Reflection Paper Mapping Corruption Risks in the Pharmaceuticals & Healthcare Sector
Executive summary This
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Table of Contents 1. Introduction ................................................................................ 2 Why a mapping exercise? ............................................................ 2 2. The Vulnerability of Health Systems ............................................ 3 3. Methodology .............................................................................. 4 Data collection ............................................................................. 4 Limitations ................................................................................... 4 4. Analysis...................................................................................... 5 Main findings ............................................................................... 5 5. Concluding Remarks ................................................................ 20 6. Glossary of terms ..................................................................... 21 7. Bibliography ............................................................................. 28
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1. Introduction In 2014 Transparency International UK established the Pharmaceuticals & Healthcare Programme (PHP). The Programme's objective is to achieve genuine change in the pharmaceuticals & healthcare sector through reducing corruption and promoting transparency, integrity and accountability, with the overall goal of improving global health and healthcare outcomes for the benefit of all people of all ages. In order to reduce the harmful impact of corruption within the health sector, a better understanding of the corruption risks is required. It is crucial that an improved knowledge base of health sector corruption is built and continually updated, and that this knowledge is applied by policy makers, health authorities, the private sector and healthcare professionals to reduce corruption in all its forms. This reflection paper provides a progress update on PHP’s mapping of the pharmaceuticals & healthcare sector corruption risks. After outlining PHP’s rational for mapping corruption risks within the pharmaceuticals & healthcare sector and the methodology of the project, the paper discusses the initial observations and framework. This discussion paper offers the opportunity to analyse our initial findings and seek feedback from stakeholders, facilitating the identification of priorities for the ongoing project, and will act as a tool in our knowledge development. It is our anticipation that this mapping of corruption risks within the pharmaceuticals & healthcare sector will be critiqued and further developed with additional research over the coming months.
Why a mapping exercise? A corruption risk map is a tool for analysing corruption risks in a complex sector, and will form the foundation for TI’s work in this sector. No comprehensive corruption risk map exists for the sector; those few that have been undertaken to date are incomplete and inaccessible to an audience beyond health and corruption experts. This corruption map will identify where and how the sector is vulnerable to corruption by highlighting key corruption risks and agents, and provides the foundation for future research and advocacy.
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2. The Vulnerability of Health Systems The pharmaceuticals & healthcare sector refers to the provision, distribution and consumption of healthcare services, medicines and related medical products, including all actors involved in these areas. In the pharmaceuticals & healthcare sector the potential size of corruption, defined as “the abuse of entrusted power for private gain” (Transparency International, 2009), is vast and it impacts on all people of all ages. Yet corruption within the sector is poorly understood. Surveys of corruption by Transparency International (TI) and others regularly indicate that corruption is present in the pharmaceuticals & healthcare sector. In 2013 TI produced a global survey of bribe-paying, in which over one hundred thousand citizens in around a hundred countries were asked what their daily experience of bribe-paying was. Twenty-five per cent of people interviewed stated they had paid a bribe at least once in the past year – in some countries it was over 75%. Specifically in the health sector, 17% of people worldwide said they had paid a bribe when interacting with medical services and 45% believed these services to be corrupt or extremely corrupt; in 17 countries, that figure rises to over 70%. The pharmaceuticals & healthcare sector is a highly complex sector with multiple actors and interactions. Indeed the health sector value chain is so immense that it stands unrivalled in this regard, especially coupled with the volume of transactions within the system. It is this complexity along with the size of financial flows – a US$7 trillion global annual spend on health – that creates opportunities for those who seek to profit from positions of power and influence. From conflicts of interest in the research & development process to marginalised communities being unable to access healthcare due to bribery, corruption risks are prevalent throughout the sector. Ultimately the impact of corruption within health systems, wherever it prevails in the value chain and beyond, harms not only the individual but society as a whole. While this is an issue that citizens experience everywhere, all too often it is those who are most vulnerable that bear the brunt of corruption’s negative effects. Figure 1 – The pharmaceuticals & healthcare sector value chain (TI-UK)
Research & Development
Patients
Manufacturing Registration
Service delivery
Manufacturing
Distribution
Marketing
Selection
Procurement
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3. Methodology Research was carried out from September 2015 to November 2015. It began by mapping the pharmaceuticals & healthcare sector value chain to provide a broad framework on which to apply categories of corruption vulnerabilities. Publications particularly useful in this exercise included the European Commission’s 2013 paper Study on Corruption in the Healthcare Sector and Karen Hussman’s 2011 paper Addressing Corruption in the Health Sector (with a more extensive list of relevant publications located in this paper’s bibliography). Within each broad category, sub-categories and sub-sub-categories of corruption vulnerabilities were identified, hereafter concurrently termed as corruption risks.
