The influence of the Whistleblower Protection Act on the pharmaceutical industry:

The pharmaceutical industry is a sector that is subject to strict regulatory requirements. From drug approval to pricing, a multitude of laws and regulations govern this sector. Now the Whistleblower Protection Act (HinSchG) has been added, further influencing the legal landscape. The passing of the Whistleblower Protection Act (HinSchG) in Germany marks a crucial turning point in the perception and treatment of whistleblowing in the workplace, including in highly regulated industries such as the pharmaceutical industry, the drug industry and the medical industry. But how does this law affect the working environment and business practices within the pharmaceutical industry? How can it change the way pharmaceutical companies deal with violations and promote accountability? The answers to these questions shed light on the increasing importance of whistleblower protection and whistleblowing mechanisms in the pharmaceutical industry.

What is the Whistleblower Protection Act?

The Whistleblower Protection Act was introduced in Germany to improve protection for individuals who report breaches of Union law. It applies to a wide range of sectors and covers a variety of areas of law, including reporting of criminal offences such as fraud, corruption and bribery, as well as public procurement, financial services, product safety and environmental protection. Companies are obliged by the Whistleblower Protection Act to establish adequate whistleblower systems through which violations can be reported. Within one week of receipt of the reports, the whistleblower must be acknowledged receipt of the report and within a period of three months must be informed of the further course of action and the steps taken. The law guarantees whistleblowers explicit protection against reprisals or professional disadvantages of any kind.

The law affects all employers of 50 or more employees from 17.12.2023 at the latest. This means that companies such as churches and clubs and associations are affected.

Special care is required in the implementation in the pharmaceutical industry, as the scope of application also flanks legal requirements in the health care industry, such as the hygiene regulations of the Länder.

Particularly relevant for the pharmaceutical industry, however, are the provisions of the Act relating to product safety and health protection. Pharmaceutical products are subject to strict safety standards and regulations. If employees discover that these standards are not being met, this can not only have serious consequences for public health and patient welfare, but also exorbitant reputational damage.

What is the significance of the Whistleblower Protection Act for the pharmaceutical industry?

The pharmaceutical industry is an industry characterised by high regulatory density and intensive supervision by regulatory authorities. This is mainly due to the industry's direct impact on human health and welfare. Drug discovery, manufacturing and distribution are complex processes that can pose significant risks if not conducted properly. Therefore, regulatory compliance is critical.

Companies that manufacture and distribute medicines and related products must comply with a wide range of laws and regulations. These include good manufacturing practices (GMP), good clinical practices (GCP), good laboratory practices (GLP) and many others. Violations of these regulations can lead to significant fines, product withdrawals, business interruptions and substantial damage to a company's image.

In this context, the Whistleblower Protection Act provides another layer of protection for both companies and the public. By fostering a culture of openness and accountability, pharmaceutical companies can identify and address potential violations earlier, before they become major problems. At the same time, they can ensure that their employees are protected when they bring potential problems to their attention.

The HinSchG is designed to protect individuals who report breaches of Union law. It thus covers a wide range of areas in the pharmaceutical industry. Let's take a closer look at how this new law relates to common laws and regulations in the pharmaceutical industry.

Pharmaceutical research and development: a key area for whistleblowing

The pharmaceutical industry is a sector where compliance and ethical standards are crucial, so the HinSchG plays a crucial role in the medical and pharmaceutical sector. It promotes a culture of transparency and accountability and encourages employees to report any violations. In pharmaceutical research and development, accuracy, transparency and compliance are critical. Incorrect data or falsified results can have a significant impact on patient safety and the credibility of medicines. When employees discover that data has been manipulated, falsified or handled differently than prescribed, this can have a significant impact on the credibility of research results and patient safety. An effective whistleblowing system can help identify and address such issues. Employees can report violations without fear of retaliation, and companies can take action to correct the problems and prevent future violations. This leads more and more to ensuring the integrity of pharmaceutical research and development.

But how does the HinSchG relate to other existing pharmaceutical laws and regulations?

