It’s common for medical organizations to look to expand operations overseas in order to establish reach in foreign markets. At the same time, this growth involves working with more employees and partnering with various distributors, vendors, and other third-party companies. The result is an increased chance of running afoul of international trade regulations, unless organizations are screening for excluded parties as part of their overall corporate compliance process.
Many countries, the United States included, have regulations against doing business with certain restricted third-party entities. Whether for national security or to prevent fraudulent activities, these laws apply especially well to the healthcare industry. The penalties, for example, for working with a banned party are immense.
As hospitals and medical institutions expand their horizons, they must eventually adopt restricted party screening to prevent accidental non-compliance with lists of denied parties. And because the penalties for breaking these laws are notoriously heavy in the medical field, international trade compliance will continue to be a high priority for medical organizations. Among those denied party lists is one set by the Drug Enforcement Administration (DEA).
Management teams who are worried about non-compliance penalties only need to study exclusion compliance and find out what the DEA expects of medical organizations.
How Exclusions Screening Works
Government agencies keep lists of banned individuals and corporate entities that businesses operating within the country must adhere to.
Getting caught working with a debarred party often results in costly sanctions and sometimes damage to market reputation. Not to mention, entities are banned likely because they were guilty of fraud, theft, or corruption and are risky to work with anyway. It’s in your own best interest to pay attention to these lists.
So the question now stands: how do you make sure that every single contact you have is compliant with many of these exclusion lists? The healthcare industry is particularly susceptible since these businesses often work with a wide variety of foreign distributors, vendors, suppliers, and partners.
A proper denied party screening program takes into account all applicable exclusions screening lists, of which there are many:
- The LEIE: The Office of the Inspector General (OIG) maintains this list of entities known to be guilty of fraudulent or potentially harmful healthcare-related activities.
- The System For Awards Management: The Government Services Administration (GSA) uses this list to show which entities are barred from receiving federal contracts.
- The Foreign Corrupt Practices Act: This decree is intended to prevent foreign bribery by domestic American organizations.
Among all of these exclusions are the ones set by the Drug Enforcement Administration. As the name suggests, the DEA largely deals with drugs, pharmaceuticals, and other controlled substances that medical businesses inevitably deal with day-to-day.
What Is the Drug Enforcement Administration?
Established back in 1973, the DEA is primarily responsible for controlling drug distribution and handling in the United States. It’s most well-known for enforcing the Controlled Substances Act, but it’s also responsible for:
- Seizing assets related to illegal drug trafficking
- Researching drug-related crimes
- Working with federal, state, and local officials
- Coordinating operations with analogous agencies in foreign countries
The DEA also keeps a list of controlled substances categorized into “schedules” based on their potentials for abuse and accepted medical uses. Both the DEA and the Food and Drug Administration work together to make changes to this list.
The agency today largely deals with international smuggling of narcotics and other substances, but its operations within the United States are worthy of note to medical companies. The DEA too maintains an excluded parties list and other regulations that medical businesses must pay attention to when they work with international entities.
A Quick Guide on Denied Party Screening
Hospitals and other medical institutions often operate internationally and come into contact with foreign third-parties regularly. The result is that compliance can be a complicated procedure.
However, it’s all manageable within the right third-party due diligence and restricted party screening program. This way, the business is capable of finding any relevant exclusion screening lists and scanning their contacts for matches. Those exclusions may come from the Drug Enforcement Administration or other government agencies.
For a quick start to denied party screening, let’s go over a few basic best practices.
Scan Regularly and Comprehensively
Don’t leave anybody out of your screening process. In order to minimize legal risk, every contact must be compared to the exclusions list:
- Employees during the onboarding process
- Current and future medical staff and physicians
- Third-party vendors, suppliers, and distributors
Given the vast size of these groups, it’s worth prioritizing your most valuable staff members and business connections first. Continue screening regularly, as you want to aim for a monthly frequency at the least. A business makes new connections all the time, so you don’t want a debarred party from slipping through.
Get Multiple Teams Involved
Compliance cannot be the exclusive responsibility of a small group within the organization. Every department must contribute to exclusion party screening. Given the stringent nature of healthcare regulations, having your teams work together is the best way to minimize the chance of non-compliance.
And it makes sense since new employees and corporate partnerships come into contact with different parts of the business. A new staff member during onboarding, for instance, interacts primarily with the human resources department. And a new supplier for certain raw materials will go through your procurement department.
By making compliance a company-wide effort, you are allowing collaboration to contribute to a more impactful program, and you enable full visibility into your compliance efforts.
Use Software Tools To Empower Your Exclusion Screening Efforts
Adhering to exclusion lists is complicated for the medical industry for many reasons:
- Multiple government agencies, from the DEA to the GSA and the OFAC, have their own denied parties lists. Medical organizations specifically have to follow many of these separate lists.
- The pharmaceutical industry usually involves working with a wide network of physicians, staff, distributors, vendors, and suppliers. Having to scan every one of these relationships for barred parties will be expensive.
- Compliance laws are always subject to change, and exclusion lists do often add new entities.
The government has additionally made it clear that businesses are responsible for their own compliance. In fact, there is no obligation from any government agency to notify you of changes to the exclusion lists that you must always follow.
What does this mean for pharmaceutical corporation management teams? You’ll need a proactive approach to denied party screening and a cost-effective one at that. The solution is software-based compliance technology. Software platforms are now available specifically to help healthcare businesses centralize all their exclusion screening initiatives.
Get Excluded Parties List Screening Compliance Right with Descartes
When it comes to international trade compliance, businesses operating in the medical field can spare no expense to avoid costly sanctions and penalties. The Drug Enforcement Administration is only one of many exclusion lists that must be followed closely.
If you need a way to screen your contacts comprehensively but are worried about high financial and operational costs, look to software-based tools and services for the job. Descartes offers its own solution that builds screening functions right into the other business tools and software you already use, such as ERP platforms and CRMs.
For medical businesses operating internationally, don’t let an unauthorized party join your network. Book a demo today and see how Visual Compliance can make a difference in your organization.