SAPRAA

1. SAPRAA Ethics and Compliance 04 June 2010

2. Global Companies are enhancing their Anti-Corruption Compliance Programmes… • Bribery is the number 1 concern in the compliance departments of the 100 largest European companies • Recent European corruption scandals have been prominent in the news • Siemens (Germany): allegations that €1.3 billion in bribes paid to government officials; have already spent €650 million in attorneys’ fees • BAE (United Kingdom): allegations of bribery of Saudi government officials; major changes in compliance based on recommendations of Lord Woolf • Alstom (France): allegations that $200 million paid in bribes to Brazilian government officials • 48% of compliance officers in these companies report that they are spending the bulk of their time on anti-corruption • Source: New York Times, May 7, 2008

3. Global Focus on Anti-Corruption • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions • 30 member signatories • 7 non-member signatories • Implement legislation similar to FCPA • Extra-territorial • Extradition and mutual legal assistance • US Government has deferred prosecution because prosecution pending elsewhere • Pacific Consolidated Industries case • “Marketing agreement” with relative of gov’t official. President/part owner of company going to serve eight months in US, UK gov’t official serving 2 years in UK • Akzo Nobel case — Akzo agreed its Dutch affiliate would enter into disposition with Dutch authorities including $550,000 fine

4. Anti-Corruption Investigations are increasingly aimed at Pharmaceutical Companies Department of Justice (DOJ) – February 7, 2008 Merck to Pay $650 Million to Resolve Claims of Fraudulent Price Reporting and Kickbacks Xinhua General News Service – March 29, 2007 China Focus: China's drug watchdog steps up anti-corruption efforts Wall Street Journal – February 13, 2007 J&J Reports Improper Payments…Senior Executive Resigns Los Angeles Times – January 4, 2007 Drug firms bar gifts to doctors Anti-Corruption Investigations of special interest… • Diagnostic Products Corporation – allegations related to payments to doctors and laboratory • personnel employed by government-owned hospitals in China, to obtain and retain business with • the hospitals, booked as commissions. • Micrus Corporation – allegations related to payments to physicians employed by government-owned hospitals in France, Turkey, Spain, and Germany in return for the hospitals' purchase of products. Payments were disguised as honoraria, commissions and stock options. • Schering-Plough – allegations related to a charitable organisation headed by a polish government official who directed a government agency that influenced purchasing decisions of government-owned hospitals.

5. The SEC and DOJ are focused on FCPA • FBI now has a “squad” of 10 or 11 full-time agents and 50 other agents working on FCPA issues • DOJ has 12 attorneys focused on FCPA • In 2001 it was 2 or 3 • Public Corruption is No. 4 on FBI’s list of priorities • Ahead of organised crime • Sharp increase in enforcement actions • Have openly said focusing on pharmaceutical companies • Focused on putting individuals in jail • Unprecedented cooperation with international law enforcement agencies

6. FCPA trends since mid-2008 • Number of investigations continues to rise • Should expect industry-wide investigations • FCPA investigations result in parallel civil litigation • Securities fraud • Shareholder derivative actions • Foreign government lawsuits • Business partner lawsuits • Proposed legislation creating private right of action • Due diligence is essential to defending government investigation • Strength of compliance programs a consideration in charging • Individuals are receiving substantial jail terms

7. Other Countries are also stepping up Enforcement of Anti-bribery Laws…

8. The Foreign Corrupt Practices Act (FCPA):What is it, and why is it relevant internationally? The Accounting Provision requires companies to keep books, records and accounts that accurately and fairly reflect any transaction and disposition of corporate assets in reasonable detail. Accounting, Books and Records Provision Internal Controls Provision Anti-Bribery Provision The Internal Control Provision establishes "standards of conduct and internal control systems that are reasonably capable of reducing the likelihood of violations of laws”. These internal controls are not limited only to accurate financial reporting, but extend broadly to ensure compliance with all laws. The Anti-Bribery Provision prohibits any U.S. Company and its employees from paying, or giving or promising anything of value, directly or indirectly, to a foreign government official, political parties or party officials to obtain or retain business, or to gain any improper business advantage. The FCPA focuses on three primary areas:

