Independent Review Organizations (“IRO”) and Conflicts of Interest – Much Ado About Nothing or a Serious Problem

As part of the process of entering into civil and criminal settlement negotiations with the government resulting from allegations of noncompliance, life science companies are increasingly seeking the retention of third-party regulatory compliance and auditing companies, designated collectively as independent review organizations (“IROs”) to facilitate such process. Recently, there is renewed skepticism and heightened criticism over the companies’ use of such IROs, especially given revelations that companies are choosing IROs that they may have had business relationships with in the past or present. Despite this, the U.S. Department of Justice (“DOJ”) and other government oversight agencies argue that the current status quo is effectively working, including the already established standards, qualifications, and other guidelines for the selection of an IRO. This article examines the various view points and what it means for the life science compliance professional.

Although the concept of the Independent Review Organization or IRO has been around for many years, with the advent of Sarbanes-Oxley in 2002, the IRO came to the forefront in life sciences. During the settlement of compliance and regulatory claims with life-science companies, the government typically now requires companies to retain IROs to assist in the investigation, review, negotiations, and settlement process. Requiring an IRO has become so ingrained in the settlement process that the Office of Inspector General (“OIG”) for the U.S. Department of Health and Human Services (“HHS”) explicitly states that, in terms of facilitating Corporate Integrity Agreements (“CIAs”), IROs play an integral role in including assisting both the Government and the company involved with compliance and regulatory issues.