Data collection PHP retrieved media articles by desk based research. Using google alerts and google keyword searches researchers collected worldwide English media articles relating to pharmaceuticals & healthcare corruption. Media articles were limited to a time period from September 2013 to October 2015. This ensured a broad selection of cases, while being manageable for the researchers with the resources available. A total of 350 cases were logged and classified according to the mapping framework devised for the purposes of this reflection paper. A glossary of terms was compiled to increase consistency when researchers were categorising media articles. Cases often displayed multiple corruption vulnerabilities and were logged in multiple corruption categories and risks within the framework. The total number of cases logged in all corruption risks of the framework is consequently higher than the total number of media articles collected, demonstrating the multifaceted dimension of corruption. The framework was further refined with the creation of corruption risks as further corruption vulnerabilities were identified during the course of the research. To mitigate a large range of corruption risks regular meetings were held by the research team to review and consolidate the framework. Once all media articles were logged and categorised, the researchers conducted a consistency check on a corruption-risk-by-corruption-risk basis. This ensured that all media articles were categorised using the same criteria. A final spot check was conducted by the lead researcher at the end of the research phase.
Limitations TI-UK has not undertaken to verify whether corruption cases reported in media articles are complete or correct. Media articles were taken at face value and no confirmation was sought on whether the stated corruption incidents were proved at a later date. TI-UK categorised the status of each case as an allegation, investigation, charge, conviction, or settlement. During analysis this allowed cases to be given a greater weighting depending on their reliability and outcome. Similarly, bias in the prevalence of cases from particular regions or countries is possible. This is due to a number of global factors including varying levels of press freedom and press expertise in the health sector. The fact that the research was only carried out in English is also a contributing factor that needs to be takes into account. Therefore, the utility of a geographical analysis is somewhat limited and is reflected in the analysis of categories within the framework. 4
4. Analysis The mapping of corruption vulnerabilities within the pharmaceuticals & healthcare sector has produced 11 broad corruption categories based upon the sector value chain. Within each category specific corruption risks have been identified and defined (a full list of definitions can be found in section 5 of the paper) giving a total of 58 corruption risks. The number of risks makes it clear that the pharmaceuticals & healthcare sector is a highly complex and vulnerable one, with an extensive range of corruption vulnerabilities offering actors multiple ways to manipulate the system for private gain. The sector value chain worked as a useful initial framework for the identification and categorisation of corruption cases. However this mapping exercise has gone beyond the value chain to include other corruption risks such as those that have been grouped under ‘political’. This is not an exhaustive list but instead highlights a manageable range of risk areas for further research.
Main findings The vast majority of risks identified are crosscutting across the sector, with only some risks applying to a narrow area of the sector, such as the self-certification of medical devices. This finding is somewhat surprising due to the complex structure and extremely technical nature of the sector, but is encouraging for future research and anti-corruption programming, as it increases the opportunity to share understanding, success and best practices across the sector. The prevalence of cases identified across risks is uneven. Categories such as service delivery and marketing produced the majority of cases, while areas such as distribution produced many less. This could simply be due to the actual prevalence of corruption, or other limiting factors such as the lack of reporting within the media and the difficulty of discovering or prosecuting some corrupt activities over others. For example, it is evident from wider anti-corruption work that discovering and substantiating grand corruption is much harder than corrupt procurement practices. This mapping of corruption risks is an inclusive one. Therefore the study has identified and presented activities that are not universally acknowledged as corruption and within some legal frameworks would be at best viewed as unethical. Some of these activities are central to business models or accepted parts of health systems. This study has used the TI definition of corruption (see section 2) as the parameter for identifying and including risks, with the optimistic anticipation that these unethical acts will be universally and legally acknowledged as corruption in the future.
“The health sector is susceptible to abuse through various channels. Health systems incorporate numerous different actors in a complex web of relationships, which makes corruption difficult to identify where it exists.” http://archive.transparency.org/global_priorities/other_thematic_issues/health/health_syst ems [Accessed 19/11/2015]
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The first category within the corruption map, research & development is the process to study and produce new medicines and medical products. Specifically, clinical trials of medicines are carried out to discover or verify the effects of and/or identify any adverse reaction to investigational products, and/or to study the absorption, distribution, metabolism and elimination of the products with the object of ascertaining their efficacy and safety. The role of governments is to provide a legal framework in order to protect the safety and rights of the subjects participating in clinical trials, ensure that trials are adequately designed to meet scientifically sound objectives, and prevent any potential fraud and falsification of clinical data and information. The key actors within this category are industry, researchers and government regulators. Within this study 30 cases of corruption within medical research & development were identified, ranking it quite low against other risk areas. One corruption risk identified is researchers providing limited or false information regarding a clinical trial. The majority of cases identified originate from Europe and North America. This was an expected finding due to the concentration of research & development companies in those regions. In the absence of an insufficient legal framework for the regulation of clinical trials, it is not possible to ensure the safety and rights of the subjects participating in clinical trial, that trials are adequately designed to meet scientifically sound objectives, or to prevent any potential fraud and falsification of clinical data and information. As the research & development category is situated at the beginning of the sector value chain the effects of corruption can increase in magnitude as they descend down to the individual. Thus corruption will impact regulators who decide on whether a product is safe to enter market, those who will purchase the product, or the healthcare professionals who will administer the substandard or incorrect product to patients. CASE STUDY: “Millions of patients given flu drugs with little or no benefit, study finds�, October 2014 An Australian-led study found that researchers paid by pharmaceutical companies had different views to independent researchers and were more likely to recommend the use of antiviral drugs for flu. This study examined systematic reviews, which are considered the most reliable evidence of a drug's effectiveness as they use stringent guidelines to assess all existing studies. The study goes on to suggest that the impact of such studies on government drug procurement policy is huge, as highlighted by a US$6.9 billion global cost to stockpile a flu antiviral. 8 http://www.theguardian.com/society/2014/oct/07/millions-of-australians-given-flu-drugs-with-littleor-no-benefit-study-finds [Accessed 18/11/2015]
