What’s driving Pharma’s international bribery scandals?

Reviewing some of the points in raised about why pharmaceutical firms are caught up in bribery cases, and how they are disguising the grease payments, here are the highlights of a report from the Inquirer.

Does this ever happen?

Does this ever happen?

  • Bribery is the norm in emerging nations; it is routine and systematic
  • Disguising the source and money trail left by bribes.
  • Competitive advantage trumps bribery penalties.
  • Compliance is destined to fail when corrupt employees are considered to be ‘savvy’.
  • Fines and penalties are not deterrents.
  • Flagging business performance is worrying firms and encouraging the unethical pursuit of sales

The system is sophisticated enough to merit its own laundry. Of course, no one wants to openly accept a bribe so figuring out how to hide the source of funds becomes a requirement. If the money goes straight to a service business used by the intended bribe recipients, such as a travel agency, the agency can lay it all off as travel expenses, from luxury cars, to suites at five star hotels and extravagant tours. While the payments appear as such on the books, they are only bookings, and the money is instead channelled to the intended bribe recipient, minus the agency’s commission.

The investigations into the big-pharma bribery scandals highlights the abject failure of anti-bribery and corruption efforts to date. Big-pharma, and any other company operating in emerging nations, with ever decreasing profit margins and an apparent absence of ethics is still focusing on the money, no matter how they get it. It appears, from the CEO comments, that corruption happens systematically even when improper behaviour exposes bribe givers to prosecution and fines.

Progression or regression?

“Once again, a progression first attributed to Steve Jobs and previously cited here applies to pharma.  When a company and its industry are growing and producing products of value that its customers want to buy, then their scientists, engineers and other R&D people drive the business.  Once the innovation and the value of new products decline and demand slackens, then marketing and sales drive things.  That works for a time until it no longer remains possible to continue selling old wine in new bottles.  Then finance drives everything, catering to Wall Street with cost cutting, layoffs, mergers, divestitures, and arithmetic sleights of hand.  That also works for a while, until it no longer does.  In the final stage, some businesses resort to cheating, bribery or other underhanded methods.”  From the Inquirer article.

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