AUTH/3285/12/19 - Ex-Employee v Daiichi-Sankyo

Disclosure of payments on Disclosure UK

  • Received
    30 November 2019
  • Case number
    AUTH/3285/12/19
  • Applicable Code year
    2019
  • Completed
    Interim case report
  • No breach Clause(s)
  • Breach Clause(s)
  • Sanctions applied
    Undertaking received
  • Additional sanctions
    Advertisement
    Public reprimand
    Audit of company’s procedures
  • Appeal
    Appeal by complainant
  • Review
    To be published

Case Summary

INTERIM CASE REPORT

This is an interim case report because the final report will be delayed due to the Code of Practice Appeal Board’s requirement for an audit of Daiichi-Sankyo’s procedures in relation to the Code (Paragraph 11.3 of the Constitution and Procedure refers).

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An ex-employee complained about the gross underreporting of transfers of value by Daiichi-Sankyo.

The complainant stated that the Disclosure UK website showed that the company declared in 2018 that its healthcare professional registration fees were £7,937.60 for named individuals and zero for aggregated disclosures.

The complainant stated that in August 2018 the company sponsored 100 healthcare professionals to attend the European Society of Cardiology (ESC) congress in Germany and paid for travel, accommodation, food and registration fees. The complainant referred to a staff briefing that showed the names of the healthcare professionals. From searching Disclosure UK many of these healthcare professionals had no activities with Daiichi Sankyo listed. If all these people had decided to remain anonymous, the aggregated data had not been reported.

The complainant estimated that it must have cost at least 69,000 Euros in registration fees to take 100 healthcare professionals. Daiichi-Sankyo only declared under £8,000.

The complainant stated that looking at the disclosure of travel and accommodation costs, there was £47,724.20 detailed disclosures and £10,067.10 disclosed in aggregate. This was obviously too low to account for flying 100 people from UK to Munich return and accommodation costs for a 5-day congress.

The complainant alleged that Daiichi-Sankyo had not declared other congress fees in 2018 and probably, in 2017 and 2016. This was likely to be a pattern of behaviour.

Disclosure was very important, and the complainant alleged that to have such a huge discrepancy was a failure that brought the industry into disrepute. The fact that Daiichi-Sankyo had declared some fees seemed to say that the company had some kind of process in place but had maybe chosen to hide how many people they sponsored to go to ESC as 100 was a huge number to take. Daiichi-Sankyo should have declared 2018 payments by the end of June 2019 but had not.

The detailed response from Daiichi-Sankyo is given below.

The Panel noted that the presentation provided by the complainant indicated that there were 760 participants at ESC 2018 with 120 from the UK. A list of Daiichi-Sankyo’s attendees was included. The Panel noted Daiichi-Sankyo submission that it funded flights, accommodation and congress registration to ESC in 2018 for 98 health professionals. In relation to ESC 2016 and 2017 Daiichi-Sankyo paid travel, accommodation and registration fees for 15 and 28 health professionals respectively. The Panel noted that these transfers of values had not been disclosed on an individual or aggregate basis. The Panel was extremely concerned to note that when asked to quantify the total transfers of value that had not been disclosed for 2018, 2017 and 2016, a total of around £471,000 was described as being identified as unreported by Daiichi-Sankyo and that the company stated it did not have complete visibility of the total transfers of value that had not been reported.

The Panel noted Daiichi-Sankyo’s submission that the error related to issues in respect of indirect transfers of value where the administration and logistics support for events was contracted to a third party. The Panel noted Daiichi-Sankyo’s submission that in these cases the third party should have included details of transfers of value for each health professional along with the invoice and either the third party had not provided the information or Daiichi-Sankyo had not requested it. The review of the report from the financial system assumed that the data shown was complete and this was not so; the report did not contain health professional itemised transfers of value data for the activities. Further, the review did not include sign off by departmental heads with budget responsibility. It appeared to the Panel that the errors were not helped by the lack of training and a standard operating procedure (SOP). The local SOP was prepared after the complaint was received.

The Panel considered that the information published on Disclosure UK at the time of the complaint was not comprehensive in relation to support to health professionals to attend conferences in 2018, 2017 and 2016. The Panel ruled a breach of the Code in relation to the omitted 2018, 2017 and 2016 data as acknowledged by Daiichi-Sankyo. Consequently, as the data had not been disclosed Daiichi-Sankyo had not met the requirement to disclose by 30 June of the relevant year and the Panel ruled breaches of the Code as acknowledged by Daiichi-Sankyo. The data had not been disclosed either as a transfer of value to an individual health professional or in aggregate and therefore the Panel ruled breaches of the Code as acknowledged by Daiichi-Sankyo.