Registration is a critical government function that ensures that registered medicines and medical devices fulfil quality, efficacy and safety standards. It provides a system whereby only products authorised by the national medicine and medical device regulatory authorities are allowed to be manufactured, imported, distributed and prescribed to patients. This registration process requires significant interaction between government regulators and industry. Suppliers may bribe government officials to register their products without submitting the required information, or government officials may deliberately slow down registration procedures in order to solicit payments from a supplier. Moreover, interest groups may offer private incentives to public officials to include particular medicines on the essential medicines list. Companies that have invested vast resources developing a medicine or medical device will be under considerable pressure to have a product registered for market entry, which is conducive to corruption vulnerabilities. Often registration of a product in its country of origin will be accepted by other jurisdictions, but conversely registration authorities will note rejection. Therefore it is at this stage of the value chain where decisions made by public officials have arguably the highest financial impact for companies, increasing the motivation for corrupt activities. According to the study corruption cases identified under registration can be found across all health sector industries. However, the self-assessment of medical devices is a corruption risk specific to the medical device industry. Here the company that has developed the medical device can self-assess and certify the product and then begin to sell it. The company is trusted to ensure that the product meets required standards, but with the pressure to return on the investment and an urgency to have products enter a market, financial motivations can lead companies to certify unsuitable products. Corruption vulnerabilities are generally higher in low- and middle-income countries (LMICs), with the US and EU generally believed to have safe and efficient systems. The use of substandard medicines or medical devices by healthcare professionals or patients can lead to serious health complications, morbidity or mortality. To help ensure transparency, fairness and consistency in the registration process the assessment of applications should be done by a committee of experts with the necessary scientific, medical and technical knowledge and skills. CASE STUDY: “Corruption rife in Drug Administration�, January 2015 A report by Transparency International Bangladesh found extensive evidence of corruption within a national drug administration. Money was received for issuing new licenses for pharmaceutical companies, registering new drugs, approving packaging and gaining export approval. Money changing hands ranged from US$5 to US$20,000, with evidence suggesting that small 9 pharmaceutical companies were more prone to such behavior. http://www.thefinancialexpress-bd.com/2015/01/16/76171 [Accessed 18/11/2015]
Manufacturing is one of the smallest categories within the corruption framework in terms of corruption risks identified. However, the impact of corruption within this area of the value chain can be devastating. Substandard drugs, produced by error or negligence, are less effective, causing further symptoms to manifest in a patient or death in more serious cases. Counterfeit or falsified medical products involve the illegal copy of a patented medical product. Specifically in regard to counterfeit drugs it is often impossible to determine at first glance the level or the existence of active ingredients present. The key actors primarily involved within this category are manufacturers and government regulators. When it comes to quality control and sample testing corruption pathways can include bribery and conflicts of interest. It is the responsibility of governments to ensure regulators are accountable and have adequate resources to mitigate such risks. Conversely, companies must ensure they act with integrity when producing medicinal products. A total of 35 cases were logged within this category, with just over half categorised as the production of counterfeit and substandard medicines and medical devices. The majority of cases occurred in LMICs in Africa and Asia such as Bangladesh, Kenya and Pakistan. However, false and counterfeit medicines have been detected in markets all over the world, and therefore represent a serious challenge to all health systems and pharmaceutical companies. A patient that is administered counterfeit or falsified antibiotics can either develop severe health complications leading to death or become resistant to antibiotic treatment.
CASE STUDY: "More than a quarter of emergency contraceptives in Peru falsified or substandard", April 2014 An analysis of emergency contraceptive pills in Peru found that over a quarter were either falsified or substandard. Some had an insufficient quantity of the active ingredient, others had the wrong active ingredient, while one had no active ingredient at all. The drugs came from nine different countries under 20 different brands. In this particular case the most dangerous outcome is that a woman who does not want to get pregnant will take these drugs and become pregnant. http://medicalxpress.com/news/2014-04-quarter-emergency-contraceptives-perufalsified.html [Accessed 18/11/15] 10
Industry promote and/or advertise their products to healthcare professionals and the general public using a number of methods e.g. advertising in journals or other media, direct mailing, personal selling through sales representatives, provision of gifts and samples, sponsored symposia, and sponsored publication of information materials. These activities aim to influence the prescribing patterns of healthcare professionals, as well as people’s attitudes, beliefs and behaviour, and to encourage them to use a particular brand of product. Control of medicine and medical device promotion ensures that marketing activities provide accurate information and that material benefits will not be offered to influence the practices of healthcare professionals or the preference of patients. Regulating information and promotion is necessary to prevent the dissemination of inaccurate and misleading information. While the marketing category of this study is limited to four sub-categories, its impact can be significant. In many settings, direct advertisement to patients and healthcare professionals is forbidden. In less regulated contexts, the way company representatives interact with healthcare professionals and health officials can drastically affect what health products they choose to dispense to patients. For the first three sub-categories set out above, this primarily occurs at the local level. In contrast undue positive list promotion presents itself more frequently at the regional or national level, as company representatives attempt to get their products on the list of medicines and medical devices that is reimbursed by health insurance funds. Advances made in pharmaceutical science and technology in the past decades has given rise to a plethora of medicines in the international market. It is estimated that as many as 70% of medicines circulating in the international market are said to be duplicative, “me too”, or nonessential products. Many are minor variations of the original medicine and offer no therapeutic advantage over other medicines that are already available. The presence of such a broad scope of medicines that are supported by marketing strategies has many consequences: healthcare professionals may not be able to keep up to date with relevant/current information on each medicine and to compare alternatives; it can contribute to inconsistency in prescribing within the healthcare system; and – crucially for LMICs - it reduces the purchasing power significantly, as the limited money available is used to buy non-essential medicines.
