No More Mooncakes: New Pharma Code Bans All Rx Company Gifts

Ann Beasley, Bloomberg Law

It’s a whole new world for drugmakers operating abroad.

Starting Jan. 1, companies can no longer give gifts or cash payments to business associates — traditions that are accepted and sometimes expected — in China and other parts of the world. The change is causing concern among both U.S.-based and multinational companies like Astra Zeneca, Bristol-Myers Squibb, Johnson & Johnson Inc., and Pfizer Inc. about how to balance appropriate business behavior with respect for cultural norms in other countries.

Companies will no longer be able to gift “mooncake” pastries to business associates, a common exchange in China, and cash payments to mark significant religious or cultural occasions in foreign countries won’t be sanctioned.

It’s all because of a new research and development biopharmaceutical industry Code of Practice taking effect in 2019. The new code implements a global ban on using gifts or promotional aids to promote prescription medicines. The code applies to all biopharmaceutical industry professionals wherever they operate and brings the rest of the world in line with current European and U.S. guidance for industry behavior.

The major changes in the International Federation of Pharmaceutical Manufacturers and Associations’ (IFPMA) Code of Practice include a ban on gifts and promotional aids for prescription medicines wherever the association’s member companies operate.

“The very nature of our business requires us to earn and maintain the trust of the people we serve. Our ethos ensures we have a solid foundation on which to build trust with doctors, nurses, patients, and those who care for patients as well as groups that represent them,” Melissa Barnes, chair of the IFPMA Ethics and Business Integrity Committee, said in a statement. Barnes is senior vice president for enterprise and risk management and chief ethics and compliance officer at Eli Lilly & Co.

Some of the biggest compliance challenges life sciences companies face operating internationally include the continued belief that “we are different” in the U.S. and Europe. Some activities, no matter whether they make sense in one country’s culture, cannot be executed in an appropriate way globally, Ann E. Beasley, director of life sciences governance, risk management, and compliance at the consulting firm Guidehouse, told Bloomberg Law.

“The notion of ‘bribery’ is not universally understood, nor is ‘conflicts of interest,’ and this creates barriers to effective implementation of company principles,” Beasley said. “Trying to have people follow processes without understanding the ‘why’ behind it will inherently create risk and misapplication of standards,” she said.

The changes to the code reflect increasingly complex dilemmas faced by R&D biopharmaceutical industry professionals, the international association said. The new Code of Practice aims to improve guidance to members on how to conduct business when interacting with the healthcare community worldwide.

Global organizations have less time to manage nuanced, local interpretations of giving customs, she said, and are more focused on establishing core, measurable approaches to common business practices that pose common risk.

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