9. External Influences on GPP - local

10. External Influences on GPP - other

11. Scope of the SA Code of Marketing Applicable to all marketers of medicines Aligned with International Professional and Local Codes and Guidelines on “Overservicing, Perverse Incentives and Related Matters” Policy of HPCSA Deals with industry-healthcare professional relationships Advertising and promotional activities

12. Health Care Professionals – Industry Relationships Code provisions: To ensure ethical behaviour and eliminate any possible perversity in the relationship • Sponsorships • Meetings – CPD & Product launches • Hospitality & Entertainment • Advertising and Promotional Material • Scientific Information Services • Sales Reps • Gifts • Grants and Donations etc.

13. Ethical Interactions - Quiz

14. Sponsorships/payments • Company X sponsored Dr. Hyde to an Independent Meeting; while most of his expenses were pre-paid, he had some additional expenses such as movie rentals and ground transportation expenses for which he paid in cash and and now wants to be reimbursed. Company X..... • Cannot reimburse any of those expenses; • Must ask him to provide the receipt for all of them and, if presented, reimburse him • Must proceed to reimburse only the ground transportation if Dr. Hyde can provide the actual receipt.

15. Sponsorships/payments • Company X sponsored Dr. Hyde to an Independent Meeting; while most of his expenses were pre-paid, he had some additional expenses such as movie rentals and ground transportation expenses for which he paid in cash and and now wants to be reimbursed. Company X..... • Cannot reimburse any of those expenses; • Must ask him to provide the receipt for all of them and, if presented, and reimburse him • Must proceed to reimburse only the ground transportation if Dr. Hyde can provide the actual receipt.

16. Payments • Company X's Regional Medical Group is planning a research award in the Diabetes field. What are the criteria that are applicable? • Evaluation by a Company X-invited independent panel • Public announcement of opportunity to apply for the award • Regional approval and legal review • All of the above • 1 and 2 only • 2 and 3 only

17. Payments • Company X's Regional Medical Group is planning a research award in the Diabetes field. What are the criteria that are applicable? • Evaluation by a Company X-invited independent panel • Public announcement of opportunity to apply for the award • Regional approval and legal review • All of the above • 1 and 2 only • 2 and 3 only

18. Promotional & Educational Materials • Which items need to go via the local promo- tional and educational material review process? • Promotional speaker slide sets and videos • Press releases and reprints • Internet sites • All of the above • All of the above excluding internet sites

19. Promotional & Educational Materials • Which items need to go via the local promo- tional and educational material review process? • Promotional speaker slide sets and videos • Press releases and reprints • Internet sites • All of the above • All of the above excluding internet sites

20. Promotional & Educational Materials • Slide sets approved on a global/regional level need to undergo local approval process before use in a promotional meeting? • Yes, local approval is always required • No, global/regional approval is sufficient • Yes, but excluding the situation when the speaker has been provided a slide set during global/regional speaker training

21. Promotional & Educational Materials • Slide sets approved on a global/regional level need to undergo local approval process before use in a promotional meeting? • Yes, local approval is always required • No, global/regional approval is sufficient • Yes, but excluding the situation when the speaker has been provided a slide set during global/regional speaker training

22. Promotional & Educational Materials • In addition to the standard approval process, who else needs to approve to approve dosing calculators, medical devices (including needles and swabs) ? • Medical • Compliance • Quality • Regulatory

23. Promotional & Educational Materials • In addition to the standard approval process, who else needs to approve to approve dosing calculators, medical devices (including needles and swabs) ? • Medical • Compliance • Quality • Regulatory

24. Responding to Unsolicited Requests for Off-Label Information • Can Company X non-Medical personnel proactively discuss off-label information with HCPs? • Yes, if done in a non-promotional manner and allowed locally • No, they may never engage in proactive off- label discussion

25. Responding to Unsolicited Requests for Off-Label Information • Can Company X non-Medical personnel proactively discuss off-label information with HCPs? • Yes, if done in a non-promotional manner and allowed locally • No, they may never engage in proactive off- label discussion