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Direct prescription influencing cases have been well documented within mainstream media, as reflected in the 75 cases logged within the category. Indeed many of the recent high profile corruption cases involving multinational pharmaceutical companies have been in relation to prescription influencing. Only 11 cases were logged in the indirect prescription influencing categories. This is probably due to the fact that linking a prior inducement to an action by a healthcare professional can be hard to discover and then substantiate. Cases within this category are predominantly from Europe, the USA and China. However, there are also some cases from India and the Middle East. Overall, this suggests that corruption risks within the marketing category are prevalent worldwide. CASE STUDY: "Croatia charges hundreds in drugs firm corruption probe", December 2013 In 2013, the BBC reported that Croatian authorities had charged nearly 400 people due to marketing corruption. This included a pharmaceutical company and several hundred doctors. Senior managers at the company bribed doctors and pharmacists to prescribe the company's products. Correspondents suggested that if all the doctors involved in the scandal had been sacked the Croatian health system would have collapsed. http://www.bbc.co.uk/news/world-europe-25538915 [Accessed 18/11/15]
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Procurement is the process of acquiring supplies through purchase from manufacturers, suppliers or distributors. As is common in many sectors, procurement in the pharmaceuticals & healthcare sector is a significant area of corruption risk. The number and size of procurement transactions is vast with national health systems often being the largest recipient of public spending and overseas development aid. Therefore it is not surprising that this study identified many specific risks within the procurement category. There is much disparity between the prevalence of risks within this category. This could be due to difficulties in monitoring, discovering and ultimately proving these corrupt activities. It may be the case that identifying kickbacks during contract bidding processes is easier than proving that needs assessments have been falsified to guarantee higher worth contracts. The main agents within this category are procurement officials and industry. For example, bidding companies may bribe public officials to gain monopoly positions at the tender stage. Given that corruption vulnerabilities are significant at this stage of the value chain, it is not surprising that the study found that cases of procurement corruption are not limited to any particular regions. An effective procurement process ensures the availability of the right medicines and medical devices in the right quantity, at reasonable prices, and of assured quality standards (medicines may be acquired through purchase or donations). Given that medicine expenditure constitutes a large proportion of health expenditure, medicine procurement is therefore a major determinant of medicine availability and total health care costs. In most developing countries medicine purchases represent the single largest out of pocket health expenditure after personnel costs. CASE STUDY: Former pharmaceutical company employees convicted of bribery in Germany, March 2014 A German Court convicted two former employees of a pharmaceutical company with suspended sentences and a US$39 million fine was given to the company on bribery charges. From 2007 to 2010 the two individuals from the company's sales division were said to have made illicit payments to a consultancy advising one of the company's clients in order to win more contracts. Details were not given on the client or market in which it operated. Further investigations were ongoing at the time of publication. http://uk.reuters.com/article/2014/03/03/uk-sanofi-bribery-idUKBREA221RD20140303 [Accessed 18/11/15]
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Once a medicine or medical device has been developed and manufactured it needs to reach the healthcare centre or patient. Distribution is an important activity in the management of medicines and medical devices and includes port clearing; receiving and inspecting; storage; inventory management; dispatch, pick up and transportation; and disposal. This involves a large number of actors and interactions, from employees at manufacturing sites to custom officials at border crossings. Each of the steps listed above can present various opportunities diminished transparency and therefore carries corruption vulnerabilities. For instance, inefficient port clearing procedures can result in undue delays, providing extended exposure to potential theft in ports with weak security. Similarly, a lack of proper organization and maintenance of storage facilities can compromise medicine quality, thereby diminishing its curative effect. The study found 19 cases that fell within the distribution category, with over three quarters of cases involving the facilitation of counterfeit medicine and medical device trafficking. Publishing standard operating procedures and setting out the roles and responsibilities of all staff involved in each of these steps are important tools that promote transparency and accountability. Counterfeit medicines cause great suffering and can lead to death. Individuals that consume such medicines do so in the belief that they medicine is genuine, particularly when being administered by a healthcare professional through a public health system. When counterfeit medicines are allowed to enter official supply chains they do not only cause direct harm to patients, they also erode patient trust in national health systems. CASE STUDY: "Mafia Behind Fake Anti-Cancer Drugs, Claims Official", May 2014 Across Europe numerous reports suggest criminal organisation are stealing drugs from medical facilities in Italy and using the ingredients to produce fake drugs. This results in ineffective or dangerous drugs. Drugs stolen include batches of a breast cancer drug, a lung cancer drug and a rheumatoid arthritis drug. http://www.ibtimes.co.uk/mafia-behind-fake-anti-cancer-drugs-claims-official-1447174 [Accessed 18/11/15]
