Pharma Alert: Ten Key Indicators That You Should Perform a Contract Compliance Audit [White Paper]
December 7, 2016 - By: SC&H Group
In today’s pharmaceutical industry, third-party providers—such as contract research and manufacturing organizations (CROs/CMOs), laboratories, and off-shore suppliers—are essential to overcoming market and revenue-growth challenges. After all, with solid third-party relationships, executives can maximize performance and speed to market while addressing new regulations, cost concerns, and increased competition.
However, as global pharmaceutical supply chains increase in complexity, executives face rising costs and risks related to how they implement strategies in different countries, as well as how they ensure transparency and communication with and between suppliers.
For example, outsourcing business activities to emerging, international markets has increased costs of transportation and the potential for non-compliance. And, when executives outsource to CROs and CMOs, they are being exposed to financial and operational risk due to a lack of visibility, transparency, and communication in the supply chain.
Further, many companies are developing partnerships and/or making acquisitions to improve stock volume, value, and competitiveness. In fact, most pharmaceutical companies in the U.S. have recently acquired or plan to acquire a company in the next year, according to a recent CPhI report.
When two organizations come together, their contract terms, policies, practices, and operations will often differ, making integration a complicated procedure. Moreover, these transactions prompt complex transfers of third-party contracts, which can decrease supplier transparency and increase risk. Consequently, it is possible that overbillings go undetected.
Whether outsourcing to a global supplier or engaging a local third party, multi-year contracts are critical to ensuring that operations run smoothly and promote accountability. Yet, given the high level of activity and complexity involved, undetected non-compliance associated with these contracts can easily be overlooked, posing significant risk to the company.
Therefore, in this white paper, we discuss a number of scenarios—either intentionally or unintentionally—that signal it’s the right time to bring in an experienced contract compliance auditor.
Ultimately, by conducting a contract compliance audit, pharmaceutical companies are addressing industry challenges by promoting visibility, accountability, and transparency among third parties. And, by promoting governance throughout their supplier contract lifecycles, they are improving communication, compliance monitoring, cost savings, and third-party relationships.
Want to learn more about when you may need a contract compliance audit so you can start realizing the benefits? Contact SC&H Group’s Contract Compliance Audit team here.