TRANSPARENCY & GOOD GOVERNANCE IN GLOBAL HEALTH
DR ROBERT BARRINGTON EXECUTIVE DIRECTOR, TRANSPARENCY INTERNATIONAL UK SPEECH TO THE EFPIA, BEIJING, SEPTEMBER 25TH 2014
Ladies and Gentlemen, good afternoon and thank you for inviting me to address this important conference. Transparency International is a global anti-corruption organisation, and I should make it clear that today I am speaking on behalf of Transparency International UK. That is not to say I expect other TI chapters to disagree with what I have to say – but with one hundred chapters around the world and an agreement that we speak by consensus, it’s simplest to speak on behalf of the chapter that I head up in the UK. It is of particular interest to be here in Beijing, because as a member of the global anticorruption community, one cannot help being aware of what is happening in China at present with regards to fighting corruption. The Economist’s lead article covers the subject this week, and gives a balanced assessment of how the fight is going and what more could be done. But I am not here to talk about China, I am here to talk about Transparency & Good Governance in Global Health, and notably the pharmaceutical sector. Much of what I will say you will be able to find on the website www.transparency.org.uk, in particular this publication. Of all industrial sectors, pharmaceuticals should be the one that the public most likes. It develops life-saving and life-enhancing products, pouring millions of pounds each year into research and playing a key role in the global health system. Yet the sector’s image with regulators, healthcare professionals, the media and the general public is very poor. The term Big Pharma has come to represent many negative things: questionable sales and marketing practices, the ways in which research is commissioned, undertaken and published, regulatory capture through lobbying and the revolving door and monopolistic behaviour.
I used to work as an analyst in the City of London, in an institutional shareholder that had major holdings in pharma companies. I think it is true to say that for most shareholders, the interest is not how many lives you save, but your revenues and profits – particularly the short-term profits in what is inevitably a long-term business. I am very aware that does not help companies operate in the most sustainable or sensible manner. Why has this disparity grown up between what the sector should be and how it is perceived? In the view of Transparency International, one of the causes of such disparities in any sector is poor governance, or lack of integrity or – to put it less politely – corruption. Let’s look for a moment at global corruption. Transparency International is perhaps best known for its corruption indices – for example, the Corruption Perceptions Index, that ranks countries according to perceived levels of public sector corruption. It’s not surprise to find that the Scandinavians, Singapore and New Zealand perform best, and Somalia, Afghanistan and North Korea the worst. What is disheartening is that when you look at countries’ scores, the majority of countries score less than 50% - not a very high pass mark, against which most of the world would be failing. We also produce a global survey of bribe-paying, in which we ask over one hundred thousand citizens in around a hundred countries what is their daily experience of bribepaying. Last year, 25% of people interviewed told us they had paid a bribe at least once in the past year – and in some countries it was over 75%. Looking more specifically at heath, 17% of people worldwide said they had paid a bribe when dealing with the medical sector, and 45% believed medical and health services to be corrupt or extremely corrupt. In 17 countries, that figure rises to over 70%. One recent study suggested that an estimated 10% to 25% of global spending on public procurement in heath is lost to corruption each year. Even at the bottom of that range, it is an enormous sum, representing more than would be required to achieve the Millennium Development Goals on health. What lessons do I draw from those statistics? Here are four of them. As global pharma companies, you are likely to be operating in markets where corruption is prevalent. And in those markets where the indices suggest there is less corruption, it is increasingly recognised that corruption operates in softer but nonetheless equally powerful forms – such as inappropriate lobbying that leads to regulatory capture. It’s not just your fault - healthcare systems are the flip side of the pharma equation. And working through that is difficult for any individual company. Even though healthcare systems are part of the picture, one cannot ignore the culpability of the pharmaceutical industry. There have been failures in governance, proven instances of corruption and a mounting concern that many industry practices, some of them key parts of
the business model, are unethical and possibly illegal. If they are not illegal now, they may become illegal in due course. This is a crisis of very great proportions. In this sector, people die due to corruption. Social media, greater transparency and new information flows have revolutionised citizen action against corruption the world over. As the picture becomes clearer in healthcare, patients and politicians will become angrier. They will direct some of that anger at the people in this room and the companies you represent. It’s not a pretty picture. But there is good news. First, a lot of work has already been done on what good governance looks like. For example, at Transparency International in the UK, we have developed a suite of tools around Bribery Act compliance. Our corporate members also take part in a free benchmark so they can measure their progress against themselves, TI’s standards and their peers, and sit down behind closed doors to discuss areas they find difficult. We have worked particularly closely with the Defence sector, and that has been very interesting. When we started doing that ten years ago, people said ‘you will never get anywhere’. They thought that considerations of national security, commercial confidentiality and ingrained secrecy would make it impossible to improve anti-corruption standards ion the sector. Ten years on, we are seeing change, even in this most difficult of sectors. We have learnt that some issues are sector-specific, and some read across between sectors. That you need to tackle both the supply side and the demand side – in other words, both defence companies and government procurement, as well as overall government policy – in order to be effective. And that in a global world, you can’t just focus on the largest US or European companies, you have to look at the approaches taken by all companies in the sector if you want to achieve a level playing field. Finally, we have noted the importance of leadership – companies and governments that are willing to be a bit braver than the others, and take a lead when it is the right thing to do. My second reason for you to be optimistic is that you are not alone. If as an industry, you want to tackle issues of corruption, or governance, or integrity, you will have allies. Transparency International is one such ally. Of course, we only want to work with companies that are serious about making the necessary changes – and by that I do not mean tinkering with codes of conduct, I mean undertaking a genuine analysis of where corruption exists within the pharmaceutical and healthcare sectors, and doing what it takes to change. Transparency International’s role in the world is to reduce corruption and not to improve your bottom line. But it is not hard to see that in today’s world of a more extensive legal framework, tightening enforcement, political antipathy towards the sector and public mistrust, there should be a convergence of interest in promoting integrity and good governance.
I congratulate you on convening today’s conference. By the very fact that you have convened the conference and invited groups like Transparency international to speak, it seems you realise that you are setting yourselves a hard task. But it is a necessary task, and one that is in the long-term interests of your industry. If you are willing to embark upon the journey, Transparency International is willing to accompany you. Please remember to download our publication on this. And if your company would like to talk to us, please get in touch. Thank you.