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Lessons Learned from BD's Global Compliance Initiative


Posted in Regulatory and Compliance by MDDI Staff on December 20, 2013

Called "COMPASS," BD's global medical device compliance initiative is intended to remind associates to stay pointed in the right direction.


By Tim Daley, Susan Murr, Brian Riewerts and Jeremy Dane

Life sciences companies face strategic, operational, and regulatory challenges across all facets of their business. Product development, supply chain, technology, commercialization, and compliance strategies overlap in myriad ways, requiring crossfunctional collaboration to achieve desired objectives, manage expenses, and deliver shareholder value.

To learn more about compliance initiatives at medical device companies, attend the Risk, Quality, and Validation conference track at MD&M West in Anaheim, CA, February 10–13, 2014.

Differences in local laws, cultural norms, and business practices make crossborder anticorruption measures particularly challenging. Compliance burdens have grown as regulations proliferate and regulators ramp up expectations. The medical device industry has been, and will continue to be, subject to complex regulations and rigorous enforcement activity, including scrutiny of third-party distributors and agents, plus enhanced compliance program obligations related to third-party risk management. Companies also face heightened executive accountability for corruption prevention, with directors and senior managers increasingly bearing responsibility for failure to exercise proper oversight.

Two Birds, One Stone

Addressing these trends, global medical technology company BD (Becton, Dickinson and Co.) combined two proactive commercial compliance and distribution management improvement initiatives to create a superior crossfunctional program. Working with global professional services firm PwC, BD strove to enhance its long-standing anticorruption compliance program across more than 50 countries to align it with business model changes and a global operating footprint. Concurrently, the company sparked an internal initiative to improve strategic management of its global third-party distributor network.

Recognizing potential synergies, BD leadership and PwC collaborated to harmonize these two efforts, reducing duplication and demand on company resources. Importantly, this alignment enabled the company to move beyond typical anticorruption rhetoric to tangibly embed compliance in its operations for measurable business benefits.

COMPASS: BD’s Design for an Innovative, Integrated Compliance Program

BD is committed to doing business in an ethical manner. The company’s chief executive and senior management recognized that integrating enhanced compliance requirements associated with the Foreign Corrupt Practices Act and other antibribery legislation with stronger distributor management processes would support growth, particularly in emerging markets.

Starting in 2009, BD combined these two work streams into one effort focused on assessing and decreasing corruption risk, developing a strong anticorruption program, constructing a strategic distributor management program, and engaging with the company’s local businesses. Called “COMPASS,” the name is intended to remind BD associates to stay pointed in the right direction. Responsibility for global implementation fell to executive vice president Gary Cohen, who at the time had responsibility for BD’s international operations. Engagement from the general counsel and chief financial officer facilitated proper resourcing and engagement from business units, helping generate support and enthusiasm from the start.

The integration program helped drive crossbusiness collaboration by simplifying go-to-market distribution strategies previously managed by individual business units. Program adoption was rapid once it became clear that the initiative supported BD’s country leaders in achieving commercial success by embedding compliance into fundamental business and distributor management processes.

The new program created two business functions at the global, regional, and country levels:

  • Commercial assurance, a compliance-focused team designed to address anticorruption compliance risks, including those associated with third-party sales agents.
  • Distributor excellence, an internal resource designed to strategically enhance and support distributor management.

Believed to be unique, BD’s approach built a strong, risk-based, enterprise-wide anticorruption compliance foundation while strengthening third-party management and market segmentation capabilities.

In designing COMPASS, the team focused on two attributes: diversity and complexity, and third-party management.

Diversity and Complexity. The diversity of BD's global medical product portfolio and large network of third-party distributors and sales representatives introduced significant complexity into the company’s global operations. COMPASS addresses two primary challenges:

  • Distributors. BD's diverse product portfolio is marketed and sold mostly through a large and diverse distribution network. Before COMPASS, BD’s distributor network was estimated at nearly 4000 listed entities ranging from large multinationals to small “mom and pops.”
  • Commercialization. BD's complex customer base—including hospitals and other care facilities, physicians, consumers, researchers, and B2B customers—requires diverse commercialization strategies and a multitude of tactics that may differ across market segments.

BD worked to achieve additional clarity in its distributor network and establish leading practices such as common sales metrics and other key performance indicators for driving and measuring distributor performance. The company considered these enhancements critical to compete effectively in the evolving global healthcare marketplace. Importantly, strong management and governance of distributors also helps to facilitate compliance.

Third-Party Management. Concurrently, BD commenced a broad, proactive effort to assess and strengthen anticorruption compliance management throughout its organization and with third parties globally. A new functional organization, Commercial Assurance, is responsible for providing BD’s management with information and counsel regarding compliance issues, as well as help in evaluating whether commercial practices are compliant.

