In the last decade, there have been a number of FCPA enforcement actions in the healthcare sector. This post discusses some of the challenges faced by companies that operate in Latin America in this industry and ways to mitigate risks. While the challenges discussed are true regardless of the region, they are particularly relevant in Latin America. Determine who is a government official. One of the main challenges of compliance with anti-bribery laws in the healthcare industry in Latin America arises out of the fact that many hospitals, laboratories, and medical schools are state-owned or state-controlled. Moreover, local legislation often considers healthcare professionals (HCPs) working in such entities as public employees. In Brazil, for example, an HCP who works in a public hospital, even on a temporary basis or without pay, is considered a government official. Because of this, many companies operating in the region have implemented controls to determine whether or not the HCPs with whom they interact are considered government officials and, if so, which of them represent higher risks from an anti-corruption compliance perspective (e.g., HCP with buying power at a Secretary of Health vs. HCP with no buying power working in a small public clinic). The higher the risks, the more enhanced controls that are necessary. Sponsorships. A regular element of a healthcare company educational and marketing program in Latin America includes sponsoring doctors to attend medical conferences. This is not unlawful under the FCPA and under local laws of many countries. Anti-bribery risks, however, arise in these situations. For example, violations can occur when there is no reasonable rational for selecting the HCP to be sponsored, when the HCP is not fluent in the language of the program (this is often an issue in the context of international events), or when the HCP travels to the conference destination (oftentimes in tourists location) but does not attend the conference. Sponsorship of HCPs to international conferences are perceived as something “glamorous” in Latin America, and many doctors are eager to receive such an invitation. To ensure that this practice is not abused, companies in the healthcare industry should have specific controls in place related to sponsorships. Among other things, such controls should include maintaining documentation on the rational for selecting an HCP for a conference, the frequency of sponsorships, implementation of on-site monitoring to ensure HCPs actually attend the conferences (and also to document the existence of the event itself) and requiring that all attendees are fluent in the language of the program. Payment to doctors. To develop and sell their products, healthcare companies often need to engage HCPs to do things like carry out specific research or provide educational briefings to employees of the company. Given that, in Latin America, some of the best hospitals and medical schools are public, there is a good chance that an HCP regarded as a thought leader or expert in his or her field may also be government official. Thus, it is important for healthcare companies to have policies and procedures in place that address payments to HCPs. Among other things, they should keep documentation about the rational for selecting the HCP and evidence of the services provided. They should maintain support showing how they determine the amounts to be paid to HCPs for different activities. Variations of compensation may exist based on factors like the HCP’s level of education or the location of the activity. Nonetheless, it is important to ensure that fees are proportional to the activities carried out. This blog post was originally published at the FCPAméricas Blog.
Carlos Ayres is an attorney with the law firm Trench, Rossi e Watanabe Advogados (associated with Baker McKenzie) in São Paulo, Brazil. He focuses on anti-corruption and compliance issues, with a particular emphasis on Brazil and other regions of Latin America. Mr. Ayres co-chairs the Anti-Corruption and Compliance Committee of IBRADEMP (The Brazilian Institute of Business Law) and teaches FCPA and Compliance as a visiting professor at the Post-Graduate Program of GVLaw, School of Law, in São Paulo. He is also a visiting professor at the Post-Graduate Program in Risk Management and Fraud Prevention of FIA (Fundação Instituto de Administração) Business School in São Paulo