The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign officials and requires accurate record keeping. It is highly relevant for pharmaceutical companies because they conduct many international clinical trials and operate in countries with national healthcare systems. Enforcement of the FCPA has increased in recent years, with over $1.5 billion in fines in 2010. Companies can minimize risk by voluntarily disclosing issues, establishing rigorous compliance policies, and following OECD anti-bribery guidelines endorsed by 38 countries.
The Foreign Corrupt Practices Act and the Pharmaceutical Industry
1. The Foreign Corrupt Practices Act (FCPA) & the Pharmaceutical Industry Dominic Lai, Pharm.D.
2. Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977... ...to prevent the bribery of foreign officials in order to obtain or retain business (anti-bribery provision) Lay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf
3. 5 elements of the anti-bribery provision 1) any individual, firm, officer, employee, or agent acting on behalf of a firm, with 2)corrupt intentwho 3)pays, promises, or offers to paymoney or any other thing of value to a 4)foreign official, political party, or any candidate for political office to 5)obtain or retain business with, or direct business to any person, in a foreign country Lay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf
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5. Create an adequate system of internal accounting controlsLay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf
6. SO WHAT? Why should the pharmaceutical industry care about the FCPA?
7. In 2008, 80%ofapproved FDA marketing applications for drugs and biologics contained data in clinical trials outside the US Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510.
8. 54% of all trial sites were outside the United States Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510.
9. 78% of patients were enrolled outside the U.S. Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510.
11. 32 of 33 developed countries have a national healthcare system1 Persons employed by state facilities can be considered foreign officials2 http://coto2.wordpress.com/2010/03/22/list-of-countries-with-universal-healthcare/ Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009. Double standard for big pharma bribers. CNN Money. Aug 17, 2010. http://money.cnn.com/2010/08/17/news/international/pharma_FCPA_bribery_investigations.fortune/index.htm
12. Ongoing investigations of several pharmaceutical companiesin connection with alleged bribes to foreign officials Double standard for big pharma bribers. CNN Money. Aug 17, 2010. http://money.cnn.com/2010/08/17/news/international/pharma_FCPA_bribery_investigations.fortune/index.htm
13. Since 2004, the number of enforcement actions by both the SEC and DOJ have notably increased1 As of 2009, the DOJ was pursuing more than 120 FCPA investigations2 http://tfoxlaw.wordpress.com/2011/03/11/fcpa-enforcement-why-the-increase-between-the-first-25-years-and-the-last-5/ Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009.
14. FCPA criminal fines have also increased dramatically since 2004 2010: >$1.53 BILLION in criminal fines 2004: $11 million in criminal fines Funk TM and Coie P. Another Landmark Year: 2010 FCPA Year-In-Review and Enforcement Trends for 2011. Bloomberg Law Reports. 2010.
15. The U.S. files >70% of the world’s foreign anti-bribery charges. The U.K. is in 2nd place Funk TM and Coie P. Another Landmark Year: 2010 FCPA Year-In-Review and Enforcement Trends for 2011. Bloomberg Law Reports. 2010.
17. Voluntary disclosure. Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009.
18. Ensuring a rigorous FCPA compliance policy is established The Organization for Economic Cooperation and Development (OECD), an international organization promoting policies that will improve the economic and social well-being of people around the world, released anti-bribery guidelines for international business transactions. Endorsed by 38 countries.1 1. www.oecd.org
Notas del editor
...as well as restore public confidence in the integrity of the American business system
Each year, Transparency International, which is a global coalition whose purpose is to fight corruption at all levels worldwide, ranks the perceived levels of corruption of almost 200 countries. The darker, or more red the color, the higher level of perceived corruption in that country.
Lanny Breuer, the Assistant Attorney General of the Criminal Division of the Department of Justice, declared a couple of years ago that a “new era of FCPA enforcement” is underway, specifically targeting the pharmaceutical industry. This is evidenced by several ongoing investigations of pharma companies shown here.
If you discover an FCPA violation, you should voluntarily disclose the violation with the DOJ and cooperate with the resulting investigation.You may receive a favorable resolution from the DOJ for cooperating.Also, if your company remediates the problem that led to the FCPA violation and establishes procedures to ensure that FCPA violations will not be repeated again, your company will benefit from that as well.In 2004, Pfizer voluntarily disclosed information about an internal investigation regarding improper payments in connection to sales activities in CroatiaIn 2010, Pfizer announced plans to fully cooperate with the SEC and DOJ’s investigation into their sales activities in certain countries outside the U.S.