This new function drives progress in preexisting global third-party due diligence processes, anticorruption policies and procedures, training and communication, and compliance auditing and monitoring programs. The BD team paid special attention to developing role-specific, scenario-based training to guide local associates and helping them comply with anticorruption laws, especially in high-risk markets. Commercial Assurance managers in key regional locations provide compliance counseling and assure operating compliance.

PwC organized a series of market-specific business process and compliance focus groups for BD in diverse markets including China, Russia, Italy, Brazil, Mexico, Turkey, and South Africa. The goal was to better understand local strategic plans and enabling activities/tactics, the size and complexity of local distributor networks, the current state of local compliance programs, and the tools needed to augment local compliance effectiveness.

Critical Steps to Stay on Course

COMPASS demonstrated that commercial improvement, expense management, and enhanced compliance need not be mutually exclusive. Consistent, clear policies and approval processes—along with better third-party due-diligence procedures—helped BD to “win business the right way.” The company’s experience highlights best practices for other global firms.

Enhance Distributor Network Efficiency and Compliance. PwC and BD collaborated on the design of enhancements to the third-party due-diligence process, including development of new risk assessment and eligibility criteria, guided analysis procedures, data quality reviews, internal QA/QC procedures, and enabling technologies. Due-diligence efforts were located within geographic regions. These changes were aided by a greater understanding of the complex global environment gained through focus groups and the team’s embracing of the underlying theme of business ownership with appropriate local resource support.

Local distributor excellence managers initiated the enhanced due-diligence activities. This permitted streamlined, consolidated information gathering in the areas of distributor demographics, organizational structure, names and positions of client-facing executives and directors, and the extent of government interactions. Local distributor excellence and commercial assurance teams analyzed this information for their local governance committee, a crossfunctional group including country general managers, business heads, legal, supply chain, and finance professionals, and others as needed.

Meanwhile, BD’s distributor excellence managers, working closely with their commercial assurance counterparts, coordinated meetings with local governance committees to review due-diligence results and agree upon required action or remediation. They also reviewed individual third-party firms to determine if they met BD’s high ethical and compliance standards.

One of the program’s unanticipated efficiency benefits, a cleansed master distributor database, facilitated overall rationalization of the distributor network.

Walk Before You Run: A Pilot Project. Following initial compliance program enhancements, the team selected BD’s Mexico subsidiary as a pilot location. BD’s corporate and regional organizations communicated common expectations and compliance standards, and introduced enhanced due diligence activities through which BD commercial assurance staff and local distributor management resources assessed distributors and presented findings to the local governance team. The pilot tested a common global policy, localized to reflect Mexico requirements as well as new approval processes and additional training.

Early on, the COMPASS team realized the importance of meeting with local leadership before conducting country rollouts, as well as engaging with the international legal team. Critical early steps included the following:

  • Communication. Due-diligence required extensive local communication and personal engagement by business leaders. Achieving common global understanding of compliance risk required training that emphasized areas that might not be intuitive, such as the broad definition of government official, and also contained local examples relevant to the audience. Local governance committee processes were streamlined as the COMPASS team gained greater understanding of information important for the business and how to best present it. They also developed common metrics to highlight progress.
  • Adaptation. Program acceptance and credibility increased as local businesses and functions recognized that their feedback counted. Businesses developed process “ownership,” which helped drive program progress and engagement.
  • Simultaneous translation of compliance training. Translation significantly improved understanding and promoted interaction. In Brazil, simultaneous translation of English and Portuguese improved training comprehension and effectiveness. This simple step allowed the global team to fully participate while ensuring there was strong understanding of locally available COMPASS resources.
  • Following the pilot, COMPASS received significant regional attention. Esteban Rossi, president of BD’s Latin American operations, explained how distributor management became a key regional business objective:

“COMPASS is more than a corporate program, it is a business need. When we talk about efficiency, new product pipeline, and the competitive environment, it is clear that we need to have a closer and more formal relationship with our distributors. Due-diligence and anticorruption training are important, and it is also critical to have compliance align with business strategy to further BD’s successful, sustainable growth.”

Leverage Technology to Operate Globally. Feedback from the business indicated that manual management of the enhanced compliance effort would be unsustainable. As a result, BD supported automation with a proprietary enterprise compliance-management service platform. It enabled distributor excellence and provided the company’s commercial assurance professionals access to specialized applications via a single Web portal.

BD now has information including the identities of the key management at each distributor and internal documents that can be uploaded into the compliance-management service platform to further supplement information about each distributor.

While proprietary compliance software is not unusual, the integration between business and compliance resources at BD is unique. It permits the company to conduct compliance reviews along with simultaneous business reviews that provide strategic perspective on whether a relationship makes operational sense.