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The service delivery category is the largest within the framework and primarily covers the interactions between healthcare professionals and patients. As a result the corruption vulnerabilities within this category are those most visible to patients. In particular, informal payments are when a healthcare professional demands or accepts a payment in return for providing access to medicine, better quality treatment, or preferential treatment. In such cases one could argue that these vulnerabilities have the highest personal impact on patients. Another corruption type covered in this category is undue reimbursement claims. This is when a healthcare professional submits reimbursement claims to a health insurance provider for services rendered to a patient. This system is exploited by requesting reimbursement for services that were unnecessary or even not provided, with cases often involving pharmacists and doctors. Given the breadth of this category, it is not surprising that over 100 cases are logged within the service device category. Nearly half of these cases relate to undue reimbursement claims, which are most prevalent in the USA. This can be explained by fraud within the US health insurance system being well documented and considerable though diminishing government resources used to tackle the issue. Conversely, the majority of cases relating to informal payments occur in LMICs. Often this is because healthcare professionals attempt to supplement their low salaries with informal payments, a particular issue in the former-soviet countries of Eastern Europe. CASE STUDY: "Meet the women fighting corruption and saving mothers' lives in India" The Adivasi community in India’s Assam state regularly faces corruption when interacting with health services. In one case nurses performed a cut during a difficult delivery and then left the woman with an open wound for several hours. They then demanded money from the woman's sister-in-law to complete the procedure. In another case when a woman had delivered a stillborn baby, nurses demanded a bribe to remove residual tissue from her womb and to cremate the baby's body. http://www.theguardian.com/global-development-professionals-network/2015/aug/24/thewomen-fighting-corruption-and-saving-mothers-lives-india- [Accessed 18/11/15] 15
One of the broadest categories within the framework, budget and resource management includes all financial processes below the ministerial level. The impact of corruption within this category can be felt throughout the health system. For example if a health official embezzles the salaries of a hospital, healthcare professionals may strike in protest, diminishing the delivery of health services, which adversely affects health outcomes of patients – especially those most vulnerable who cannot afford private healthcare. Not only does embezzlement diminish already constrained public healthcare budgets in LMICs, it also discourages international donor investment within the health care system. A total of 58 cases were logged within this category, the majority classified as budget leakages, embezzlement, misuse of funds and fraud in transfer of budgets. Very few cases were logged as use of resources or user fee revenue corruption as these cases are often harder to discover, particularly with the former where the line between incompetency and corruption can be hard to discern. Similarly, there were very few cases logged as abuse of payroll that could include the embezzlement of a share of salaries and the use of ghost workers, though it is unclear why there are few cases in this sub-category. The geographical diversity of cases is primarily limited to Africa and Asia. This could be because many LMICs have weaker controls and less technically sophisticated processes for controlling and dispersing funds. CASE STUDY: Nigerian doctor, who exposed corruption at a Hospital, goes into hiding after death threats, September 2015 In one medical centre in Katsina, Nigeria, funds were embezzled into the bank accounts of doctors no longer working at the centre, what can be termed ghost doctors. The total amount embezzled is estimated to be over US$40,000. However, an audit committee set up by the hospital management and several national medical associations began to receive threats when it placed pressure on management to identify the destination of embezzled funds and to request department heads to evaluate salary chains. As a result the chairman of one of the involved medical associations had gone into hiding at time of the report. http://www.premiumtimesng.com/news/headlines/189908-nigerian-doctor-who-exposedcorruption-at-katsina-federal-hospital-goes-into-hiding-after-death-threats.html [Accessed 18/11/2015] 16
The Human Resource (HR) Management category refers to the medical education system and personnel processes within health facilities. The key agents within this category are healthcare professionals and health officials working in health facilities, medical colleges, and government regulators. Broadly the risk area of human resource management can be categorised into healthcare professionals seeking to gain through corrupt activities in their day-to-day jobs, and the careers of those working within health systems being advanced through an undue advantage. Corruption within medical education can produce healthcare professionals with inadequate knowledge and even individuals who are unqualified practicing medicine. A number of logged cases dealt with bribes being paying to gain entry to medical education institutions, the majority of these cases being located in India and Nepal. In these cases not only is there the potential to exclude the best candidates, but for many it will also be their first professional interaction with health systems, setting corruption as precedence. Weak HR management processes result in oversized and under-qualified health services, with distorted incentive structures and poor work ethics that ultimately undermine the goal of providing healthcare to those in need. For example, absenteeism can seriously disrupt the delivery of health services. This type of corruption reduces the resources effectively available for health, equity accessibility and ultimately the effectiveness of health care services. It discourages people to use and pay for health services and ultimately has a corrosive impact on the population’s level of health. HR management corruption in the health sector is especially critical in LMICs given the lack of sufficient healthcare professionals. CASE STUDY: “Fraud cost NHS in NI at least £44m last year”, November 2014 As part of a review of fraud within the Northern Ireland Health Service a nurse was found to have submitted false time sheets and forged her manager’s signature. The woman was sentenced to one year in prison. http://www.newsletter.co.uk/news/health/fraud-cost-nhs-in-ni-at-least-44m-last-year-16420725 [Accessed 18/11/2015] 17
