A popular saying goes you scratch my back and I’ll scratch yours. But how cordial are business relationships allowed to be before the legislator becomes interested in them? Individual cases of corruption have also been discovered in the medical technology industry – improved management compliance systems are now meant to warn against rule violations. We spoke with Professor Hendrik Schneider of the Leipzig University in Germany about this subject.
Professor Schneider, how often and in what form do criminal prosecutions against medical device companies take place?
Hendrik Schneider: There are no statistics on this. Ultimately, the data mentioned is based on estimates. The latest data on the subject of “corruption“ are from 2013. What can be seen here is that only 2.5 percent of ascertained criminals come from the “Pharmaceutical and Healthcare“ field – medical technology falls under “healthcare“. If you take a look at this in its entirety – there were 7000 criminal corruption charges in the year 2013 – this only amount to very few cases.
When corruption is being discovered it does not just pertain to individual employees but usually the entire company. What penal measures can the involved parties expect?
Schneider: German criminal law first examines the accountability of the individual. That means, the preliminary investigations are conducted against the actual responsible parties in the company even if they did not obtain a personal benefit from the corruption and the corrupt activities only resulted in a success for the company. Of course, you can also take action against a company. This is done via a regulatory offense procedure and can result in a fine. However, so-called forfeiture orders are more important for public prosecution departments and courts of law. Through them, all gains that companies generated from corrupt orders can be collected in the treasury’s favor.
Compliance is important for companies to prevent corruption and rule violations. Are medical device companies already implementing this correctly and productively?
Schneider: The companies I know are implementing this matter with great sensitivity and generally already have well-functioning management compliance systems. My impression is that in some media reports, the industry is represented far worse than it factually is and a lot of things don’t apply. I have conducted a research project titled “Compliance in German Companies“ and the health sector fared comparatively well. If there are compliance violations in the supply chain, you can usually just respond with business actions to prevent damage to the company’s own reputation. It makes sense to have your suppliers agree to your company’s compliance rules. That is to say, you have suppliers agree to comply with certain standards etc. This is not legally binding, however.