Red Flags in a Pharmaceutical Audit

Globally, regulatory authorities have developed a keen interest in the pharmaceutical industry. Recent enforcement actions, including the cases of GlaxoSmithKline, Johnson & Johnson, Valeant Pharmaceuticals, Abbott Laboratories etc., have paved the way for regulatory agencies to dig deeper into the malpractices prevalent in the pharmaceutical industry.

Back in 2014, the total pharmaceutical revenues worldwide had exceeded one trillion U.S. dollars for the first time. Increased competition owing to the growing size of the industry has noticeably increased the complexities of operations, sales and marketing, which in turn have led to an alarming spike in malpractices by stakeholders involved at various levels in the industry.

With the growth of the pharmaceutical industry and the unavoidable by-products that result from it, the industry is currently faced with a number of schemes that have been tailored to manipulate and defraud enforcement agencies and the public at large. The present article aims to identify the most common ‘red flags’ and fraudulent schemes that plague the pharmaceutical industry in India. Sufficient awareness about these fraudulent schemes is essential to equip auditors with a more focused and effective audit plan.

Red Flags and Fraudulent Schemes

The Indian pharmaceutical industry is faced with a number of challenges from a compliance point of view. The most prevalent fraudulent schemes in the industry relate to year-end targets, sales returns, etc., which are used as a veil to effectuate concerns around channel stuffing, free of cost products, free samples, fraud.Continue Reading Red Flags in a Pharmaceutical Audit