Does
the CSR activity of the pharma giant Pfizer which is independent of its
commercial interests and where a grant of Rs 7 crore was given to ICMR to set
up a disease centre compromise the collaboration?
By
Dr KK Aggarwal
Recently, there was a
lot of furore over news that the Indian Council for Medical Research
(ICMR) was collaborating with Pfizer, a drug multinational company that sells
antibiotics, for its Anti-Microbial Resistance (AMR) project. There were
charges of conflict of interest (CoI) in this “public-private partnership”
(PPP) as Pfizer had provided an initial grant of Rs 7 crore to set up a centre
in Delhi to combat anti-microbial resistance and to enhance the surveillance
programme for this malaise.
As per officials of
the ICMR, Pfizer offered its Corporate Social Responsibility (CSR) funds to it
and there were no strings attached and no CoI. Those criticising this
collaboration advocate that industry support to AMR activities, if any, should
be in the form of unrestricted educational grant with multiple grants to a
common pool. They assert that the WHO document pertaining to PPPs states:
“Pharmaceutical companies would have to be willing to contribute collectively,
for example, through their industry associations.” They also say that to
eliminate or at least reduce CoI, no single company should be selected as a
partner to a specific educational or surveillance activity.
Before deciding
whether this collaboration amounts to CoI or not, let’s first understand the
meaning of “conflict of interest” and “corporate social responsibility”. A
conflict of interest is a situation in which a person/organisation has
competing interests or loyalties. It is a situation in which an
individual/organisation is involved in multiple interests, financial or
otherwise, and serving one interest could involve working against another.
Here, the personal interest of an individual/organisation might adversely
affect a duty owed to make decisions for the benefit of a third party. A
conflict of interest exists if the circumstances are reasonably believed (on
the basis of past experience and objective evidence) to create a risk that a
decision may be unduly influenced by secondary interests, and not on whether a
particular individual is actually influenced by a secondary interest.
The easiest way to
explain the concept of CoI is by using some examples:
· When a public
official’s personal interests conflict with his professional position.
· When a person has a
position of authority in one organisation that conflicts with his interests in
another organisation.
· When a person has conflicting
responsibilities.
There are different
types of activities that can create a possible conflict of interest. These
include: Nepotism where favours are given to relatives and close friends, often
by hiring them; self-dealing where someone in a position of responsibility in
an organisation has outside conflicting interests and acts in their interests
rather than the interest of his organisation. However, these activities do not
involve wrongdoing or any criminal activity. For example, a business executive
hiring her daughter might not be CoI unless the latter is given preferential
treatment or more pay. If the executive isn’t in a position to give favours,
there’s no CoI.
Coming to CSR, the
Companies Act, 2013, makes it mandatory for companies having a net worth of Rs
500 crore or more or a turnover of Rs 1,000 crore or more to constitute a CSR
Committee. This Committee is entrusted with the work of undertaking activities
known as CSR activities. It is mandatory for the company to spend, in every financial
year, at least two percent of the average net profits made during the three
preceding years in pursuance of its CSR policy. Also, it is mandatory for the
company to give preference to the local area around where it operates for
spending this CSR amount.
Activities which may
be included by companies in their CSR policies are mentioned in Schedule VII of
the Companies Act. One of the provisions of Section 135 of the Act is that if
the company fails to spend its CSR amount, the Board shall in its report
specify the reasons for it. Activities which may be included by companies in
their CSR policies are mentioned in Schedule VII of the Companies Act. These
include: eradicating extreme hunger and poverty; promotion of education;
promoting gender equality and empowering women; reducing child mortality and
improving maternal health; combating the human immunodeficiency virus, acquired
immune deficiency syndrome, malaria and other diseases; ensuring environmental
sustainability; employment enhancing vocational skills; social business
projects; contribution to the Prime Minister’s National Relief Fund or any
other fund set up by the central or state governments for socio-economic
development and relief and funds for the welfare of the Scheduled Castes, Scheduled
Tribes, other backward classes, minorities and women, etc.
In a circular on June
18, 2014, the Ministry of Corporate Affairs had clarified that while activities
undertaken in pursuance of the CSR policy must be relatable to Schedule VII of
the Companies Act, 2013, the entries must be interpreted liberally so as to
capture the essence of the subjects enumerated in the said Schedule. The items
enlisted in this Schedule are broad-based and intended to cover a wide range of
activities. Further, the ministry clarified in a circular that enabling access
to or improving the delivery of public health systems should be considered
under the head “preventive healthcare” or “measures for reducing inequalities
faced by socially and economically backward groups”.
In this context, the
funding of the AMR project of ICMR by Pfizer falls under Clause (v) of Schedule
VII of the Companies Act. The said CSR activity cannot be CoI as a CSR project
of any company is independent of its commercial interests. There is an independent
committee in a company which assesses any CoI by it.
CoI should be
disclosed by anyone in a company who is attending a particular meeting and he
should affirm that his decision will not be influenced and will be independent
of the other party. Otherwise no doctor should become the health minister; no
lawyer, the law minister and no industrialist, the finance minister.
Conflict of interest
has to be seen without a blinkered vision and in the spirit of the guidelines
in this regard.
|
Other CSR partnerships
Though Schedule VII allows CSR activities to be
aligned with government- run schemes, it has often moved beyond that. A
collaboration between the two for social good would mean government
policies/schemes develop an ally in the private sector. This is a win-win
situation for both parties.
Some examples:
·
In 2017, Nestle partnered with the Department of
Medical and Health, Government of Rajasthan, to offer access to clean
drinking water at two public health centres. It did so through its NGO
partner, Enable Health Society, as part of the Adarsh Public Health Center
Yojna. The company also constructed 430 sanitation facilities in government
schools across 11 states, which has benefitted more than 1,50,000 girl
students.
·
In 2016, Sun Pharma signed a tri-party agreement
between ICMR, MP and Foundation for Disease Elimination and Control of India
(its CSR arm) to launch a mal aria-free India project in Mandla district of
MP. The goal was to eliminate malaria from 1,233 villages and use the lessons
learnt for the rest of the country. In 15 months, it was observed that there
was a reduction in malaria cases by over 80 percent.
·
In 2015, ITC entered into partnerships with several
state governments and NABARD to undertake watershed development projects.
These targeted over 1,58,000 hectares in some of India’s most drought-prone
regions.
·
In 2012, Coca-Cola started the “Support My School”
campaign in 1,000 government schools all over India. It aimed to provide them
with adequate sanitation and basic amenities like toilets and other
facilities, especially for the girl child. So far, 3,72,959 students
(1,69,973 boys and 2,02,946 girls) have benefited.
|
Reproduced
from: http://www.indialegallive.com/viewpoint/icmr-pfizer-collaboration-a-conflict-of-interest-61815,
Published in India Legal, March 18, 2019 issue, pages 28-29
Dr KK Aggarwal
Padma Shri Awardee
President Elect Confederation of
Medical Associations in Asia and Oceania
(CMAAO)
Group Editor-in-Chief IJCP Publications
President Heart Care Foundation of
India
Past National President
IMA
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