Risk Management In The Pharmaceutical Industry
In the fast-paced modern world decisions are made quicker than ever and the need for risk management has never been greater. As Beck referred to in his paper we live in a ‘World risk society’ where risk managers are at the core of protecting and helping their specific business, environment or organisation thrive. In Becks work he often questions risk management failures due to uncontrollability, ignorance and uncertainty. We have chosen to focus our research on the pharmaceutical industry and we will go into detail on two past failures in the industry later in the paper.
Risk management in the pharmaceutical field is vital. It is at the core of how pharmaceutical companies preform in the market but is also responsible for the lives and well-being of patients who use the pharmaceutical products or services. Failures of risk management personnel within this industry impact both directly and indirectly on patients on a vast scale of minor to severe consequences sometimes including death. Protection of patients by managing risk in the quality systems and manufacturing process is being given prime importance in the pharmaceutical industry. Each product and service within the industry has associated risks. In the earlier days risk within product quality and process was assessed in the following informal ways; trend reviews, flow charts, check lists, changes review and observations complication. The risk management approach presently is initiated by regulatory agencies with recognized management tools along with support of statistical tools in combination, which make it an easier application of quality risk management principles across the broad industry. The FDA expects the risk management to follow the basic process of:
- Learning about and interpreting products benefits and risks.
- Designing and implementing interventions to minimize a product/service’s risk.
- Evaluating interventions considering new knowledge that has been acquired over time.
- Revising interventions when appropriate.
The use of a risk-based approach provides a consistent method for decision making which is prevalent to ensuring patient safety. Applying risk management processes to the pharmaceutical industry should reduce the number of threats or at least minimize their impact through the continued use of risk management tools and methods. At times the cost/price of such risks in this can be hard to decide as it can result in death as mentioned earlier. This was the case of the thalidomide disaster in the 1950/1960s. The thalidomide disaster is one of the darkest episodes in pharmaceutical research. The drug was marketed first as a sleeping pill, even safe for pregnant women. The drug was proven to help with morning sickness and therefore became very popular among pregnant women. However, it caused 1000s of babies worldwide to be born with malformed limbs. The damage was revealed in 1962. A new investigation has found the Irish government issued an ineffective recall of the drug once the devastating side effect became apparent.
In absence of a public announcement from the government issuing a circular to a CMO delayed the recall of the drug, which meant in the interim it could be prescribed. Because of this, organisational leaders must become “system thinkers” who demand in depth analyses of safety concerns, replace punitive reactions to mistakes with an open environment and proactively address any risks; there will be an opportunity to build safer health care organisations. However, there is no room for reckless behaviour in the healthcare environment.
Post loss of the thalidomide, management faced a long trial in Germany and a British newspaper campaign. They forced the distiller company to financially support the victims which was a huge volume of money the company lost. Likewise, with the asbestos insurance, we can see that if your product causes harm to someone, they can sue you legally. Similarly, in the notes we can see that the asbestos case caused Georgia pacific 344, 300 claims, costing the company a total of 830 million.
Another and more recent, close to home risk management failure within the pharmaceutical industry is the Irish smear test scandal. The smear test scandal that took place in Ireland illustrates a major failure in the pharmaceutical industry. It saw over 200 women presented with inaccurate results on their tests by a HSE programme, Cervical Check. This incident can be classed with high severity as 12 affected women to date have subsequently died with many more left terminally ill. The HSE has a risk management policy that outlines “the commitment of the HSE to the proactive management of risk in line with the ISO’s 31000’s 11 principles of risk management”. Despite this policy the HSE not only suffered huge financial losses but also a major blow to the public’s confidence in them as a governing body. It was viewed as a ‘Breach of Trust’. In addition, it claims to engage in ‘Risk avoidance’, yet the inaccuracy of the results was known 2 years prior and this information was withheld from the affected women. Furthermore, a concept developed by Houck known as ‘risk creep’ can be used to describe some of the behaviour of Cervical Check. Prior to the scandal hey did not have many of their smear tests audited and most were sent to an American laboratory for testing. His behaviour contradicts the quality assurance asserted by the programme. Restoring confidence in the HSE and providing help and support to those affected were the main aims of the organisation and the state’s ‘Loss Reduction’ strategy. Overall, this leads to the question of who is to blame?
As mentioned in the ‘social dimension’ of ‘uncontrollable risk’, in this situation one person cannot be blamed for the actions of many that have led to this risk management failure. However, a victim to the scandal Vicky Phelan took legal action against both the HSE and the U. S laboratory involved. In response, the HSE made an apology and took liability. These examples of failures within the pharmaceutical industry lead us on to the topic of the so-called ‘post loss’ stage. Even though it deals with a situation where the downfall already happened the taken actions should be pre-determined and have the survival of the company or organisation in mind. That means the company/organisation should try to reduce the severity of the loss. Along with the upcoming liability costs for the victims a reputational loss are the biggest threats to companies. A loss in the company´s reputation is so severe because it can lead to negative spill overs to other products or services of the company, if clients lose the trust in one product they a more likely to avoid the other products as well which leads to heavy decline in sales. Also, it is not easy to reduce or avoid a loss in reputation after one product is known to be harmful. But a company can not only suffer from the clients, the whole reputational risk is a combination from all stakeholders of the company.
So in addition to the clienteles, the loss in reputation of suppliers, employees or investors can hit a running business hard. It is not the fact that people think worse about the company/organisation that causes the harm but that this leads to a decline in trust, sales and possibly that good employees leave. To reduce the effects of a reputational damage especially with clients a quick and believable communication campaign is important, it certainly didn´t make things better for the reputation of the Grünenthal GmbH that it took them over half a century, until 2012, to officially apologize to the victims of the Thalidomide incident and this lack of swift reaction to a failure is noticeable in the HSE withholding information of their downfalls for over two years even to the victims directly affected.
