The Ropes & Gray Global Health Care Compliance Initiative’s virtual trip around the world podcast series highlights our collaboration with our local counsel contacts, in particular the Local Law Comparison Guide. The Local Law Comparison Guide (the “Guide”) is a resource tool providing country-specific surveys that analyze legal, regulatory and industry requirements governing industry interactions with health care professionals. As part of this series, Ropes & Gray attorneys interview our local counsel partners, who are based around the world and helped develop the Guide. These discussions highlight notable health care regulations and developments impacting compliance in our various countries.
In this episode, we are joined by our partner in Mexico, Lourdes Salazar. Lourdes is an attorney at Von Wobeser. Alison Fethke, counsel at Ropes & Gray, discusses with Lourdes the regulatory regime in Mexico, key risks for compliance, and changes in law to be aware of.
Alison Fethke: Hello, and welcome to Ropes & Gray's virtual trip around the world podcast. I'm Alison Fethke, a counsel in the health care group in our Chicago office. Together with my colleagues across the globe, I'm so excited to share with you the launch of our new Local Law Comparison Guide. This is developed as part of the firm's Global Health Care Compliance Initiative and is based on our cross-practice group collaboration both at Ropes & Gray and, very importantly, our strong relationships with expert local counsel. This new Local Law Comparison Guide summarizes requirements and standards for typical activities conducted by health care and life sciences companies across 19 key international jurisdictions, and we partnered with trusted law firms on six continents to develop this guide. I am so excited to have with me here today from the law firm of Von Wobeser, Lourdes Salazar, who is going to talk with us about compliance and regulatory considerations when operating in Mexico. Lourdes, I'm delighted to have you join me. Thanks for coming. Could you just start by giving us a brief overview of you and your practice at Von Wobeser? And then we're going to dive into some of the key considerations and trends happening in Mexico.
Alison Fethke: Are you resident in Mexico City, Lourdes?
Lourdes Salazar: Yes, I'm resident in Mexico City. All my life, I've lived here.
Alison Fethke: Terrific. So as we get started, could you start by just describing for us the regulatory framework in Mexico? And by that, I mean if you're a life sciences or a health care company, what are the laws or the industry trade group guidelines that a company would really need to be aware of and that would be at the top of their list in terms of things to think about?
Lourdes Salazar: The thing here is that all the regulatory matters are spread in different provisions. And actually, regarding the compliance, it's a relatively recent topic here in Mexico. Before 2015, compliance played more like a commercial and a business role more than an effective obligation of the companies. In that year, Mexico introduced at a constitutional-level the creation of the National Anti-Corruption System, who acts as a coordinating agency and an authority for all levels of government responsible for preventing corruption. What I mean is that before that, all the rulings and guidelines were more focused in industry groups than actually written in a specific provision. So that's what we have here, and everything is spread. So we recommend our clients to be in one of these chambers where all the other companies are because I think that they have the most important things or topics regarding the compliance and all the regulatory matters.
Alison Fethke: So starting in 2015 with your National Anti-Corruption law, it sounds like the landscape changed for all companies in Mexico. For those in the health care and life sciences space, is there anything specifically, or greater risks or concerns they should be aware of?
Lourdes Salazar: Yes, we have here three different things. On all these provisions, we have the criminal, administrative, and civil liability of corporations; we have now the Whistleblower Protection Program; and we have the general law on corporate liability and due diligence, which was presented to Congress in September of last year, but has not published. Regarding the criminal, administrative, and civil liability of corporations, many corporations might be subject to fines, temporary or definitive disqualification from participating in governmental bids, and even the dissolution of the company. In most cases, the risk is that the company will be subject to sanctions regardless of whether or not the company had a direct intention to participate in an act of bribery, and as a consequence, will be sanctioned for not having the proper controls or guidelines related to activities of officials, employees, managers, or others. And now, of course, with the Whistleblower Protection Program—which was established in October of last year—the Ministry of Public Function provides the guidelines for granting, implementing, and following up on measures aimed to protect whistleblowers. These whistleblowers have become highly relevant in the fight against corruption. Their complaints filed should be followed by the Mexican authorities in order to be aware of potential acts of corruption.