With regard to the requirement to document all disclosures and retain records for 5 years the Panel noted that Daiichi-Sankyo denied a breach in this regard. However, in response to a request for further information, the Panel noted Daiichi-Sankyo’s submission that it did not have complete visibility of the total transfers of value that were unreported and it listed the payments it had managed to identify. The Panel noted the apparent inconsistencies and that Daiichi-Sankyo had not been able to produce all of the relevant data. The Panel therefore ruled a breach of the Code.

The Panel noted that Daiichi-Sankyo had published a methodological note so had met the requirements of the Code. The company had not followed its methodological note but this was covered by the rulings of breaches of the Code above. The Panel therefore ruled no breach of the Code, which was upheld on appeal by the complainant.

The Panel noted that there had been a requirement in the Code since 2012 to disclose financial details of sponsorship of UK health professionals etc in relation to attendance at meetings. This included registration fees, costs of accommodation and travel. At that time the information was to be disclosed in aggregate. Changes were made to the Code since then including the need to disclose transfers of value on an individual basis.

The Panel noted that in 2018 Daiichi-Sankyo had under reported the transfers of value by at least £398,000. The figure published on Disclosure UK (checked in January 2020) was just under £280,000. The Panel queried why the issue had not come to light sooner given the numbers of UK health professionals which attended the ESC and the costs of that support. The Panel considered that the magnitude of under reporting was of serious concern. There was also under reporting in 2017 and 2016.

The Panel was also concerned that the company’s processes were inadequate. The new SOP was designed to assist with the new process but the Panel queried whether it was sufficiently robust, particularly with regard to checking the data. It did not appear that the company had corrected the data on Disclosure UK and this must be prioritised. It would in any event need to be updated as part of the requisite undertaking.

The disclosure of transfers of value was an important part of self-regulation and it was of serious concern that Daiichi-Sankyo had not been transparent about the transfers of value for so many years.

High standards had not been maintained and therefore the Panel ruled a breach of the Code as acknowledged by Daiichi-Sankyo.

The Panel noted that a ruling of a breach of Clause 2 was used as a sign of particular censure. It considered that to fail to disclose the required information on Disclosure UK was extremely concerning as was the scale of the under reporting. Daiichi-Sankyo’s process was inadequate. The Panel ruled a breach of Clause 2.

The Panel decided that as Daiichi-Sankyo’s conduct raised concerns about the company’s procedures it warranted consideration by the Appeal Board. The Panel decided to report Daiichi-Sankyo to the Appeal Board under Paragraph 8.2 of the Constitution and Procedure.

The Appeal Board noted the Panel’s comments and rulings of breaches of the Code including Clause 2 and its decision to report Daiichi-Sankyo to the Appeal Board. The Appeal Board noted that Daiichi-Sankyo had submitted that it was in the process of addressing the issues and it had apologised.

The Appeal Board did not understand why Daiichi-Sankyo had been unable to realise that it needed to disclose transfers of value in relation to funded flights, accommodation and congress registration through a third-party agency. The representatives from Daiichi-Sankyo acknowledged and recognised that the company had not fully understood and implemented its responsibility to correctly disclose transfers of value over a three-year period. The representatives from Daiichi-Sankyo acknowledged that its methodology which focused on direct transfers of value was not adequate and there was no SOP to cover transfers of value in place during this time.

The Appeal Board considered that this case demonstrated that Daiichi-Sankyo had grossly under reported the true position of its transfers of value over a sustained period. It noted from the company representatives that the third-party had supplied data to Daiichi-Sankyo but that the company could not locate the data. The Appeal Board noted the explanation of the company representatives that a certain employee who had/ought to have received the data had left the company. The Appeal Board considered that the issue was broader than one individual’s failing. There was a fundamental and systemic failure of the company’s processes and a complete misunderstanding of the requirements and application of the Code. The Appeal Board queried whether the company’s submissions truly reflected the urgency of the situation.

The Appeal Board decided that in accordance with Paragraph 11.3 of the Constitution and Procedure, Daiichi-Sankyo should be publicly reprimanded for its fundamental systemic failure to have adequate processes in place to correctly disclose transfers of value over a three-year period. The Appeal Board also decided to require an audit of Daiichi-Sankyo’s procedures in relation to the Code. The audit should take place as soon as possible. On receipt of the report of the audit the Appeal Board would consider whether further sanctions were necessary.