@Risk

Global production of food and other goods regulated by the US Food and Drug Administration has skyrocketed over the past decade –so much so that the distinction between domestic and imported products is now obsolete, according to Commissioner of Food and Drugs Margaret A. Hamburg, M.D.

“There has been a perfect storm – more products, more manufacturers, more countries and more access.  A dramatic change in strategy must be implemented,” she said last week, as the FDA unveiled a new strategy to meet the challenges posed by rapidly rising imports of FDA-regulated products and a complex global supply chain.

The strategy, outlined in a report called the Pathway to Global Product Safety and Quality, calls for the agency to transform the way it conducts business and to act globally in order to promote and protect the health of the nation’s consumers. For example, the FDA says it will:

• partner with its counterparts worldwide to create global coalitions of regulators focused on ensuring and improving global product safety and quality. These coalitions of regulators will develop international data information systems and networks and increase the regular and proactive sharing of data and regulatory resources across world markets.

• build in additional information gathering and analysis capabilities with an increased focus on risk analytics and information technology.

• leverage the efforts of public and private third parties and industry and allocate FDA resources based on risk.

• augment changes already set in motion. For instance, between 2007 and 2009, the FDA increased the number of foreign drug manufacturing inspections by 27 percent and has opened a series of international offices in key locations.  FDA has also collaborated with its counterparts in the European Union and Australia on drug inspections, worked to  integrate certain aspects of drug regulation via the International Conference on Harmonization and joined the Pharmaceutical Inspection Cooperation/Scheme (PIC/S) which is an organization of the drug manufacturing inspectorates from 39 countries.  The FDA and other global leaders are also creating an expanded global regulators forum for medical devices.

• broaden its food safety efforts under the FDA Food Safety Modernization Act (FSMA). This new law creates a new foods safety system, in which FDA has a legislative mandate to require comprehensive preventive controls across the food supply chain and has new tools to hold players in the supply chain responsible.  There are also new inspection mandates, including a mandate leading to the inspection of more than 19,000 foreign food facilities in the year 2016.

These new initiatives will enable the FDA to better address fundamental global shifts that are on the horizon. In particular, the agency says it is preparing for these worldwide trends: (more…)

Federal agencies are cracking down on businesses that aren’t compliant with the Foreign Corrupt Practices Act (FCPA).

The US Department of Justice, the Securities and Exchange Commission and the FBI are joining forces on a rigorous anti-corruption campaign, targeting not only a company’s employees, but also its agents, contractors, investors and suppliers.

It appears that Pharmaceutical and Life Sciences companies are at the top of the DOJ’s list for investigations, and a leading firm in this sector recently agreed to pay $70 million in FCPA penalties. However, supply chain and procurement executives of all multi-national corporations now face distinct risks and business challenges.

In general terms, the FCPA consists of two core elements:

• The anti-bribery provision, which prohibits companies from giving money, gifts, or anything of value to obtain or retain business.
• The internal records and process standards provision, which requires companies to keep accurate records and maintain clear, detailed and adequate controls with employees and trading partners (including suppliers, intermediaries and subsidiaries) to protect against improper payments or influence.

Even though relationships between suppliers and other business entities are often opaque and difficult to track, too many companies have discovered the hard way that “willful blindness” only increases their culpability in the eyes of Federal regulators. Today, lack of evidence to verify proper, compliant management of these trading relationships is itself a cause for investigation. In fact, companies having no knowledge of corrupt payments can be prosecuted even if they were aware of potential warning signs and consciously failed to conduct due diligence and implement controls.

What can you do to mitigate your risk?

For starters, get informed.  Aravo is hosting a one-hour webinar next Wednesday, June 29, 2011, at 9am Pacific (12 pm Eastern) so you can hear how leading pharma companies are working to ensure compliance with FCPA.

Please join us and our featured speaker William Barry, of Richards Kibbe & Orbe LLP, and learn best practices for FCPA program design and tracking around:

(more…)

Cybercrime is on the rise, and unfortunately, it’s a trend that shows no signs of slowing down.

In fact, a new report from McAfee and Science Applications International Corporation (SAIC) found that the cyber underground economy now makes its money on the theft of corporate intellectual capital, including trade secrets, marketing plans, research and development findings and even source code.

McAfee defines this intellectual capital as the “new currency of choice” and says that cybercriminals have discovered that there is great value in selling a corporations’ proprietary information and trade secrets which have little to no protection.

“Cybercriminals have shifted their focus from physical assets to data driven properties, such as trade secrets or product planning documents,” Simon Hunt, vice president and chief technology officer, endpoint security at McAfee, said. “We’ve seen significant attacks targeting this type of information. Sophisticated attacks such as s Operation Aurora, and even unsophisticated attacks like Night Dragon, have infiltrated some of the of the largest, and seemingly most protected corporations in the world. Criminals are targeting corporate intellectual capital and they are often succeeding.”

The report, Underground Economies: Intellectual Capital and Sensitive Corporate Data Now the Latest Cybercrime Currency, found that: (more…)

Smartphones are embedded into today’s corporate culture. But, if you use your smartphone for both business and personal purposes, you may be putting your company at risk.

A new study from AVG Technologies found that most people are surprisingly indifferent to the many serious security risks associated with the storage and transmission of sensitive data on iPhone, Blackberry and Android devices. For example: (more…)

Supplier financial vulnerability continues to be a concern in the supply chain.

In fact, now that the risk is so significant, a new report urges companies to start acting like their own credit rating agencies.

The New Weakest Link in Your Supply Chain: Supplier Credit, a report from Oliver Wyman in collaboration with the Association for Financial Professionals (AFP), says that:

. . . supply chain risks have moved from the province of engineers into the realm of chief financial officers and treasurers. To emerge from the global recession unscathed, companies should rethink their approach to supply chains by behaving much more like their own credit rating agencies— and fast.

According to the report, credit rating agencies have downgraded the ratings of more than 500 companies in North America since April. Plus, the number of US businesses filing for federal bankruptcy protection has risen 126 percent over the past few years. Obviously, companies in your supplier network could be at risk, and it makes sense to take a hard look, specifically with strategic suppliers.

To mitigate supplier financial risk, the report suggests developing a predictive credit analysis framework that includes: (more…)