Alison Fethke: In Mexico, health care professionals or health care providers, are they typically also considered to be government officials?
Lourdes Salazar: Health care providers that we have here, they can be considered as part of the government as long as they work in an institution of the government, either that they are actually health care providers or they have just desk jobs and they are filing, or rating, or executing things. And there are several differences in the approach that individuals can have with health care providers from the private industry and the health care providers that act also as a government official.
Alison Fethke: So something maybe for health care and life sciences companies to think about very specifically. They may not always think about the connection between the health care providers and their role as a government official.
Lourdes Salazar: Yes, of course. Actually, it's not quite written, but it's prohibited to have interactions like marketing, advertising, or hiring for private workers at a health care provider that is also a government official. Since it's quite ambiguous, the role in which they can participate, the retribution that they might have, even speaking about gifts, meals, or anything, it's not quite clear. And this kind of act, the provisions are very broad and open. All these kinds of things can be considered as a serious act of corruption, so it's not quite open to have these kinds of engagements or anything with government officials, but also as health care providers.
Alison Fethke: If it's a health care provider that is not a government official, where would a company look for guidance on appropriate activities like meals, training programs, or a sponsorship, for example?
Lourdes Salazar: The first thing that they have to see is the General Law of Administrative Responsibility and the federal and local criminal codes in order to verify that any kind of these activities, sponsor activities, or events can be considered as an act of corruption. For more specific guidelines, the companies can go in the ethics codes in the Mexican health care industry, and we have three very important, which is the Ethics and Transparency Codes issued in 2013 by the Mexican Chamber of the Pharmaceutical Industry; the Good Promotional Practice Codes that was also issued by the same Chamber; and the Code of Interactions with Healthcare Professionals issued by the Mexican Association of Innovative Industry of Medical Devices. Here we have more of these guidelines that the same industry has applied to itself in order to avoid any kind of breach with the law, so there are more clear rulings and things.
Alison Fethke: We also have a similar framework in the U.S. with the AdvaMed and PhRMA Codes. It sounds like it is somewhat similar in Mexico in terms of industry self-regulation.
Lourdes Salazar: Yes, it’s more like a self-industry regulation than something that is written by the law.
Alison Fethke: Lourdes, in terms of the key risks that you are seeing as you work and counsel your life sciences and health care clients, what are you seeing as the biggest risks right now, either currently or on the horizon in the near-term?
Lourdes Salazar: The biggest risk that we see is actually that kind of interaction. I mean that the companies should be really careful when they are sponsoring events, when they are having meetings with the health care providers, the kind of educational grants that they are providing to them, the samples, so they have to be very careful when they are doing these things. Any kind of payment, retribution, gift, meals or whatever should be set according to fair market prices, the time that's spent, the final results, and the responsibilities that are taken—both parts in the engagements that they are having. And of course, this compensation must not be related to the company's past, present, or future business relationship with these health care providers. So that's the things that they have to take very carefully.
Alison Fethke: Has there been enforcement, either among the companies in the self-regulatory framework or by the government with respect to those kinds of activities?
Lourdes Salazar: There is some kind of enforcement, of course. Companies might be subject to fines, even from fines that are subject to the disability for them to appear in public biddings, and of course, with the final and the most terrible one, like having the dissolution of the company. Regarding the specifics in the industry group, the sanctions are not quite open to the general public. And what we have seen is that the industry itself, it's quite conscious of the things that they can and they can't do, and they even sometimes throw other things into their legal provisions. They take their own precautions, and they prefer to not be put in that level of risk.
Alison Fethke: It sounds like there is some self-regulation among companies to some degree. Are there other key risks that you see, perhaps any that have been caused or changed related to the COVID-19 pandemic?
