Life Science Compliance Update

April 07, 2017

The New Strict French Anti-Bribery Law


In early December 2016, the Sapin II law was enacted in France. The law, which is meant to promote transparency, fight against bribery, and modernize the economy, was pushed for two years by Transparency International. Corruption has long been criminally punishable under French law, so the main purpose of the new law was to issue more clear rules to prevent and detect bribery.

Company Obligations

Companies that exceed certain thresholds (and their executives) are required to adopt an anti-bribery compliance program that satisfies a variety of specific requirements set out in the law. The obligation to implement internal procedures applies to: (1) companies with their registered office in France (including French overseas territories, i.e., French Guiana, French Polynesia) that employ more than 500 employees and realize at least €100 million in revenue and (2) groups of companies that employ more than 500 employees with revenue or consolidated revenue exceeding €100 million, where the holding company has its registered office in France. In the second instance, the obligations detailed in Sapin II lie on the holding company itself, but also on subsidiaries or controlled companies, including those outside of France.

Sapin II Obligations

Companies that exceed the aforementioned thresholds have until June 1, 2017, to:

  1. Adopt a code of conduct, describing the behaviors likely to constitute bribery acts. This code should give clear and practical guidance tools to employees;
  2. Set up a whistleblowing system allowing employees to report behaviors or situations breaching the internal code of conduct. This whistleblowing system should define the process for investigating complaints in a confidential way. Sapin II also provides for certain protections for such whistle-blowers;
  3. Create a risk map, ranking and classifying the company’s risks of exposure to corruption, by sector and geographical area and taking into account the company’s major clients, suppliers or intermediaries;
  4. Run due diligence on the company’s major clients, suppliers and intermediaries;
  5. Implement internal or external accounting auditing processes to make sure that accounting books are not used to conceal corruption or influence peddling acts;
  6. Train the employees that are more at risk;
  7. Set up a disciplinary process that enables punishment for employees that breach the code of conduct; and
  8. Set up an internal process to control and evaluate the measures implemented.

Sanctions for Breach

To ensure compliance with these rules, Sapin II provides serious financial sanctions for those who do not comply. In fact, a new authority, the National Agency for Prevention and Detection of Bribery, has been established to enforce Sapin II. The Agency can issue an injunction to comply with the law as well as order the payment of fines by both the legal representative of the company (up to €200,000) and the company itself (up to €1 Million).

Non-compliance with Sapin II also carries significant reputational risk: the decision by the Anti-Corruption Agency issuing an injunction or imposing a fine can be made public under ‘name and shame’ powers.

Sapin II Brings Changes

While Sapin II does not significantly interfere with existing laws and sentencing guidelines on corruption, it does actually greatly change things in France. For one, it expanded extra-territorial reach for French prosecutors by allowing investigations into foreign companies with even a footprint in France.

The eight mandatory measures for a corruption prevention program have an effect on companies that are already complying with current French laws (they will need to consult with their employee representative organizations prior to integrating the code of conduct into internal regulations) and companies that are already complying with UK and US standards should consider how the such an obligation affects their existing framework.

Additionally, by compelling all companies with more than 50 employees to establish a whistleblower mechanism and providing “protection against retaliation” and guaranteeing confidentiality to whistleblowers, Sapin II introduces one of the strongest protection frameworks for whistleblowers.

There are a few things that differentiate the whistleblower regime from its UK and US counterparts. First, the regime applies only to disinterested parties: the law does not protect or incentivize whistleblowing by implicated parties, i.e. those who have the closest visibility of the facts. Second, the whistleblower must have firsthand knowledge of the facts. Third, with very few exceptions, whistleblowers receive immunity from criminal prosecution. Fourth, the law affords protection to those alleged to be involved by guaranteeing anonymity to named accused persons in a report until the facts are proven. Finally, unlike in the US, whistleblowers may be provided with financial support in an amount to be determined by an existing independent authority, but not rewarded.

However, whistleblower activity may be hampered by the hierarchical reporting process: whistleblowers must first use internal whistleblowing channels before blowing the whistle to the relevant regulator and finally to the press. In line with the preventive policy directive behind the law, this is designed to enable companies to react quickly to allegations.