26. Responding to Unsolicited Requests for Off-Label Information • Can Company X non-Medical personnel respond to unsolicited questions on off-label informa- tion from HCPs? • No, only medical personnel allowed to answer • Yes, if the non-Medical employee knows the answer and delivers it in a non-promotional way • Yes, if the non-Medical employee has been trained how to answer any medical reference on the topic available

27. Responding to Unsolicited Request for Off-Label Information • Can Company X non-Medical personnel respond to unsolicited questions on off-label informa- tion from HCPs? • No, only medical personnel allowed to answer • Yes, if the non-Medical employee knows the answer and delivers it in a non-promotional way • Yes, if the non-Medical employee has been trained how to answer any medical reference on the topic available

28. Consumer Advertising & Promotion • Disease awareness programs developed by External Party on behalf of Company X... • Need to be reviewed and approved by Company X • Do not need to be reviewed by Company X due to the independency of the External Party • Can be reviewed by Company X if the party will agree

29. Consumer Advertising & Promotion • Disease awareness programs developed by External Party on behalf of Company X... • Need to be reviewed and approved by Company X • Do not need to be reviewed by Company X due to the independency of the External Party • Can be reviewed by Company X if the party will agree

30. Consumer Advertising & Promotion • Can you sponsor a journalist to attend a company media event, associated with an overnight stay? • Yes • No, not allowed

31. Consumer Advertising & Promotion • Can you sponsor a journalist to attend a company media event, associated with an overnight stay? • Yes • No, not allowed

32. Consumer Advertising & Promotion • Can a PR agency buy media space ( e.g. pay a newspaper) for a Company X-funded disease awareness publication? • Yes, provided that the publication is identified as funded by Company X • Yes, but no Company X funding disclosure is needed due to PR agency independence • No

33. Consumer Advertising & Promotion • Can a PR agency buy media space ( e.g. pay a newspaper) for a Company X-funded disease awareness publication? • Yes, provided that the publication is identified as funded by Company X • Yes, but no Company X funding disclosure is needed due to PR agency independence • No

34. Public Relations Activities • Can you organize a 2-hour sightseeing city tour for journalists attending a company media event before the dinner? • Yes, there are no restrictions for entertainment to journalists • No, such entertainment is not allowed

35. Public Relations Activities • Can you organize a 2-hour sightseeing city tour for journalists attending a company media event before the dinner? • Yes, there are no restrictions for entertainment to journalists • No, such entertainment is not allowed

36. Gifts • What affiliate review is required for gifts proposed to be given at International Meetings? • Host affiliate approval is required • Attendee Home affiliate review is required • Both of the above are required

37. Gifts • What affiliate review is required for gifts proposed to be given at International Meetings? • Host affiliate approval is required • Attendee Home affiliate review is required • Both of the above are required

38. Gifts • Is it allowed to provide a medical textbook to a HCP as a gift? • Yes, provided the value limit is met • No, it should be considered as a grant

39. Gifts • Is it allowed to provide a medical textbook to a HCP as a gift? • Yes, provided the value limit is met • No, it should be considered as a grant

40. Educational Grants & Charitable Donations • Which of the following would be considered a grant? • Independent Meeting – unsolicited request, funding only and no Company X involvement • Independent Meeting – unsolicited request, funding in form of a payment for a booth based on organiser price list • Sponsorship of HCP to independent meeting

41. Educational Grants & Charitable Donations • Which of the following would be considered a grant? • Independent Meeting – unsolicited request, funding only and no Company X involvement • Independent Meeting – unsolicited request, funding in form of a payment for a booth based on organiser price list • Sponsorship of HCP to independent meeting

42. Educational Grants & Charitable Donations • How should the following situation be evaluated? A Medical Association requests Company X to sponsor the organisation to conduct an AIDs- awareness campaign through a monetary contribution • This is should be considered as a grant request • This should be considered as a partnership with an external organization • This should not be considered at all, because this is an area which fits in Company X's therepautic areas

43. Educational Grants & Charitable Donations • How should the following situation be evaluated? A Medical Association requests Company X to sponsor the organisation to conduct an AIDs- awareness campaign through a monetary contribution • This is should be considered as a grant request • This should be considered as a partnership with an external organization • This should not be considered at all, because this is an area which fits in Company X's therepautic areas

44. Thank you!