Lourdes Salazar: Regarding COVID, we were expecting several modifications, like things more opened and things like that. And regarding compliance, we don't see any relevant modification. What we have seen is a new provision that caused quite a lot of confusion within the industry in which the Mexican government authorized itself in acquiring medicines and vaccines that was not evidenced in compliance in Mexico, meaning that it's not compliant to obtain a health or sanitary registry. And this situation caused a lot of confusion within the industry because the authority did not put the guidelines in which these kinds of authorizations that it planned itself will take place. It seems to be more open, but not just for acts in front of COVID. We have not heard that the authorities have been importing and using medicines and vaccines different from the COVID issue, and we expect that they do not do that.
Alison Fethke: Have there been major changes in business practice caused by COVID that have required modifications in compliance guidelines, such as virtual programs, virtual conferences, or scientific meetings?
Lourdes Salazar: No. The provisions are really late, and are not being used on time for our response, so we don't have any kind of modification. Everything has been the same. And, again, since this industry is more like it's self-regulated, I think that they are taking control and focusing, even that they are having virtual conferences, attending meetings, and providing guidance, of course, to the health care providers, they are still taking a lot of care on the things that they can do and they cannot. They are just using the Telemedia as part of an additional tool, and that's all.
Alison Fethke: Lourdes, when you think about working with, for example, a life sciences, perhaps a pharmaceutical company navigating this framework, with respect to their compliance program, what would you consider to be the key pieces to put together in terms of a compliance program? I know you mentioned how important it is to have structure around your compensation arrangements with HCPs. Do you have any suggestions on best practices for that?
Lourdes Salazar: I think the most important thing is just not saying that the company has the guidelines and they have the structure, but that they have programs in which they train their employees, their management, and all the people that will be involved in actually having these activities for them to know what they can do because some of the time, the worst things that happen is because someone was not aware of the things that they were not able to do, even that they were doing in good faith. So I think that that's the more important, to inform your own people of what they can do.
Alison Fethke: Right. Making sure that you just don't have things on paper, that people actually understand and are trained.
Lourdes Salazar: Exactly. We should be training the people all the time. I don't know if once a year or twice a year. The company will notice that once they have this approach with their own and they can develop this kind of program as something permanent, not assuming that the people know what they can and cannot do.
Alison Fethke: That makes a lot of sense. I think that's good advice for a compliance program everywhere in the world. So, Lourdes, as we look forward in the next year, what are the risks that you see on the horizon for your life sciences and health care clients? What's on your radar to think about?
Lourdes Salazar: I think that we don't see a lot of risk regarding the compliance, again, because the industry has been doing the things very good and they are the first ones that they don't want to have any kind of risk. But we are seeing a lot of modifications in the rulings regarding the medicines and the drugs, and we are seeing a lot of changes or proposal of changes. So I think that it's important that they are in touch with their legal team, that they are aware that there may be some changes that might not constitute a risk, but they have to be aware. Currently, we have, as you know, the thing with the cannabis, which, of course, we'll be involved regarding our industry because there will be an authorization for use of cannabis in treatments. We have to be aware that there will be a lot of control in this use, that there are some provisions that are not published yet and that will be related with the production, diagnosis, prescription, the production of these medicines, and of course, a prescription itself in which companies will not be forced to ask for renewals every five years. Just after the first renewal, the registry will be permanent as long as they have the same conditions. And this is a very good situation for the companies, the industry, and even for the government because they had a lot of workload regarding all these kind of proceedings. And, again, it's kind of a recognition of the government that the industry is doing things well, that it will no longer be necessary to have these renewals every five years. Those are the most relevant things that we see that might be changing in this moment.
Alison Fethke: Great—that is so helpful. Thank you very much. A lot to keep on our radar. I just wanted to thank you, Lourdes, for joining me today, and for the partnership of your firm, Von Wobeser, on this important initiative. We think this will be a great resource for our clients in trying to navigate this complex regulatory environment. You can also subscribe and listen to this series wherever you regularly listen to podcasts, including Apple, Google, and Spotify. So thanks everyone for listening, and we hope you have a great day.
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