Regulatory capture occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the sector it is charged with regulating. Regulatory capture creates an opening for industries or political groups to advance their private interests ahead of the wider societal interests. In the pharmaceuticals & healthcare sector, industry and others with a private interest in the sector will attempt to influence government regulators using illicit methods to gain advantageous health policy and market conditions. The study found a small number of cases related to the risk area of regulation. Often these cases relate to conflicts of interest, for example with those in positions of influence within regulatory bodies having commercial interests in companies that their decisions will affect. As with other areas of low prevalence within the study, the low number of cases could be due to the difficulty in discovering and proving corruption violations within the regulatory system. The study found cases concentrated in South Asia and USA. Regulatory capture can adversely affect health planning at the systemic level, leading to nonalignment between health needs and health solutions. This in turn can lead to higher morbidity and mortality rates. In particular, the selection of essential medicines and medical devices defines government or other institutional clinical and financial supply priorities, such as the determination of limited formularies for reimbursement benefits as part of a health insurance scheme. CASE STUDY: “Lyme Disease Community Blows the Whistle on Corruption Within the CDC�, November 2013 When the Centers for Disease Control and Prevention (CDC) announced that the USA was seeing 300,000 cases of Lymes disease annually rather than 30,000 cases as previously thought, it was found to coincide with the release of the new Baxter Lyme vaccine. A huge marketing campaign was evident to observers, with an Op-Ed in the New York Times by a doctor heavily referenced by the newspaper’s editorial board. Calling for readers to write to the CDC for a new Lyme vaccine, the paper failed to mention that the Doctor acts as an executive adviser at the largest company devoted entirely to human vaccines. Similarly, a journalist discovered that a group consisting of CDC employees and other researchers had significant commercial interests in Lyme disease tests and vaccines. http://www.truth-out.org/opinion/item/20053-lyme-disease-community-blows-the-whistle-on-18 corruption-within-the-cdc [Accessed 18/11/2015]
The category of corruption in the political sphere category goes beyond the pharmaceuticals & healthcare value chain and identifies corruption risks at the highest level of government. This type of corruption primarily involves high-level public officials such as politicians, company representatives and their agents, as well as other individual actors like criminal organisations. The effects of corruption at this level are often far reaching, due to the level at which decisions are made and the amount of funds being processed. However, despite going beyond the pharmaceuticals & healthcare value chain, the cases identified within this category impact most areas of the value chain. For example, a politician may interfere in the procurement process of a regional health authority so as to win a contract for a company owned by a relative. Therefore, many of the cases within this category are also logged in other categories. Favouritism, nepotism and conflicts of interest cases are often very similar, involving lobbying and cronyism. Similarly, revolving door and trading in influence cases involve an individual using their power and connections to garner a favour for an individual, in return for their own inducement. Ultimately, all the categories relate to the grey area that exists between high levels of government and private companies and individuals. It can be hard to define some specific cases as corruption and governments often have very weak regulations in place to prevent such interactions. In this category 47 cases were logged, spread almost equally across the sub-categories. Most cases were identified as high-level embezzlement, state capture and conflicts of interest; fewer cases were identified as trading in influence and the revolving door. Geographically cases are spread across the Americas, Europe, Africa and Asia. Interestingly a high proportion of cases occur in the MEDCs CASE STUDY: “Honduras corruption probe widens as lawmaker is held�, July 2015 The Honduras Vice-President of Congress was arrested over accusations of defrauding the country’s healthcare system. Along with her father and two of her brothers, the Vice-President is suspected of having links to a company that defrauded the state by selling poor quality medicines at inflated prices. The total amount defrauded could reach as high as US$120 million. Prosecutors allege that some of the money was used to finance political campaigns of the ruling party. http://www.bbc.co.uk/news/world-latin-america-33343365 [Accessed 18/11/2015]
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5. Concluding Remarks Healthcare services, medicines and medical devices improve health outcomes and enhance quality of life. Indeed universal access to healthcare and essential medicines has come to be viewed as a fundamental human right and a goal to be achieved by the international community. Yet the ability of healthcare services, medicines and medical devices to save lives, reduce suffering and improve health depends on their good quality, safety, availability, affordability and effectiveness. A number of corruption risks reduce these factors in the pharmaceuticals & healthcare sector including market and government failures. The complexity of the pharmaceuticals & healthcare sector, due to the number of actors and volume of interactions, results in a large number of corruption risks. Predominantly these risks are cross-cutting, applying to all industries within the sector, while the prevalence of risks varies, with areas such as service delivery and marketing producing the majority of cases. In order to reduce the harmful impact of corruption within the health sector, a better understanding of the corruption risks is required. This reflection paper is a foundational exercise that begins this process, as it maps the main corruption risks in the pharmaceuticals & healthcare sector and offers stakeholders the opportunity to provide comments and feedbacks. PHP is committed to continually developing this research over the coming months and years to expand the sector’s knowledge base of corruption and its drivers. The Programme will work closely with relevant stakeholders and decision makers to properly identify corruption risks and produce effective anti-corruption measures, to ultimately work towards our long term goal of improving global health and healthcare outcomes for the benefit of all people of all ages.