How Can Companies Prepare?

Companies that fall under the scope of Sapin II will need to ensure that they can demonstrate that they comply with each of the eight measures listed above. Compliance is recommended to be such that an investigation by the newly-created Agency would come up clean.

Companies that do not fall under the Sapin II requirements would also do well to comply, as they can minimize the risk of bribery and, in the event of actual bribery, to mitigate their liability under separate bribery offences and/or to being able to negotiate the level of fine for such offences under the procedure of the Deferred Prosecution Agreement.

March 28, 2017

Whatever the Question, Transparency Isn’t the Answer


Many in political (and non-political) circles have blamed a lack of pricing transparency for increasing healthcare costs. However, as recognized in a study published in The Journal of the American Medical Association, improving transparency is not the answer. More than half of the states in the United States have passed laws that either establish websites with health care prices or require plans, doctors, and hospitals to disclose them to patients. Some employers and other organizations even provide health care prices to employees and the public.

However, according to the study, such transparency doesn’t always help patients spend less. The AMA article investigated the effect of transparency of the Truven Treatment Cost Calculator, a website that is available to more than twenty-one million workers and their family members. The website provides users with the costs (both the total price and the portion the user would be responsible for) from over three hundred services, including various sorts of imaging, outpatient operations and physician visits.

The researchers compared outpatient health care spending of 150,000 employees who had access to the website with that of about 300,000 comparable employees who did not. However, despite its features, the cost calculator wasn’t popular. Even though sixty percent of employees with access to it had a deductible of at least $500, only ten percent used it in the first year of availability and twenty percent after two years of availability. The study found that price transparency did not reduce outpatient spending, even among patients with higher deductibles or those who faced higher health care costs because of illness.

This Study is Not an Outlier

Many other studies show the same thing. Health plans report that use of their price transparency tools is limited, with many enrollees entirely unaware that they even exist. The majority of plans now provide pricing information to enrollees, but roughly two percent actually look at it. Aetna, for example, offers a price transparency tool to 94 percent of its commercial market enrollees, but only 3.5 percent of the enrollees use it.   

A study of New Hampshire residents found that only one percent used the state’s health care price comparison website over a three-year period. Another study found that the use of the price transparency platform Castlight Health was associated with lower payment for lab tests, advanced imaging and office visits; however, the study did not examine outpatient spending overall.

Why Is This?

Dennis Scanlon, a Penn State health economist, is not surprised by this result. “Health care choices are different than most product and services. Most decisions are driven by physician referrals, and insured patients usually face little variation in costs across options”

Another possible reason that people don’t cost-shop for health care is that they find the process to be too complex. As we have said time and time again, providing more information to consumers doesn’t always improve their decision making, in fact, many times, it can overwhelm a consumer and lead to poorer choices. It is easier to go somewhere based on a recommendation, even if it costs more.

March 07, 2017

Update: Connecticut APRN Reporting Policy


Last month, we wrote about the Connecticut APRN policy that is starting to come to fruition. As we noted, the dates of reporting were different than what applicable manufacturers (GPO's, Distributors, Drug and Device Manufacturers) were expecting.

At the time of our previous article, we were uncertain as to why Connecticut went back to the July 1, 2015, recording date after the state legislature had previously announced it was delaying reporting.

As such, we contacted the Connecticut Department of Consumer Protection about the apparent erroneous information. In our communications, we noted that “the website currently says that the “first reporting date is from July 1, 2015 to July 1, 2017, and annual, rather than quarterly filings are now required.”

The way the website previously read may have lead manufacturers to believe that the very first report, due on July 1, 2017, must include payments made to APRNs from July 1, 2015 - July 1, 2017. However, it was our understanding that the legislature modified the law so that it would just be the “preceding calendar year” for reporting.

We have now found out that the statement on the website is a clerical error, and the website has been updated for the APRN expenditure reporting, which can be found here. Once again, the first report is due by July 1, 2017, for the period from January 1, 2016 to December 31, 2016.

Thank you to Abraham Gitterman for helping us get this clarification.


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