As the global response to Coronavirus (COVID-19) continues to develop and evolve, unscrupulous criminals are seeking to profit from the pandemic by exploiting the urgent demand for medicines and equipment. How can Refinitiv help safeguard your reputation and meet your regulatory obligations?
- In the UK, the Medicines and Healthcare Products Regulatory Agency (MHRA) has expressed concern that there will be unlicensed COVID-19 tests marketed to the public illegally and it is currently working to investigate a significant number of potential scams involving fraudulent coronavirus testing-kits.
- Research from a soon-to-be-released survey report from Refinitiv indicates there is a problem at the heart of the healthcare procurement process. Early analysis of the survey results shows the mean percentage of companies in the healthcare sector carrying out due diligence at only 50%. 7% below the total for all sectors surveyed.
- Safeguard your reputation and meet your regulatory obligations with Enhanced Due Diligence.
National authorities and regulators must remain vigilant to these emerging threats and ensure risks are mitigated through appropriate and proportionate due diligence programs.
Business continuity and COVID-19
Governments around the world have introduced strict self-isolation measures in order to restrict the movement of people and in turn the spread of the virus, and as a result companies have invoked business continuity plans on a scale that was previously unimaginable.
These measures have disrupted the supply of essential goods and products across most sectors and nowhere has this been more evident than in the healthcare sector.
In the face of unprecedented demand for medicines and equipment to help contain the virus, it has struggled to source and secure legitimate supplies.
This has been most evident when it comes to COVID-19 testing kits as well as personal protective equipment, and the shortages of these items are now a regular feature of our daily news updates.
Supply chain and healthcare due diligence
In their rush to obtain supplies quickly, it has been reported that buyers are not checking their suppliers properly.
Criminals and organized crime groups are taking advantage of this urgent need by targeting providers and the general public alike with fraudulent equipment and scams.
Regulators are sounding the alarm bell and they are urging national authorities and healthcare providers to remain vigilant to these emerging threats and ensure they adequately mitigate the risks through appropriate due diligence programs.
In the UK, the Medicines and Healthcare Products Regulatory Agency (MHRA) has expressed its concern that there will be unlicensed COVID-19 tests marketed to the public illegally and it is currently working to investigate a significant number of potential scams involving fraudulent coronavirus testing-kits.
It has also reported that under its Pangea operation, 2,000 online advertisements related to COVID-19 were found and more than 34,000 unlicensed and fake products, advertised as “corona spray”, “coronavirus medicines” or, “coronaviruses packages” have been seized.
During the normal course of business, or business as usual times, the procurement of supplies and equipment is rigorously overseen.
In heavily regulated industries, there is a requirement to carry out due diligence and monitoring of suppliers and third parties.
In a time of crisis, there is a danger that the normal rigor associated with these processes is circumvented in order to expedite the provision of urgently needed supplies.
The consequences of doing this in the healthcare sector in the face of a global pandemic could be dire, not only does it put the health of the general public at risk, but it is also likely to result in punitive action by regulators.
At a time when criminals are actively targeting the healthcare sector in order to profit from the pandemic, it is only right and fitting that organisations step-up their vigilance, and rather than adopt simplified due diligence processes, should conduct enhanced due diligence checks on suppliers and third-parties.
Healthcare procurement research report
Research from a soon-to-be-released survey report from Refinitiv indicates there is a problem at the heart of the healthcare procurement process.
Early analysis of the survey results shows the mean percentage of companies in the healthcare sector carrying out due diligence at only 50%. 7% below the total for all sectors surveyed.
Now, in this time of crisis, these due diligence deficiencies are hitting hard. There is even a danger that the rigor that is applied in some cases has now been circumvented in order to expedite the provision of urgently needed supplies.
Public and private healthcare providers’ baseline due diligence considerations for new vendors should confirm the existence and active status of a corporate entity.
Official government records provide a reasonable view of ownership, but litigation and regulatory checks for adherence to licensing and any adverse actions should also be undertaken, as well as global compliance checks.
Equally important, media and internet database due diligence should be conducted on the entity, specific to risk relevant information, in order to assess potential, additional risks that have yet to be realized formally by legal or regulatory actions.
While these recommendations may appear onerous at first glance; most of this information is publicly available and easily accessible to the trained due diligence research firm.
Healthcare due diligence programs
Further, given the complexity of supply chains and the current medical supplies demand issues, due diligence programs should consider potential vendors in the context of the jurisdiction(s) in which they operate, which often dictates the commercial, legal, and regulatory environment.
A jurisdiction’s transparency, or lack thereof, is paramount in terms of understanding a government and its ability to provide a safe, fair, and productive environment for all commercial interests.
Whether in times of crisis or normalcy, enterprises must remain vigilant to the persistent threat of criminals who seek to exploit buyers of all types, across all industries, when the opportunity presents itself.
As reported by Law Enforcement Bodies and Governmental Agencies alike, even the most stringently regulated sectors that are essential to battling the pandemic, such as healthcare, have been targeted by bad actors due to the extraordinary supply and demand stress they currently face.
Public and private healthcare providers, as well as all enterprises feeling the pressure to their supply chains, must mitigate these risks by implementing baseline due diligence considerations to confirm the existence of a potential vendor as well as understand any potential legal, regulatory, and reputational issues, based upon their industry and appetite.
Implementing the appropriate and proportionate due diligence program will promote informed decision making that will protect an enterprise and allow them to best serve the world around them.
How to track the market developments:
The Corona Virus app in Eikon is your single destination to keep track on the key market moving headlines as well as the charts, data and impact analysis on the markets, sectors and commodities asset classes. If you’re an Eikon user, simply search for ‘Corona Virus’. If you’re not a user, get access now or switch to Eikon.
- Watch our unique series of video insights covering various sectors and asset classes. entitled the #CoronaCorrection Series, jointly produced with Real Vision.
- Follow our LinkedIn, Twitter and YouTube social media channel communities for the latest updates.
- For more Refinitiv insights on the impact of COVID-19, go to refinitiv.com/covid
- Register for our on-demand webinar – Singapore Investment Management 2020: A Dynamic and Competitive World.
- Sign up for our Wealth Management webinar series – Moving Beyond Turbulence. Join this 3-part webcast series to understand industry implications and what tools and capabilities will be essential for wealth managers to navigate through uncertain times and move forward successfully.
- LinkedIn Chat: Factoring in ESG into the investment decision making process. Could this situation with COVID-19 have been predicted if ESG was factored in?
- Read the Monday Morning Memo: Are ESG Funds Outperformers During the the Corona Crisis.