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6. Glossary of terms Category
Sub-category & sub-sub-category
Definition
Research & development
Falsifying information
A researcher cheats by producing incorrect and non-existent data, or intentionally manipulates clinical trial data, for example reporting a procedure that never occurred, in order to gain an unfair or illegal advantage.
Selective publication of trial data
A researcher excludes either a section of the trial data or the entire trial isn't published, to make it more likely that a drug is approved and receives a good uptake of users.
Research capture and conflicts of interest
A company is able to determine the overall outcome of a trial by controlling the funding arrangements, acting as an inducement for researchers to publish favourable results.
Exploiting relaxed regulations to carry out dangerous trials
A company offshores a clinical trial to a country with less stringent regulations, thereby mitigating costs and risks, but placing trial participants in greater danger.
Bribery, extortion and kickbacks
A government regulator accepts or solicits an advantage as an inducement for abusing the registration process.
Integrity violations
A government regulator abuses their position of entrusted power within the registration processes for private gain.
Abusing medical device self-assessment systems
A company abuses the selfassessment system by knowingly certifying sub-standard medical devices.
Registration
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Manufacturing
Marketing
Production of counterfeit and substandard medicines and medical devices
An individual or company involved in the manufacturing process produces or facilitates the production of illegal or substandard medicines or medical devices that can place patients’ lives in danger.
Quality control and sample testing violations
An individual or company is able to circumvent or cheat the quality control and sample testing process, for example by bribing government regulators and inspectors. An individual or company offers, promises or gives a healthcare professional an advantage as a clear inducement to dispense specific medical products. An individual or company offers, promises or gives a healthcare professional an advantage as an unspecified inducement to buy or use specific medical products.
Direct prescription influencing
Indirect prescription influencing
Procurement
Off-label marketing
An individual or company offers, promises or gives a healthcare professional an advantage as an inducement for using medical products for conditions unapproved by registration authorities.
Unethical positive list promotion
An individual or company encourages health officials, healthcare professionals and/or regulators to include specific medical products on the positive list of drugs that are reimbursed by public funds.
Pre-bid vulnerabilities
False needs assessment
A procurement agency’s needs assessments is falsified so that the procurement official assessing bids will ultimately gain an advantage, such as exaggerating the requirement for a particular product that they may have a personal financial interest it.
Circumvention of tender procedures
A procurement official limits the tender process, for example by directly buying medical products from a supplier and not opening up the contract to outside bids. 22
Bid vulnerabilities
Tailored tendering
A procurement official rigs a contract by adapting contract specifications to a particular supplier’s capabilities in return for an inducement.
Bribery, extortion and kickbacks
A procurement official accepts or solicits an advantage as an inducement for awarding the contract to a specific bidder. A procurement official awards the contract to a specific bidder for private rather than professional interests, such as the bidder being a friend. A group of companies have a secret agreement to conspire to commit actions aimed to deceive or commit fraud with the objective of illicit financial gain. A procurement official involved in monitoring the implementation of the contract accepts or solicits an advantage in return for awarding a successful inspection.
Favouritism
Collusion, bidrigging and market division
Post-bid vulnerabilities
Bribery, extortion and kickbacks
False invoicing
Changing contract agreements Distribution
Facilitating counterfeit medicine and medical device trafficking
Theft, diversion and reselling along distribution chains
Service delivery
Informal payments
Access to medicine
Preferential treatment
A bidder awarded a contract, possibly in conjunction with procurement officials, provides false invoices to obscure a financial transfer between the two. A contract agreement between the buyer and seller is unduly altered, so as to favour the buyer. An individual, company or company trades or assists in the trade of falsified medicines and medical devices during the distribution phase. An individual, company or group steals and resells medicines and medical devices during the distribution phase. A healthcare professional accepts or solicits an advantage in return for providing patients with access to services that should be free. A healthcare professional accepts or solicits an advantage in return for providing patients with privileged treatment, such as being moved up a waiting list. 23
Better quality treatment
A healthcare professional accepts or solicits an advantage in return for providing patients with higher quality services, such as a more thorough consultation.
Misuse of dual practices
A healthcare professional working in a public hospital refers patients to their personal private clinic.
Unethical referrals
A healthcare professional accepts or solicits an advantage in return for referring a patient to a private clinic or laboratory when it is unnecessary or can be completed with public facilities. A healthcare professional exploits his or her power and authority to provide access to medicine, preferential service or better treatment to a family member or friend. A healthcare professional files insurance claims for treatments or prescriptions that the patient did not require.
