Pharma's use of compliance auditors raises conflict-of-interest concerns

Several pharmaceutical companies are hiring their own auditors to perform compliance reviews in order to fulfill obligations outlined in federal settlements, raising conflict-of-interest concerns from legal experts, according to Reuters.  

Drug manufacturers that enter into federal settlements are required to conduct internal compliance audits as part of corporate integrity agreements that are built into the agreement. However, the Department of Health and Human Services inspector general permits companies to use auditors that are already contracted to do existing work, creating an inherent conflict of interest, according to some legal experts.

For example, in 2012--two years after agreeing to a $600 million settlement involving the off-label promotion of Botox--Allergen paid Ernst & Young more than $440,000 to conduct compliance reviews while it was also paying the auditor more than $5 million to conduct internal audits.   

"Work with a major company is an important contract, and an established contractor isn't going to be independent," Brandon Garrett, a professor at the University of Virginia School of Law, told Reuters.

The pharmaceutical industry has a long history of agreeing to multibillion-dollar settlements to resolve false claims and kickback allegations, although the amount of federal financial penalties has declined precipitously over the past two years. Last year, Sen. Elizabeth Warren (D-Mass.) suggested that drug companies that violate anti-kickback statutes should be required to pay 1 percent of their profits to the National Institutes of Health.

To learn more:
- read the Reuters article

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