DOJ Targets Pharmaceutical Manufacturers In Foreign Corrupt Practices Act Probe

 According to a recent articles in the Financial Times and New York Times, the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) has launched an investigation into international payments made by drugmakers for consulting, hospitality, licensing agreements, charity and clinical trials.

The article reports that “to date, companies including Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Merck & Co. and Pfizer say they have been contacted in connection with the probe.”

One source, an industry attorney familiar with the investigation, told the Financial Times that “the justice department is seeking to determine whether drugmakers have ignored local and federal anti-bribery laws.”

Of particular interest to the DOJ, according to the law firm Arnold & Porter, are “corrupt payments that may have influenced the reliability of data in clinical trials performed outside the US.”

This issue has been spotlighted because “a recent report by the US Department of Health and Human Services (HHS) found that 80 percent of marketing applications for drugs approved by the FDA included at least one foreign trial.” As a result, Arnold & Porter noted that “companies may find themselves facing critical legal issues if approval of products rested on the results of studies the [justice department] deems corrupt.”

In addition to foreign trials, the article reported that the DOJ and SEC are interested in probing instances in which bribery may have occurred. A second industry lawyer involved in the matter told the Financial Times that because “global pharmaceutical companies operating in countries with state-run medical institutions frequently deal with government officials,” there is a large risk of bribery if companies don’t train and educate their people.

Prosecution around the Foreign Corrupt Practices Act, connecting physicians as “state” employees, is a growth area for the DOJ especially since the successful $500 million agreement SEC agreement reached in December 2008 from the German imaging and power supply company Seimans.

Consequently, sources to the Financial Times that the investigation is currently at a relatively early stage, but is considered a priority for the justice department.