Structure and Programs

Baxter designed and updates its ethics and compliance structure and programs regularly to reflect the needs of a diversified and complex global healthcare company.

Corporate Responsibility Office

The Corporate Responsibility Office (CRO), established by Baxter’s board in 1993 and composed of six senior executives, is responsible for communicating the company’s ethics and compliance standards, providing guidance and overseeing training to employees and directors, maintaining multiple channels for employees to report concerns, and monitoring compliance. The CRO, which meets at least every quarter, reports to the board's Public Policy Committee and reports on financial matters to the board's Audit Committee (see graphic). Baxter was one of the first companies to establish a direct reporting relationship between its CRO and its board, ensuring ethics and compliance oversight at the highest level, and later established Regional Ethics and Compliance Committees to implement the CRO's charter globally and enhance corporate understanding of local cultures, values and behavioral norms.

Membership in the Regional Ethics and Compliance Committees rotates to ensure broad employee exposure and participation. The company also has dedicated legal resources in each of its global regions: Asia Pacific, Europe/ Middle East/Africa (EMEA) and Latin America/Canada. During 2010, these attorneys conducted 11 ethics and compliance assessments: two in Asia Pacific (Malaysia and Philippines), five in EMEA (Belgium, Poland, Russia, Turkey and the United Kingdom) and four in Latin America/Canada (Canada, Chile, Colombia and Mexico). These are in addition to the three assessments the company conducted in the United States during the year.

Baxter also is enhancing its monitoring efforts to better measure performance between formal assessments and has begun identifying country- and business-specific resources to supplement its compliance programs. (See 2010 Case Study: Baxter Creates New Entity to Support Ethics and Compliance at U.S. Business Level.)

Baxter’s Ethics and Compliance team also works closely with the company’s Corporate Audit group. Corporate Audit participates in most of the ethics and compliance audits, and works with the Ethics and Compliance team to identify ethics and compliance issues during selected financial audits. In 2010, Corporate Audit and the Ethics and Compliance team developed new monitoring tools and processes, and piloted more formal monitoring in Asia and Europe. The team has scheduled a Latin America pilot and more extensive rollout in 2011.

Certificate of Integrity and Compliance

Each year, Baxter requires executives, mid-level supervisors, sales representatives and other selected employees around the world to reaffirm their commitment to the company's ethics and compliance standards by completing and submitting a Certificate of Integrity and Compliance (COIC). The COIC also serves as a reporting document that measures the integration of ethical business practices throughout Baxter. In 2010, more than 16,000 employees – over a third of Baxter’s workforce – completed the COIC, which is available in 11 languages.

Legal and Regulatory Compliance Training

Baxter requires employees worldwide to take Web-based training on legal and regulatory compliance. In 2010, 43,930 employees completed 86,991 e-Learning courses covering areas such as product complaints, pharmacovigilance, adverse-event reporting procedures, workplace violence prevention, data privacy, trade compliance, requirements for selling to the U.S. government, the Foreign Corrupt Practices Act, antitrust, intellectual property, and Baxter’s ethics and compliance standards. Baxter’s Ethics and Compliance group and Legal department also conducted 426 classroom sessions around the world in 2010 to train employees on Baxter’s ethics and compliance standards and supporting policies.

Also in 2010, Baxter continued to implement its risk-based anticorruption education program to provide awareness-level training to most employees, and more advanced training to employees who regularly interact with government officials and healthcare professionals. In 2010, Baxter conducted more than 170 international anticorruption training sessions, reaching nearly 5,000 employees in targeted positions, and more than 65 U.S. healthcare compliance training sessions to more than 1,800 employees.

Physician Payment Disclosure/Sunshine Act

Beginning March 31, 2013, companies operating in the United States that manufacture covered drugs, devices, biologics and medical supplies will be required to report to the Centers for Medicare and Medicaid Services (CMS) all payments (such as consulting fees, travel and lodging, meals, education grants and royalties) given to U.S. physicians and teaching institutions that total more than $100. The first report will cover payments made in 2012. As an example, Baxter makes payments to physicians who serve as investigators in clinical trials and collaborate on other R&D initiatives to compensate them for work done on the company’s behalf, which contributes to the development and introduction of new products. Baxter is working toward implementing the new federal requirements to ensure its disclosures are complete and accurate.

Broader Anticorruption Activities

In 2010, Baxter expanded the scope of its anticorruption program to address the activities of its business partners, consultants and other entities that may engage with foreign government officials while performing services for Baxter. In 2010, the company standardized its risk-based approach to conducting due diligence on these entities and began training on these requirements.

Because anticorruption efforts can be impeded or enhanced by others in the industry, Baxter also is committed to establishing and improving industry codes of conduct and enhancing ethical behavior across the healthcare industry. In 2010, Baxter continued to work with Eucomed and other industry organizations that have initiatives focused on setting industry-wide standards for interactions with healthcare professionals. In the longer term, Baxter will continue to identify and prioritize organizations with whom it can partner to create industry-wide codes for marketing and sales practices. Baxter also continues to evaluate how broader anticorruption initiatives such as the UN Global Compact, World Economic Forum Partnering Against Corruption Initiative or the Organisation for Economic Co-operation and Development Principles may complement the company’s approach.

See the Ethics and Compliance priority update for more information.

Data Privacy and Security

In the course of business, consumers, patients, plasma donors, healthcare professionals, employees and others share personal information with Baxter. Privacy laws require the company to protect this information. In 2009, Baxter created a Global Privacy Council to manage and oversee the protection of personal information companywide. Complementing the council is a network of Local Privacy Owners (LPOs) responsible for privacy compliance in their respective countries. In 2009 and 2010, Baxter established LPOs in Canada, the United States and more than a half-dozen countries in Europe. Most other countries in Europe will have LPOs in place by the end of 2011. The company will begin to introduce the privacy program to the Asia Pacific and Latin America regions in the latter part of the year as well. Also in 2010, Baxter adopted a new global privacy policy. This policy defines Baxter’s standards in this area and ensures that all of the company’s global operations follow the same controls for protecting the personal information of Baxter stakeholders.

Closely aligned with data privacy is information security. Baxter’s Information Technology (IT) Risk Governance Board meets monthly to ensure appropriate accountability and decision-making relative to information technology risks. In 2009, Baxter established a cross-functional Information Security Assessment Team to prioritize organizational response to security and privacy risks. The company has since established a robust Information Protection Program, complete with global policies and governance systems, to define appropriate and inappropriate use and protection of Baxter information and technology. In 2010, Baxter deployed an Information Classification and Trade Secret Policy, which was translated into 14 languages and will be communicated to all employees in 2011 via a mandatory e-training course. Other key security initiatives in 2011 include automating security and compliance risk assessments, improving computer access and authorization controls, and implementing data loss prevention strategies.

Advertising and Promotion

The U.S. Food and Drug Administration (FDA) and other agencies worldwide regulate the advertising and promotion of pharmaceuticals, medical devices and biologics. Included in FDA’s oversight are print and broadcast advertising, websites, press releases, sales brochures, scientific symposia and convention booths, among other promotional materials and activities. Baxter’s Advertising and Promotion staff manage the company’s compliance with promotional regulations companywide. See Product Use for more detail.