Target: Pharma — Rooting Out Corruption

Transparency International (TI), an anti-corruption organization currently best known for its Corruption Perceptions Index, now has pharma in its sights.Pharm Exec spoke to Sophie Peresson, Director of TI’s Pharmaceuticals & Healthcare Program, about how the organization will go about understanding and combating corruption in the sector.

PE: What led Transparency International to make the decision to look at the pharma industry?

Sophie Peresson (SP): Seventeen per cent of people worldwide stated they had paid a bribe when dealing with the medical sector in a global survey of 114,000 citizens in 2013, and 45 per cent believed medical and health services to be corrupt or extremely corrupt.  Other surveys, such as Transparency International’s Bribe Payers Index, reinforce this finding.

With global spending on health of around US$7 trillion annually, the size of funds flowing through the healthcare sector makes it a lucrative and attractive target for corruption.  Estimates of global health public procurement funds lost to corruption range from ten to twenty five per cent.  Yet if only one percent of global health spending were lost to corruption, representing US$70 billion, and it was put back into healthcare, this would be US$10 billion more than the sum that would have been needed to achieve the Millennium Development Goals on health.

The pharmaceutical industry has a responsibility to be transparent and accountable and to reduce its role in corruption, thereby increasing health equity.

The purpose of TI’s Pharmaceuticals & Healthcare Program is to achieve genuine change in the pharmaceutical and healthcare sector through reducing corruption and promoting transparency, integrity and accountability. We will apply TI’s strengths and expertise to contribute to the program’s overall goal of improving global health and healthcare outcomes for the benefit of all people of all ages.

What is the expected timeline for the program? What is to be looked at first?

SP: This will be a long-term project of course; fighting corruption involves both changes in policies but also attitudes. We estimate that we will need at least 10 years to make an impact. We are currently developing the strategy and anticipate that it will be ready in the second half of 2016.

We are aiming for both a long and short-term impact to make corrupt officials think twice about accepting bribes but also provide the real structural reforms that create transparency and limit the scope for corruption to take root.

What stood out from the pilot project as areas of particular interest?

SP: The sector is under served by anti-corruption programming as a whole. There are pockets of good work; however, the response is hugely disproportionate to the threat. It is clear that the problem in the health sector needs a holistic approach driven by multi-stakeholder groups operating at various levels. This includes the private sector, which is so integral to the health systems. Real change will only be achieved if the private sector is prepared to be bold, commit to change and take a leading role.

There is also a lack of clarity in policy. The regulatory and legislative frameworks at national, regional and global levels are unclear and too often legislation is poorly enforced.

Two areas of the value chain that stood out were procurement and service delivery. Procurement due to the size and number of transactions that happen within health systems, and service delivery because of its direct impact on the individual, often the most vulnerable in society.

What will the geographical focus be in the early stages of the investigations?

SP: The program is a global one but there are regional projects that have been launched (e.g. in Latin America). Moreover, the Health Action Fund (HAF) is helping to support several national initiatives led by TI chapters. The HAF will allow disbursal of grants to TI national chapters from anywhere in the network to fund activities, in whole or in part, that are contributing towards TI’s goals.

Is the global shift to further transparency and - e.g. the US "Sunshine" Act - likely to make TI's work easier?

SP: Arguably, this can provide a benchmark to measure performance against, but compliance is box ticking and it is therefore essential to ensure that implementation really happens. 

Large parts of the world are not covered by compliance legislation and therefore at a higher risk of corruption vulnerabilities. Our research has shown that industry works on a self-regulation model, and is quite closed with regards to compliance in, for example, Africa, China, India. These are large markets and corruption here hurts the vulnerable the most.

How does TI plan to work with the industry on finding and combatting corruption?

SP: We have been successful in developing a very good relationship with many industry players and we hope to continue doing so. Asking industry to see the need to combat corruption as going hand in hand with their other corporate social responsibility initiatives.  It is in their interests to strengthen health systems to make sure the right treatment reaches the right patient at the right price.  It’s a chance for the industry to repair its reputational damage and build trust within the patient community again.

In 2016, the program plans to start work on a global Companies Index for the pharmaceuticals and healthcare sector. There is a growing body of indices that seek to evaluate company good governance and drive improvement within a sector or on an issue.

TI produces a number of indices that focus on the private sector, such as the Defence Companies Anti-Corruption Index. These indices involve the assessment of a range of major international companies using well-developed methodologies. TI aims to persuade local, international and global companies working within the health sector to provide medicines, equipment and services in a transparent and accountable way so to improve health outcomes.