Implementing Corporate Governance

Essay by patiencemkpUniversity, Master'sA+, August 2008

download word file, 6 pages 3.0

Managing risks for a healthcare corporation can be overwhelming with the myriad of regulations that needs to be met to sustain appropriate levels of government compliance. There are the corporate financial challenges brought forth by the Sarbanes Oxley, which discuss the practices of corporate governance, there are federal and state laws, which address pricing and contracting methods, there are patent laws and regulatory laws, which affect the manufacturing processes, and these are just a few of the examples within the United States. One of the more difficult laws for these companies to follow is establishing a code of ethics for sales representatives within the United States, which must adhere to the stringent guidelines and recommendations, set forth by pharmaceutical associations. Pharmaceutical Research and Manufacturers of America Association (PhRMA) is one institution that a pharmaceutical company can benchmark a code of ethics policy. PhRMA issues guidelines, generated from federal and state regulations, which companies can chose to benchmark to ensure appropriate sales techniques are being used.

These guidelines include the types of gifts a representative can give a healthcare professional, instructions on when providing a meal is appropriate (along with controlled dollar amounts), ensuring ethics when promoting continuing education products subsidized by pharmaceutical corporations, and a cornucopia of other "quid pro quo" type benefits that a sales representative could offer a potential customer. By benchmarking these guidelines, a corporation can manage risks associated with misuse of promotional materials or other gifts.

Unfortunately, having a code of ethics for a sales force to comply is a small part of managing the risks that could incur if these codes are not followed. In 2006, Medtronic, a medical device company, agreed to pay a $10 million settlement for inappropriate promotional practices (Wasserstein & Butler, 2007). Genentech, Inc. and Caremark, Inc. had a...