Global Anticorruption Alert: DOJ Targets Pharmaceutical Industry And Individuals For FCPA Enforcement

Enforcement of the Foreign Corrupt Practices Act ("FCPA") continued to grow last week. On Thursday, November 12, a senior Department of Justice ("DOJ") official predicted increased scrutiny of the pharmaceutical industry under the FCPA. A day later, prosecutors obtained a 13-year sentence for a former U.S. Congressman convicted of conspiring to violate the law. These and other developments highlight important questions regarding the standard by which knowledge under the FCPA will be measured. If the DOJ continues to take the position that a mere failure to investigate possible bribery can give rise to FCPA liability, then businesses will face heightened risks in their overseas operations.

DOJ Warns the Pharmaceutical Industry The Assistant Attorney General for the DOJ's Criminal Division warned pharmaceutical industry executives to expect an increase in FCPA investigations and prosecutions. Lanny Breuer stated during a speech to the Pharmaceutical Regulatory and Compliance Congress:

Consider the possible range of "foreign officials" who are covered by the FCPA: Some are obvious, like health ministry and customs officials of other countries. But some others may not be, such as the doctors, pharmacists, lab technicians and other health professionals who are employed by state-owned facilities. Indeed, it is entirely possible, under certain circumstances and in certain countries, that 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. Breuer indicated that prosecutors and agents responsible for investigating health care fraud and the FCPA would be combining forces to crack down on bribery in the pharmaceutical industry overseas, and that senior executives would not be immune from such prosecution. Breuer's announcement appears consistent with the DOJ's ongoing effort to target individuals. Just last September, the prosecutor in charge of FCPA prosecutions at the DOJ told the Corporate Crime Reporter that the recent rise in individual prosecutions reflects an intentional effort on the part of the government to develop a "credible deterrent effect" under the FCPA.

While the resources and prosecutorial efforts announced by Breuer are noteworthy, the government's focus on the pharmaceutical and health care business is not surprising. In recent years, U.S. enforcement authorities have been approaching...