Middle East's life sciences players face high corruption risk

06 April 2021 Consultancy-me.com 4 min. read

A year on from the Covid-19 outbreak, bribery and corruption remain the top risk facing life sciences businesses in the Middle East. This is according to a new KPMG study among industry-leading companies.

KPMG ran surveys and interviews through last year, among life sciences distributors and manufacturers in the Middle East, as well as multinationals active in the region. The goal was to assess the compliance risk landscape against the backdrop of new work-models, regulatory flux and an overstretched healthcare system.

As it stands, corruption is the biggest compliance concern for the industry – cited as a high risk by nearly 40% of respondents. Life sciences is a complex web of stakeholders – sales & marketing teams, healthcare practitioners, manufacturers, regulators, etc – who feed off each other for validation, clearance and profit.

Top compliance risks for life sciences businesses in the Middle East

KPMG Middle East partner & head of forensic Nicholas Cameron provides an example. “In the Middle East, life sciences sales team and, at times, their distributors, have significant interactions with practitioners, who provide medical detailing of products and technical support for patient treatment.”

“Whilst these engagements are necessary to ensure products are used safely and to drive sales, improper arrangements with practitioners may occur in order to retain sales.” Compliance officers can be left in the dark when it comes to these illicit transactions, as they rely on data from sales teams.

Other windows for corruption in life sciences include charitable donations, grey areas around public private partnerships and patient support programmes. These arrangements leave notable scope for dubious activity, but is often sniffed out – at least in the case of multinationals – by the Securities & Exchanges Commission (SEC) in the US.

Top laws driving compliance priorities in the Middle East

Indeed, the top regulatory driver listed by the respondents is the US Foreign Corrupt Practices Act (FCPA) – a comprehensive law that prevents businesses operating in foreign markets from bribing local players and authorities. The SEC found nine FCPA violations last year – three of which were in the life sciences sector.

In the Middle East, four FCPA transgressions have been reported in life sciences since 2018 – including French pharma company Sanofi being charged by the SEC for paying bribes to win business across the Middle East and in Kazakhstan.

And this is just the tip of the iceberg: many are struggling with compliance issues that are not flagged by the SEC, but might come to light in other scenarios – putting them in violation of industry body codes and local corruption laws.

Anti-bribery corruption training

The accused company has a sizeable burden of responsibility in most of these incidents, which is not always the case. Such is the vastness of the life sciences stakeholder ecosystem that corrupt activity from any third party can also end up implicating a business. By this point, most life sciences businesses give their employees regular anti-bribery and corruption training, although nearly half of third-party operators never receive such training. 

Other compliance risks

So the risk of corruption is huge, and that’s not the only compliance headache facing the life sciences sector. Mismanaged finances, patient safety and shifting regulations are other perennial risks for the industry. 

Covid-19 has only made matters worse. With unprecedented sharing and demanding of private medical information, the pandemic has thrown up a host of new data and privacy compliance issues. This is topped off with the heightened cyber threat as IT systems stretch across a wider range of networks.

In the backdrop, the compliance function in healthcare is compromised. “On-site review of third parties slowed during the pandemic, largely due to travel restrictions,” explained Cameron. All this while healthcare infrastructure is being strained to its full capacity to treat droves of infected patients.

According to Cameron, “life sciences companies need to prepare for potential compliance risks associated with reduced monitoring activities during the pandemic, using technology.”