Important Disclaimer Focus on Big Pharma Highlights FCPA Hot Spots November 17, 2009 On November 12, 2009, Lanny A. Breuer, the Assistant Attorney General for the Criminal Division of the Department of Justice, announced that a new long-term focus for his division would be on Foreign Corrupt Practices Act (FCPA) enforcement in the pharmaceutical industry. To those listening to his address at the Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practice Forum, he warned: "Our focus and resolve in the FCPA area will not abate, and we will be intensely focused on rooting out foreign bribery in your industry." In his remarks, Breuer shed some light on the new enforcement focus. He explained that the FCPA and health care fraud units would be joining forces on overseas bribery investigations. He also remarked on the potential complexities involved in interpreting the FCPA's term "foreign official" in the pharmaceutical context, calling out health ministry and customs officials, doctors, pharmacists, lab technicians, and other health professionals at state-owned facilities as possibilities. Breuer declined to define the term, and provided little other guidance to pharmaceutical companies beyond rigorous compliance and voluntary disclosure in the event of a violation. While past enforcement actions—such as those against Syncor Taiwan and Schering-Plough—have been focused on the sale of pharmaceutical products to state-owned entities, Breuer sounded a cautionary bell regarding the "depth of government involvement in foreign health systems." As Breuer explained, "nearly every aspect of the approval, manufacture, import, export, pricing, sale, and marketing of a drug product in a foreign country will involve a 'foreign official' within the meaning of the FCPA." In other words, Big Pharma should be concerned with more than just overseas sales. Indeed, pharmaceutical companies deal with government officials and thus face FCPA risks in almost every facet of their business. Before marketing and selling drugs in a foreign country, a company must secure the proper licenses and approvals for those drugs from the country's FDA-equivalent. To manufacture the drugs, companies must obtain various approvals and certificates, such as a good manufacturing practices, or GMP, certificate. And to keep the factories running, a company must pass factory inspections and meet environmental regulations. These are just a few of the many FCPA hot spots for pharmaceutical companies. With increased government scrutiny on an industry laden with FCPA risk, pharmaceutical companies must be on high alert. Accordingly, we recommend the following: First, as noted by Breuer, ensure you have a comprehensive FCPA policy in place and that such policy is "faithfully enforced." Second, conduct an FCPA risk assessment or audit to identify the FCPA hot spots in your company. Third, ensure your company is poised to respond quickly and effectively to any FCPA issues raised. For more information about this topic or related FCPA issues, please contact Lisa Prager or Leo Cunningham in Wilson Sonsini Goodrich & Rosati's white collar crime and government investigations practice. |