• The HinSchG strengthens accountability and transparency throughout the pharmaceutical supply chain. It encourages employees in the pharmaceutical industry to report violations of pharmaceutical laws by providing them with legal protection. This can help ensure compliance with standards for quality, safety and efficacy of medicines.
• Patent Law: Through the HinSchG, potential violations of patent law, such as the illegal manufacture or sale of patented medicines, can be brought to record by drug company employees without fear of retribution. In this way, it helps to ensure compliance with the many laws and regulations in the pharmaceutical and biotech industries.
• Drug pricing regulation: Similarly, HinSchG can help ensure compliance with drug pricing regulation by encouraging employees to report any violations.
• Good Manufacturing Practice (GMP): Violations of GMP guidelines can have serious implications for the quality and safety of medicines. The HinSchG protects employees who report such violations, which also gives companies the opportunity to stop such practices and prevent future violations.
• Clinical Trial Regulations:** The HinSchG can help ensure compliance with clinical trial regulations. Employees who report breaches in clinical trials can rely on the protection provided by the HinSchG.
• Data protection laws: Since the pharmaceutical industry works with sensitive patient data, data protection is crucial. The HinSchG can also help to ensure that breaches of data protection laws are reported here by protecting whistleblowers.
• Influence on the distribution and marketing of medicines: Compliance and ethical conduct are also crucial in the area of distribution and marketing of medicines. Illegal or unethical practices can pose significant legal and financial risks to companies. Inappropriate sales practices, violations of the German Medicines Advertising Act (HWG), the German Medicines and Active Substances Manufacturing Ordinance (AMWHV), the German Medicines Act (AMG) and other violations can pose significant legal and financial risks for companies. Through the Whistleblower Protection Act, employees can report unethical or illegal practices.

Pharmaceutical manufacturing and quality assurance

Pharmaceutical manufacturing is a highly regulated process where accuracy and consistency are critical. Violations of good manufacturing practices (GMP) can lead to product defects, recalls and even health risks to patients. A classic example of the application of the Whistleblower Protection Act in the pharmaceutical industry could be a case where an employee discovers that a drug is being marketed despite known and risky side effects. Without a secure reporting channel, the employee might be reluctant to report the violation for fear of professional disadvantage. With the Whistleblower Protection Act, the employee now has a safe way to report the violation and is protected from retaliation. A whistleblower system can help ensure that such violations do not go undetected. Employees in production, quality assurance and other relevant areas can report breaches and companies can take appropriate corrective action.

What is an internal reporting channel?

An internal reporting channel is a mechanism that allows employees to report concerns or non-compliances securely within their organisation. This can take the form of a dedicated hotline, an email address or an online platform where reports can be made anonymously in some circumstances. The Whistleblower Protection Act obliges organisations to set up such internal reporting channels. Companies in the pharmaceutical sector with 50 or more employees are also affected. The supervision of whistleblowers must avoid conflicts of interest and keep the identity of whistleblowers confidential.

Whistleblower protection law: a guide for the pharmaceutical industry.

Implementing a whistleblower system requires careful planning and execution. Here are some steps companies should follow:

• Develop a clear policy: Critical to implementing a whistleblower system are clear guidelines for reporting concerns or violations. This policy should define what constitutes a breach, how to report it and what the consequences of reporting are.
• Establish a secure reporting channel: Companies with 50 or more employees are legally required by the Whistleblower Protection Act to provide and operate a secure reporting channel that handles and processes reports confidentially and competently. This includes the provision of a reporting channel as well as the technical implementation and operation.
• Informing employees about the possibility of making reports: Employees should be informed about the whistleblower system and their rights and obligations with regard to reporting violations. This requires clear and structured communication and regular reiteration of the existence of an internal reporting channel.
• Training of reporting officers: Companies must ensure that employees who receive reports are skilled trained and able to process reports professionally, carry out validity checks appropriately and forward them to external bodies if necessary.
• Management of reporting: Companies must develop, document and implement a process for managing reporting. This includes investigating reports, assessing their credibility and deciding on appropriate actions.
• Documentation requirements: Timeliness and documentation requirements must be trained and adhered to in order to ensure the safety of the reporting process and meet legal requirements.
• Whistleblower Protection: The medical manufacturer must also ensure that whistleblowers are protected from retaliation to safely avoid consequences of violating the Whistleblower Protection Act.

