Main Subject - Business

Skimming is the removal of cash for a victim company before the transaction is entered into the accounting system. Since skimming is an off the books type of fraud (it is never recorded) there is no d

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

irect audit trail therefore making the fraud difficult to detect. The employees with an opportunity to commit skimming schemes are those who deal directly with customers or those that handle their payments. This arti

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

cle will cover the four main categories of skimming schemes and discuss some of the red flags for detection of the fraud.

Unrecorded Sales
The most common form of skimming is not recording the s

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

le of goods but collecting the money from the customer. Despite controls such as register tape, managers, and surveillance equipment, employees may be able to manipulate the system in order to prevent fraud detection.

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

In some examples of unrecorded sales, the fraudster manipulates the register tape so that it does not print on the tape when transactions are keyed into the system. A means of detection would be pre-numbering the sy

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

stem records so that if skimming were perpetrated when the fraudster turn the register tape back on there would be a break in the pre-numbered transactions. Companies should be specifically careful of unrecorded sales

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

schemes with revenue streams that are difficult to monitor and generally unpredictable in value.

Understated Sales and Receivables
In these skimming schemes the customer receives a receipt that

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

is for the total amount of the transaction but when the employee enters it into the system they record either a discount or a sale of lesser value. In order to cover their tracks they can manipulate carbon copies of t

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

he receipt by writing in their own amounts or generating false discount documentation. Fraud prevention is possible by requiring approval for sales discounts, checking receipts for alterations and tracking the history

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

of cashiers' sales discounts.

Theft of Checks Through the Mail
In this particular scheme the sale has been recorded into the company's system but the payment on the receivable has not been recei

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ved. The person in charge of receiving payment in the company physically steals the check and cashes it at the bank. If the employee is able to overcome the issues with cashing the checks such as endorsement and conv

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

incing the bank that the transaction is legitimate then they must deal with how to conceal the fraud when the customers balance becomes delinquent. If the employee is not careful the company will send late notices to

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ustomers that will likely result in complaints from customers with a copy of the canceled check. Fraudsters have gone around this by intercepting the notices or manipulating the address of the customer in order to rer

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

oute the mail. A major red flag for the opportunity to commit this scheme is when the employee that receives the mail is also the same person that has the job of recording the receipt. By properly segregating duties

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

and marking all checks for deposit only, a company can easily reduce the potential of this skimming scheme.

Short-Term Skimming
The final category of short-term skimming is less about stealing

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

he money than borrowing it in order to accumulate earnings from the time value of money. By delaying the receipt of payment the employee is able to use the funds for short term investments generating interest for the

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

perpetrator. The means of obtaining access of the money could be any of the forms above but there is a clear distinction that in this case the money is eventually returned to the company and the only loss is the time

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

value of that receipt. Red flags in this area would include a higher days sales outstanding ratio or unusual payment timing when compared to historical customer payment especially when looking at specific customers.

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

strong>Fraud Prevention
Regardless of the method of skimming the most important means of prevention is establishing proper internal controls. Segregating duties and employee awareness of the company's p

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

olicy on theft can eliminate the opportunity and rationalization of committing these frauds. When early detection fails skimming can lead to very costly losses and a corporate culture that ignores the signals of fraud

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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