February 9, 2021

What Are The Seven Elements of an Effective Compliance Program?

A sound manufacturer compliance program leverages internal controls to monitor the business and ensure conformity with applicable laws, regulations, and industry standards. It’s an internal set of checks and balances designed to detect and address issues before significant violations occur.

What does an effective compliance program look like? The government’s watchdog for fraud and abuse in the federal health care programs, the US Department of Health and Human Services’ Office of the Inspector General (OIG), has set the industry standard for nearly 2 decades.

OIG developed a series of voluntary compliance program guidance documents directed at various segments of the industry, like manufacturers. It set forth seven elements to encourage the development and use of internal controls to monitor adherence to applicable statutes, regulations, and federal health care program requirements.

Here are seven elements considered industry-standard for every life sciences manufacturer:

1. Written Policies and Procedures

The first step in implementing a compliance program is to establish written policies and procedures that promote the company’s goals for compliance. These guidelines provide clear direction for operating the business in a manner that complies with applicable statutes and regulations.

2. Compliance Officer & Committee

Everyone in the business should understand the compliance requirements that apply to her role; however, designating a group of individuals to lead the way is essential. The Compliance Officer serves as the focal point of the company’s compliance activities and is primarily responsible for identifying key fraud and abuse risks and overseeing implementation of the compliance program.

The Compliance Committee advises the Compliance Officer and assists in the implementation of the compliance program. Its membership usually includes senior leaders with a variety of skills and professional experience who demonstrate high integrity, good judgment, assertiveness, and an approachable demeanor.

‍3. Training and Education

Company-wide training and education are essential to creating a culture of compliance. Employees must receive training and continuous education not only to know what is expected, but how to comply and why compliance is important. Annual all-employee training generally includes an overview of these seven elements of an effective compliance program, key federal and state laws and regulations, and relevant industry guidance for best practices at a minimum.

4. Effective Communication

Compliance requires consistent messaging and an environment that encourages questions when messaging is unclear. Company personnel must have easy access to report compliance issues and should feel comfortable raising questions or concerns. Offering multiple reporting options, including confidential reporting through an anonymous hotline or online messaging system can encourage employees to be transparent about perceived issues.

5. Monitoring and Auditing

Without internal monitoring and external audits a company may not learn about a compliance concern until a significant issue has developed. That’s why it is crucial for a manufacturer to implement procedures for ongoing evaluation that flag potential issues, allowing the company to evaluate them and take prompt corrective action as needed.

6. Clear Disciplinary Guidelines

Clear disciplinary guidelines are one of the best ways a manufacturer can communicate that it takes seriously all violations of applicable laws, regulations, policies, procedures, and industry guidelines. They help personnel understand the importance of compliance to the company and appreciate the consequences of non-compliance.

7. Violation Detection & Correction

The final component of an effective compliance program is having a sound investigations procedure. It should be designed to make a preliminary good faith inquiry into all potential issues and initiate an investigation when appropriate. Failure to methodically respond to credible allegations can send a message that compliance is not important and set the company up for future issues.

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Interested in establishing a compliance program? Need a Compliance Officer? Our team has extensive experience implementing each of the seven elements. Just let us know how we can help. From drafting policies and procedures to establishing monitoring and auditing plans, we’re here to support you.