Reducing manually-driven compliance procedures, the COMPASS content-management program facilitated approvals via online forms, reducing spreadsheets and paper. The new approvals process adapted the program’s document management capabilities to create a workflow, establish a core communications channel, and build a document repository. It also allowed the COMPASS team to create a global repository, facilitating sharing of leading practices both virtually and globally, resulting in a more integrated global team that can leverage resources, promote a shared view of the business, and foster esprit de corps.

Measure Tangible Business Improvements. Thanks to COMPASS, business units are now teaming and distributor approvals are made from a more strategic and collaborative perspective that helps avoid the costs and risks of maintaining relationships with redundant or underperforming distributors.

The communication facilitated by this process extends to broader governance and business planning matters. Availability of consistent, standardized data permits the development of key performance indicators to monitor performance, generate valid SWOT analyses and identify opportunities to augment vendor skills and capabilities.

To help address environmental complexities and improve collaboration among local management, the COMPASS team created an extended virtual global working group to share leading practices and leverage experiences and materials, including global “rules of the road” policy standards adapted locally and the delivery of key anticorruption messages to BD associates. The resulting toolkit included leading practices, from which regions could select and modify as appropriate. A supporting online training course and an intensive two-day live training session focused on channel enablement are being rolled out globally. Programs have already been conducted in the Middle East, Turkey, and Africa.

The additional data and communication facilitate greater coordination of segmentation, pricing strategy, and how the company works with its high-level distributors. For example, BD’s Brazilian operations created a segmented approach to managing distributors based on a detailed crossbusiness analysis of standard criteria.

Increase Distributor Outreach. Crossbusiness unit compliance training has made BD’s distributors more knowledgeable about the company’s products, organization and strategy, and more familiar with local representatives.

Recognizing the benefits of broader awareness, BD has integrated anticorruption compliance training into broader supplier/partner education and training events such as those that have long been held in China. More recently, BD has conducted sessions in Brazil, Turkey, Dubai, Vietnam, and the Philippines. Each session leverages the comprehensive compliance guidance framework to help third parties representing BD understand the practical application of laws and regulations, as well as their own ethical and compliance obligations.

10 Lessons Learned

From a legal and compliance perspective, COMPASS provides BD associates with the tools and training necessary to drive ethical business practices for BD and its partners.

Expected benefits include protection of brand value, safeguarded reputation of company executives, management, and the board, and potentially reduced government sanctions should misconduct occur despite safeguards. BD has lowered the risk of entering into new markets, delivering new products and services, and entering into new arrangements with government entities, while system and process standardizations have yielded reduced expenses from efficiency gains and fewer losses from fraud.

The following are among the lessons learned from COMPASS:

  1. Enhanced depth of perspective. Combining a compliance project with a business objective allows organizations to assess these objectives from two different points of view.
  2. The importance of teamwork. Everyone—corporate and geographic program resources, outside consultants, senior management, and local business leadership—must first understand, and then support, the initiative.
  3. Communication is crucial. There is no such thing as over-communication in complex, matrixed organizations, both internally and externally with third parties.
  4. To truly embed a program in the business, the process cannot be top down. Adapting the program to local conditions leads to stronger acceptance, increased local ownership, and greater program credibility and trust.
  5. Resource appropriately at the local level. Having the right resources in place in each country, even before local leadership and associates are trained, is essential. Training begins with the leadership.
  6. Be clear that compliance procedures are imperative. The need for anticorruption measures may not be intuitive to non-U.S. audiences.
  7. Leadership and associates must understand and support the governance model. This includes clarification of roles, responsibilities, and position descriptions.
  8. Integrate the distributor component. The distributor component must be integrated into the whole project, including the business processes focused on third-party due diligence. Local governance requires a crossfunctional team.
  9. Prepare before you pilot. Initial sites must have sufficient resources in place, support from the senior leadership, and robust packaging and dissemination of materials, even if not complete or fully polished.
  10. Continued refinement. Today, BD is focusing on ensuring sustained global implementation and continued refinement of the COMPASS model, as needed, based on an ongoing assessment
To learn more about compliance initiatives at medical device companies, attend the Risk, Quality, and Validation conference track aMD&M West in Anaheim, CA, February 10–13, 2014.

Tim Daley is vice president of global sales and distribution effectiveness at BD.

Susan Murr is vice president of commercial assurance and Privacy at BD.

Brian Riewerts is pharmaceutical and life sciences governance, risk, and compliance leader at PwC.

Jeremy Dane is director of the health industry advisory group at PwC.

[image courtesy of NIROTS/FREEDIGITALPHOTOS.NET] 


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