you live them every single day,” he said.
Take the writing of those compliance manuals very seriously, Martinez added, and ensure that they are presented in a user-friendly format. “Try to use different techniques to get the message out” — for example, with videos that show situations and how the person reacted in that situation, she said. “Also engage your sales and marketing people as actors or as contributors to the scripts.”
The panelists agreed that companies should set up a compliance department and hire a professional compliance officer to manage it, not heap the responsibility onto someone else, like marketing professionals or lawyers.
Finally, it is of utmost importance that no one in the company is above the law, including the highest-level officials. “Employees will be watching to see how the company’s leaders respond to misconduct, and that response should only be one way: zero, zero, zero tolerance,” Alonso said.
Companies should do their research ahead of time and, if they find a country is just too risky, they should simply stay away.
“It all comes back to setting realistic goals, assessing the market and knowing there may be certain markets you can’t compete in because of your standards,” Alonso said. “You don’t want to push your people into danger zones where they feel ‘My job is at stake, and this is what I have to do.”’
By Charlotte Libov
