A culture of compliance

In honoring Perrigo Company for the best large-cap compliance & ethics program, the judges cited a fulsome program that permeates the company culture. ‘If one measures having the right processes in place, Perrigo is number one,’ one judge said.

Compliance and ethics are especially critical for pharmaceutical firms such as Perrigo, which develops, manufactures and distributes private-label drugs and nutrition products that are subject to strict regulation by agencies such as the Food and Drug Administration and under legislation such as the False Claims Act. Perrigo’s focus is on products for dermatological and respiratory conditions, which are often more challenging to demonstrate as having the same safety and effectiveness as their brand-name equivalents.

Over the last eight years Perrigo has completed roughly 20 acquisitions, each one demanding extensive due diligence to ensure there are no outstanding or pending lawsuits or other issues that may have an adverse impact on the company in the future. That in itself is a formidable task for a company’s legal and compliance departments. Perrigo’s acquisition in late 2013 of Dublin-based Elan, which has been incorporated in Ireland, required close co-ordination of US and Irish law by the company’s legal team.

Rigorous compliance starts with Perrigo’s board of directors, which is extremely supportive of the compliance program, says Todd Kingma, Perrigo’s executive vice president, general counsel and corporate secretary. He also credits CEO Joseph Papa, ‘who always tells people to do the right thing’ – a message that is disseminated throughout the organization to the company’s 10,000 employees. ‘The most important thing in compliance is the culture of the company and that people take it seriously,’ he adds.

That culture is evident in the company’s code of conduct, entitled ‘We are responsible’, which lists three core values – integrity, respect and responsibility – and emphasizes open communication among employees and recognition of individual contributions as well as treating the firm’s reputation as each employee’s own.

One thing that caught the judges’ attention was the quarterly fraud prevention newsletter from the vice presidents of internal audit and compliance, published in three languages. The newsletter educates employees about the more common identity theft scams and provides links to articles covering noteworthy identity theft convictions.

The CEO’s business update newsletter is another example of the C-suite setting the tone for Perrigo’s culture of compliance. It reminds employees of their individual and collective responsibility for compliance, provides a collect number for non-US callers that directs them to an independent third-party reporting system, and lists managers and the corporate compliance department as helpful compliance resources.