The implementation of the Whistleblower Protection Act in the pharmaceutical industry.

The implementation of the Whistleblower Protection Act requires careful planning and execution. This includes developing a clear policy for reporting concerns or violations, establishing a secure reporting channel, training employees on the whistleblower system, their rights and responsibilities, how to handle reports, and protecting the whistleblower from retaliation. These measures can help build staff trust in the organisation, minimise risks and promote a corporate culture that values honesty, transparency and accountability. The Whistleblower Protection Act and the implementation of an effective whistleblowing system promotes compliance, which is particularly important in the pharmaceutical sector where non-compliance can have serious consequences.

Important considerations for the pharmaceutical industry

It is important for the pharmaceutical industry to view the Whistleblower Protection Act not only as a legal obligation, but also as an opportunity. An effective whistleblower system offers a variety of benefits and can help to strengthen the trust of employees, customers and the public in the company. In any case, a distinction must be made as to the size of the company in question. A law protecting persons who report breaches of Union law could be important for the pharmaceutical industry for several reasons. Important considerations in the implementation of the whistleblower protection law may be:

• Building trust: An effective whistleblower system can help build employee trust in the organisation. Employees who believe that their concerns will be taken seriously and dealt with appropriately are more likely to report violations.
• Minimise risks: By potentially uncovering regulatory breaches early, pharmaceutical companies can minimise risks and address grievances in a timely manner. This can help avoid fines, litigation and reputational damage.
• Foster corporate culture: A whistleblower system can help foster a corporate culture that values honesty, transparency and accountability.
• Ensure compliance: A whistleblower system can help ensure compliance with regulations. This is particularly important in the pharmaceutical industry, where non-compliance can have serious consequences.
• Improved legal protection for employees: Employees may feel safer reporting potential breaches, which could lead to a stronger compliance culture.
• Increased transparency: With improved whistleblower protections, companies could be forced to be more transparent about their processes to ensure they are not violating regulations.
• Risk management: The Whistleblower Protection Act encourages the continuous development and improvement of internal risk management by helping to ensure that risks are identified and addressed earlier, which steadily reduces the likelihood of serious breaches and potential penalties.

Summary

In conclusion, the Whistleblower Protection Act is an important development for the pharmaceutical industry. By implementing effective whistleblower systems, pharmaceutical companies can not only fulfil their legal obligations, but also increase the trust of their employees and the public and improve their business practices. Of course, the pharmaceutical industry and its branches must respond to the requirements of the Whistleblower Protection Act. Establishing safe and effective reporting channels, training employees and protecting whistleblowers are just some of the measures that need to be taken in this context. Careful consideration should also be given in this context to having the service provided by an external party and getting good advice in-house. Although the implementation of the Whistleblower Protection Act presents challenges, it also presents opportunities for improvement and growth. It is now up to pharmaceutical companies to take advantage of these opportunities and create an environment that encourages and protects whistleblowing. Employees can report unethical or illegal practices and companies can take action to stop such practices and prevent future violations. An effective whistleblowing system can help identify and proactively address violations. Thus, it can be concluded that the Whistleblower Protection Act will play a crucial role in promoting transparency, accountability and compliance in the pharmaceutical industry and will prepare significant development potential for the pharmaceutical industry and drug manufacturers. By establishing effective whistleblowing systems, pharmaceutical companies can minimise risks, sustain employee and public trust and ultimately achieve better business results. Thus, by implementing effective whistleblower systems, the pharmaceutical sector, drug industry and medical industry can not only fulfil their legal obligations, but also benefit from a variety of advantages and improve their business practices. It is now up to the pharmaceutical industry to seize these opportunities and create an environment that encourages and protects whistleblowing. Read more about this topic in our FAQ-Guide.