Nepotism and favouritism
False reimbursement claims
Embezzlement
Unnecessary treatments
Non-delivered treatments
A healthcare professional files insurance claims for treatments that were not carried out or prescriptions that were not dispensed.
Sale of prepaid or public medicines
A healthcare professional steals public or prepaid medicines and medical devices, and sells them for private gain.
Sale of counterfeits
A healthcare professional sells counterfeit medicines and medical devices on public time.
Use of publically owned facilities and time for private gain
A healthcare professional unduly uses publically owned medicines, devices and facilities for private gain.
Unnecessary treatments
A healthcare professional forces patients to have treatments that the patient does not require and for which the healthcare professional lawfully receives benefits, such as the user fee or a commission from the hospital at which they work. 24
Budget and resource management
Abusing payroll management
A health official or healthcare professional embezzles the salaries of staff members, those who no longer work at a health establishment, or fake staff members.
Undue influence of budget processes
Political influence and bribes in resource allocation
The influence of high ranking public officials and politicians or the giving and receiving of bribes, to manipulate resource allocation for private gain against the public interest.
Budget leakages, embezzlement, misuse of funds and fraud in transfer of budgets
A health official or healthcare professional appropriates, uses or traffics the funds and goods they have been entrusted with for personal enrichment or other activities.
Theft of formal user fees
A healthcare professional steals legal patient payments for his or her own private gain.
Abuse of exemption or support schemes
A healthcare professional or patient misuses and exploits a scheme for vulnerable populations for private gain.
Theft and abuse of user fee revenue
Theft of resources
Human resource management
Medical education vulnerabilities
A healthcare professional steals or uses unwarrantly non-medical equipment, such as vehicles, electronic appliances etc. Bribery when approving and regulating medical colleges
A medical school offers, promises or gives an advantage to a government regulator an an inducement to award accreditation or approve standards.
Integrity violations when approving and regulating medical colleges
A government regulator has a personal interest in a medical school, resulting in favourable decisions being made for the medical school.
Bribes to enter medical school and pass grades
A medical school accepts or solicits an advantage from students in return for their entry to the school or to pass exams.
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Forged documents
A healthcare professional abuses their position to modify original documents or create false documents in order to gain a personal advantage, such as providing patients with false sick leave certificates in return for money.
Abusing time management
A healthcare professional abuses their paid work commitments by taking unwarranted leave or providing treatment for private patients during paid work time.
Unethical appointments and promotions
Nepotism and favouritism
A health official or healthcare professional abuses his or her power and authority to provide a job or promotion to an undeserving family member, friend or acquaintance.
Selling and buying of positions and promotions
A health official or healthcare professional accepts or solicits financial incentives in return for providing a job or promotion to an undeserving individual. A healthcare professional receives certified credentials through an improper professional assessment process.
Unethical accreditation of healthcare professionals
Regulation
Undue influence on health policy
Undue influence on market regulations
A company or group gains an unfair advantage by excessively influencing the health policy process to their own ends, at the expense of the public interest. A company or group gains an unfair advantage through improper access to influence the health market regulation decision-making process at the expense of the public interest.
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Political
Nepotism and favouritism
A high ranking public official or politician exploits his or her power and authority to provide a favour to a family member, friend or acquaintance, even though the individual may not be qualified or deserving.
High level embezzlement
A high ranking public official or politician dishonestly and illegally apporpriates, uses or traffics the funds and good they have been entrusted with for personal enrichment.
State capture
A situation where powerful individuals, institutions, companies or groups within or outside a country use corruption to shape health policies and regulations to benefit their own private interests.
Conflicts of interest
A high ranking public official or politician is confronted with choosing between the duties and demands of their position and their own private interests.
Trading in influence
A high ranking public official or politician accepts or solicits an advantage for himself or herself or for another person, in order that the high ranking public official or politician abuses his or her influence in order to obtain from an administration, public authority or the State Party an undue advantage.
Revolving door
An individual who moves between public office and a private company, exploiting his or her period of government service for the benefit of the company they used to regulate or purchase services from.
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7. Bibliography European Commission. (2013). Study on Corruption in the Healthcare Sector. Luxembourg: Publications Office of the European Union. Hussman, K. (2010). How to Note: Addressing Corruption in the Health Sector. Department for International Development. Hussman, K. (2011). Addressing Corruption in the Health Sector: Securing Equitable Access to Health Care for Everyone. U4 Issue, January 2011 (1). Hussman, K. (2011). Vulnerabilities to Corruption in the Health Sector: Perspectives from Latin America Sub-systems for the Poor (With a Special Focus on the Sub-National Level). UNDP. Kohler, J.C. (2011) Fighting Corruption in the Health Sector: Methods, Tools and Good Practices. UNDP. Maduke, T. (2013). Corruption in Health Sectors of Low- and Middle- Income Countries. Leadership, Management & Governance Project. Segato, L. et al. (2013). Corruption and Waste in the Health System. Transparency International Italia. Transparency International. (2006). Global Corruption Report 2006. London: Pluto Press. Transparency International. (2009). The Anti-Corruption Plain Language Guide. Transparency International.
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