The UK Government is in the middle of a post-legislative review of the UK Bribery Act 2010 (UKBA) which may lead to amendments. These changes, coupled with ever evolving international anti-bribery corruption (ABC) legislation mean pharmaceutical companies need to keep their ABC risk assessment and compliance under review and adapt with the local and international changes. This is particularly key for companies planning expansion into new geographical markets or to extend reach “beyond the pill” into adjacent products or services. Poor understanding of ABC can result in either exposure to risk or indeed a poor understanding of risks can lead to an overly cautious approach where some market expansion tactics are unnecessarily constrained. This article seeks to highlight some of the key global developments and provides tips for navigating the ABC regulatory minefield.
It is commonly accepted that the UK Bribery Act 2010 (UKBA) has succeeded the US Foreign Corrupt Practices Act 1977 (FCPA) as the most stringent ABC legislation globally. It has put ABC compliance on the corporate agenda and reminded the business world that bribery and corruption is illegal and there is an obligation on businesses to help stamp it out. The UKBA’s extra-territorial reach and focus on both public and private bribery meant more companies than ever were caught by ABC legislation. Seven years on and with companies now more familiar with the UKBA’s requirements, the Review has given focus on the section 7 corporate criminal offence of “failing to prevent bribery and corruption”.
So might the Review lead to changes to the UKBA and what might the impact of such changes be for pharma companies? Recent global legal changes in the ABC space, particularly in France which introduced Sapin II in 2017, might provide a clue. It adopts many of the key principles of the UKBA, however, there are three notable differences, namely that:
- Sapin II requires relevant organisations to have ABC policies and procedures e.g. failing to have such a compliance framework in place is an offence. Under section 7 of the UKBA “adequate procedures” is not compulsory rather a defence in the event bribery or corruption is found in the business;
- The French guidance is more granular than its UK equivalent, providing further explanation as to what is expected of relevant organisations; and
- The Sapin II requirement for an ABC compliance programme only applies to companies with turnover of over EUR100m and/or more than 500 employees (whilst for “adequate procedures” the UKBA applies to all business, large or small).
It is likely that the Review will lead to further UKBA guidance, including potentially more granularity over what “adequate procedures” may mean for organisations of different size and risk. Whether the Review committee decides to introduce a compulsory requirement is yet to be seen. The challenge with any positive obligation is that it requires enforcement and monitoring which in turn requires resourcing. Without such policing businesses will simply not take it seriously. Either way, should the UKBA be changed to create a positive obligation this should have little impact on those organisations with a strong compliance culture.
Against an evolving regulatory environment it is important that pharma companies ensure their ABC compliance remain fit for purpose and up-to-date – below are some top tips for compliance:
- Consider ABC as part of wider compliance. In the UK the introduction of the failure to prevent tax evasion by the Criminal Finances Act 2017 mirrors much of the adequate procedures guidance of the UKBA. Further, in jurisdictions such as Italy and Spain, failure to prevent offences cover a much wider remit than just ABC and tax but also include AML, market abuse and unlawful use of data. Given overlap and synergies there is benefit from engaging across the business to create a compliant culture broader than just ABC;
- A key part of the UK Government’s six guiding principles on the UKBA is monitoring and reviewing, including if there is a change of law in a jurisdictions an organisation is operating in or if the business enters into new territories or services. To keep up-to-date with changes in ABC legislation companies should sign up to financial crime updates from professional advisors, regulators and NGOs such as Transparency International. Irrespective of material changes companies should also ensure a regular review of their ABC compliance;
- As this article has highlighted, there are numerous pieces of international ABC legislation, many follow a similar pattern but all have their nuances. Companies should look for synergies between various legislation at group level, benchmarking against the highest state of compliance and applying local variations as appropriate; and
- As part of a risk assessment it is key to understand controllable and non-controllable risks and seek ways to manage controllable risks. This process can often reduce the perceived risk of a strategic move and provide a robust and lower risk ay to achieve company growth.
Chris Cartmell is a senior solicitor in the Regulatory Disputes Practice, and Jo Pisani is a partner in UK Pharma and Lifesciences Consulting Practice, at PwC