Topics Held the FY2020 Compliance Managers and Practitioners Meeting.

Prior to the meeting, Makoto Hatano, Chairperson of the Pharmaceutical Association of Japan Code Compliance Promotion Committee, stated the basic policy of the Committee for FY2020: "The Code Compliance Promotion Committee is committed to ensuring that member companies comply not only with relevant laws and regulations but also with voluntary codes, including the Pharmaceutical Association of Japan Code of Practice, and that they fulfill their social responsibilities as members of the life-related industry with high ethical standards. The Committee's basic policy is to "support member companies in fulfilling their social responsibilities with high ethical standards as members of the life-related industry by complying with relevant laws and regulations as well as the Pharmaceutical Manufacturers Association of Japan (PMAJ) Code of Practice and other voluntary codes," and its priority issues are "support member companies in promoting compliance," "promote appropriate information disclosure based on transparency guidelines," "respond to guidelines regarding sales information provision activities for ethical pharmaceuticals," "support the government and the Federation of Pharmaceutical Manufacturers and Pharmaceutical Associations of Japan (JMPMA)," and "support the medical industry in fulfilling its social responsibility. The presentation also outlined the "collaboration, collection, dissemination of information, and feedback with the government and related domestic and international organizations such as the Japan Federation of Pharmaceutical Manufacturers & Associations (JFPMA), the Fair Trade Council of Pharmaceutical Manufacturers & Distributors of Ethical Drugs (JFTC), the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), and others.

He also stated that, with the APEC SMEs Vision 2025 coming into effect in FY2020, the committee will continue to collect and disseminate information on global trends.

Mr. Toshiaki Nagasato, President and Representative Director of KM Biologics, gave a presentation titled "Toward Restoring Confidence," in which he reported on his ongoing efforts over the past three years since the succession of the business.

Mr. Nagasato began by outlining the causes, problems, and remedial measures in this compliance case, and then introduced specific improvements in the systems, functions, and mechanisms for "strengthening governance," "compliance promotion system," and "efforts to restore trust," respectively.

In the area of governance enhancement, he explained that the management and auditing systems were strengthened and the quality assurance and production management systems were restructured to clarify the respective responsibilities of management and employees and to resolve issues in a timely manner.

In addition, he stated that the company's compliance promotion system has been working to raise employee awareness of compliance through the establishment of a compliance committee chaired by the president and ongoing education, as well as by emphasizing bottom-up initiatives from employees for early detection and early response to risks.

He concluded his report by stating that the top priority of the mid-term management plan is "restoration of trust" and that the company has implemented various initiatives from the viewpoints of organization, roles, workplace environment, and awareness reform. He concluded his report by stating the importance of individual awareness, an open work environment, and management's constant attention to the workplace.

Professor Hajime Kakizaki of Meiji University School of Law gave a lecture titled "Governance Reforms for Sustainable Corporate Value Enhancement as Required by the Revised ERM".

Mr. Kakizaki began his presentation with an overview of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) internal control framework and the revised Enterprise Risk Management (ERM). 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) and its background, and the overall picture and five components of the Revised ERM: Governance and Culture; Strategy and Goal Setting; Performance; Review and Correction; and Information, Communication, and Reporting. He emphasized that risk management as a management strategy is indispensable to realize a corporate mission to enhance corporate value, and that a corporate culture that leads to autonomous governance is also important.

He then cited court precedents and the revision of the Whistleblower Protection Act as examples of governance issues in Japan related to risk management, and stated that it is necessary to ensure a system that enables prompt provision of risk information to the board of directors and sufficient consideration of the rationale for pre-action to future events by the board of directors.

Finally, he explained the key points of the new three-line model of the IIA (Institute of Internal Auditors) and suggestions from the first draft of the ALI project toward governance reform that makes use of the revised ERM. Then, in order to respond quickly to the accelerating changes in the corporate environment and to enable the board of directors to properly oversee corporate risk management, the revised ERM and the 3-line model will provide a substantial and flexible forward--looking framework for obtaining real--time risk information and fine--tuning daily management tactics. He concluded by saying that the collaboration between the looking-into, second-line risk and compliance managers and the third-line internal audit is necessary, and that this is the cornerstone of governance reform for sustainable corporate value enhancement.

Tokuo Tanaka, Executive Director of the Pharmaceutical Manufacturers Association of Japan (PMAJ), thanked the speakers, Toshiaki Nagasato and Tamaki Kakizaki, and expressed his appreciation for the participation and daily activities of the compliance managers and compliance practitioners in the meeting.

In his remarks, Mr. Tanaka referred to the recent incidents of GMP violations and inappropriate scholarship donations, and described them as extremely worrisome events that have seriously undermined public trust in the pharmaceutical industry as a whole. The scholarship donation case is a regrettable incident that occurred as a result of a convenient decision, while the "Basic Idea on How Pharmaceutical Companies Should Support Clinical Research (April 22, 2014, Pharmaceutical Manufacturers Association of Japan)" clearly states how scholarship donation should be provided. We stressed that this is a situation in which efforts must be made to restore confidence in the industry.

He concluded by stating that all those engaged in the pharmaceutical industry must fully understand that "research and development of new drugs" and "compliance" are two wheels of a cart, and that only when they run properly can we move forward into the future, and that unless we practice them daily, we will not be able to gain the trust of society.