Slap on the Wrist Light-touch regulation favors Germany’s Big Pharma

German drug makers boast that their self-regulatory organization has a strict code of conduct. In practice, though, it's more lax than its US counterpart.

In 2015, Niklas Schurig, a German doctor, complained about a medical training day that took place in a fancy hotel in the spa town of Baden-Baden. To him, it seemed to be more about luxury than about education.

The seminar was run by several German pharmaceutical firms including Boehringer Ingelheim and Berlin-Chemie, who paid speakers €6,000 ($7,400) for a 30-minute talk. The day-long event had a lavish €50,000 budget.

That seemed a bit rich, so Mr. Schurig reported the event to the FSA, German pharma's self-regulatory organization. It was set up by 56 pharma firms in 2014 to police the industry’s ethics and its relations with doctors and hospitals.

The FSA looked into the training event and two and a half years later, Mr. Shurig received a reply. The FSA found that the sum of money spent that day seemed excessive – but it wasn't going to take action. It later emerged that the FSA judge in the case was a former Boehringer executive, although he denied this affected the verdict.

Pharma industry self-regulation is just there to whitewash dubious practices. Wolfgang Wodarg, Transparency International in Germany

The incident sheds light on the FSA, an organization often invoked by pharmaceutical companies when they want to emphasize their ethical credentials. It is “proof that the industry has nothing to hide,” according to the FSA's managing director, Holger Diener.

In theory, the organization can take strong measures, including fines of up to €400,000. But in practice, things appear to be much more relaxed.

The FSA has investigated six cases of suspected misdoing every year since 2010, a tiny figure considering that the industry paid €562 million to doctors and medical centers last year.

That level of data is a new degree of transparency: the FSA released information about payments to the industry in a break from past secrecy. But it did not report the levels of individual transactions: In Germany, neither drug companies nor doctors need to make payments public. People can disclose this information voluntarily but only 25 percent of doctors chose to do so in 2016, fewer than the previous year. The US government, by comparison, has a searchable website that discloses information about funds or gifts transferred between the healthcare industry and providers.

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Big Pharma’s reputation is not great in any country. Drug companies have been accused of inaccurate safety claims, paying off doctors and research journals, and promoting “off-label” uses of prescription medicines.

Over the last decades, companies in the United States have paid more than $30 billion in fines and settlements for illegal and unethical practices. But in the context of massive drug marketing budgets, these are small sums – one study has found that the industry spent more than twice as much on marketing as on research and development.

Bad publicity has prompted lawmakers and industry to respond. In the US, the pharmaceutical industry banned all gifts to doctors in 2008. And federal law now stipulates that all payments to doctors must be reported publicly.

The FSA has refused to back similar laws in Germany, saying this is a “cultural matter” and they “want to give members the freedom to decide.” Wolfgang Wodarg, of anti-corruption campaigners Transparency International in Germany, called the FSA an industry fig leaf: “They are just there to whitewash dubious practices,” he says.

On the rare occasions when the organization has found fault with an event or gift, there have been no serious consequences. One speaker at the lavish 2015 Baden-Baden event told Handelsblatt that “It was obvious to everyone that it was effectively an industry event,” while insisting his own contribution was unaffected.

That event was judged to have contravened the FSA's regulations which say organizers should avoid posh venues, and that industry shouldn't dictate the content of presentations. But breaking the rules only led to a warning, not a fine.

No complaints from big pharma. Boehringer Ingelheim said it “accepted the judgement,” and that the matter was closed.

Jan Keuchel is a Handelsblatt correspondent covering investigations and the German legal system. Christina Zühlke is a freelance journalist who contributed to this story. To contact the authors: [email protected]