Investigation on foreign Bribery in Drug Industry would be one the priority (US)


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Accordig to Lanny Breuer, the head of the (US) Justice Department‘s Criminal Division, investigating foreign bribery in the Drug industry would be one of his priorities over the next several years.

On Tuesday, the WSJ’s (Wall Street Journal) Michael Rothfeld reports that federal investigators are looking at ways that drug makers could be paying bribes overseas to boost sales and speed approvals.

Big companies-including Merck, AstraZeneca, Bristol-Myers Squibb and GlaxoSmithKline -in recent months have disclosed they are being investigated for possible violations of the Foreign Corrupt Practices Act, the now ubiquitous 1977 law that makes it illegal for companies whose stock is traded in the U.S. to bribe government officials in other countries to get business.

In fact, since 1977 to nowadays, the SEC and department of justice did not have the means to check the implementation of this Act.

The first well known cases were Siemens, and some others in Poland. I am not here to give companies names that be found in the SEC’s website.(Beside link on this blog)

The companies said they are cooperating with the government, with several adding that the investigation is industry-wide and broader than their companies specifically.

So far, none of the companies has been accused of wrongdoing, and the investigation ultimately may not result in charges.

The investigation is targeting transactions in Brazil, China, Germany, Italy, Poland, Russia and Saudi Arabia, people familiar with the matter said.

Note that FCPA procedures have been settled since 2 or 3 years in the foreign subsidiaries of majors companies. I worked on that for France, Belgium and Switzerland

Kind of briberies

Letters from the government to one of the companies, which were reviewed by The Wall Street Journal, identified four types of possible violations:

  1. Bribing government-employed doctors to purchase drugs; (understand in France, doctors who prescribe reimbursement drugs – see Charter on sales representatives (signed between Leem and CEPS)
  2. paying company sales agents commissions that are passed along to government doctors;
  3. paying hospital committees to approve drug purchases
  4. paying regulators to win drug approvals (this have been seen in former cases, which is, to my opinion, the worst behavior).

It is true that the pharmaceutical industry is particularly vulnerable because government plays a bigger role in administering medicine in many foreign countries than it does in the U.S. and drugs are highly regulated, which creates contact with public officials..the approach is different abroad  – Nevertheless the Obama “reform” might make grown up relationship between Pharmaceutical industry and insurances, hospitals…to be followed.

Link for more:

Source: Chief Compliance Ethics Officer Network and FCPA: Foreign Corrupt Practices Act Forum


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