Topics "FY2020 Meeting of Compliance Management Officers and Practitioners" Held

Prior to the start of the meeting, Makoto Hatano, Chairperson of the JPMA’s Code Compliance Committee, outlined the committee’s basic policy for fiscal year 2020“The Code Compliance Committee supports member companies in complying not only with relevant laws and regulations but also with voluntary codes of conduct, including the JPMA Code of Practice, and in fulfilling their social responsibilities with high ethical standards as members of the life sciences industry,” as well as the priority issues: “Supporting member companies in promoting compliance”“Promoting appropriate disclosure of information based on the Transparency Guideline” and “Compliance with the Guidelines on Sales and Promotion Activities for Prescription Drugs”“Collaboration with domestic and international organizations such as government agencies, the Japan Pharmaceutical Manufacturers Association (JPMA), the Fair Trade Council for the Manufacture and Marketing of Prescription Drugs (FTC), and the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), as well as the collection, dissemination, and feedback of information.” An overview of these initiatives was presented.

He also stated that, following the entry into force of the “APEC SMEs Vision 2025” in fiscal year 2020, the association intends to continue gathering information on global trends and disseminating updates.

Toshiaki Nagasato, President and CEO of KM Biologics, delivered a report titled “Toward Restoring Trust,” detailing the initiatives the company has been implementing for approximately three years since the business succession.

Mr. Nagasato began by outlining the causes, issues, and improvement measures related to this compliance case. He then presented specific improvements to the structures, functions, and mechanisms regarding “Strengthening Governance,” “Compliance Promotion Framework,” and “Efforts to Restore Trust.”

Regarding the strengthening of governance, he explained that the company had reinforced its management and audit systems and restructured its quality assurance and production management systems. He noted that this had clarified the responsibilities of both management and employees and established a framework to resolve issues in a timely manner.

Furthermore, regarding the compliance promotion framework, the company stated that it has raised employee awareness of compliance through the establishment of a Compliance Committee with the President as the Chairperson and ongoing training, while also implementing initiatives that prioritize bottom-up feedback from employees to enable early detection and response to risks.

Finally, regarding efforts to restore trust, he noted that the company had designated “Restoring Trust” as the top priority of its medium-term management plan and had implemented various initiatives from the perspectives of organizational structure, roles, the workplace environment, and a shift in mindset. He concluded his report by emphasizing the importance of individual awareness, an open and communicative workplace environment, and management’s commitment to consistently keeping a close eye on the front lines.

Professor Tamaki Kakizaki of Meiji University’s School of Law delivered a lecture titled “Governance Reform for Sustainable Enhancement of Corporate Value as Required by the Revised ERM.”

Professor Kakizaki began by explaining the transition from the internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to the revised Enterprise Risk Management (ERM) framework, along with the background behind this shift. She then provided an overview of the revised ERM framework and its five components:“Governance and Culture,” “Strategy and Goal Setting,” “Performance,” “Review and Correction,” and “Information, Communication, and Reporting.” In his Explanation, he emphasized that risk management as a management strategy is indispensable for realizing a corporate mission that enhances corporate value, and that a corporate culture fostering autonomous governance is crucial.

Next, regarding governance challenges in Japan related to risk management, I cited case law and amendments to the Whistleblower Protection Act as examples, stating that it is necessary to ensure mechanisms that allow the board of directors to fully consider the rationality of providing timely risk information to the board and taking preemptive action regarding future events.

Finally, for governance reforms that leverage the revised ERM, there was an explanation of the key points of the IIA’s (Institute of Internal Auditors) new Three-Lines Model and the implications drawn from the first draft of the ALI project.He concluded by stating that, in order to respond swiftly to the accelerating changes in the corporate environment and for the board of directors to appropriately oversee corporate risk management, it is necessary to utilize the revised ERM and the Three-Line Model to obtain real-time risk information and enable fine-tuning of daily management tactics. He emphasized that collaboration between the second-line risk and compliance managers—who adopt a forward-looking approach—and the internal audit function, which serves as the third line, is essential, and that this collaboration forms the foundation for governance reforms aimed at sustainable enhancement of corporate value.-looking collaboration between second-line risk and compliance managers—who obtain real-time risk information and enable fine-tuning of daily management tactics—and internal audit, which serves as the third line, is essential. He concluded by stating that this collaboration forms the cornerstone of governance reforms aimed at sustainably enhancing corporate value.

After expressing his gratitude to the speakers, Mr. Toshiaki Nagasato and Ms. Tamaki Kakizaki, Mr. Norio Tanaka, Managing Director of the JPMA, thanked the compliance officers and compliance practitioners for their participation in the conference and for their daily efforts.

In his remarks, Executive Director Tanaka touched upon recent cases of GMP violations and irregularities involving scholarship donations, stating that these were extremely alarming incidents that had significantly eroded public trust in the pharmaceutical industry as a whole.Regarding the GMP violations, he noted that the lessons learned from similar past incidents had not been applied at all; regarding the incidents involving scholarship donations, he pointed out thathe emphasized that, despite the “Basic Guidelines on the Appropriate Support of Clinical Research by Pharmaceutical Companies” (April 22, 2014, JPMA) clearly outlining the proper procedures for providing scholarship donations, the incidents occurred due to self-serving decisions; he expressed deep regret over this and stressed that the industry must strive to restore public trust.

He concluded by stating that “new drug research and development” and “compliance” are like the two wheels of a car; unless everyone in the pharmaceutical industry fully understands that we can only move forward toward the future if these wheels turn properly, and puts this into practice every day, we cannot earn the trust of society, and he asked for even greater cooperation.