Thursday, September 23, 2010

The Foreign Corrupt Practices Act and Industry

As promised last year -- the Department of Justice is following where industry members conduct their business. At last count, [that we know of] the DOJ had notified at least 12 industry and device manufacturers that they were under investigation for possible violations of the Foreign Corrupt Practices Act. The feds want to know if these 12 tried to influence how physicians would determine the results of industry members’ overseas trials on any drugs that came back to the U.S. market. (To get the Lexocology article about the investigation, you'll need to register.)

Getting specifics on what the DOJ has found hasn’t been easy: As this WSJ story on Merck points out, Merck wasn’t charged with anything. The Financial Times reported that the DOJ "was looking at whether pharma companies had ignored a 'systematic risk' inherent in the global drugs business and ignored obligations under local and US anti-bribery law."

What ostensibly rattled the DOJ’s proverbial cage was that report this summer from the Inspector General of the Department of Health and Human Services. You all saw it – the one that said 80% of all FDA approved drugs in 2008 were based on trials conducted in foreign countries. And of course, the FDA had conducted very few inspections of those sites.

We say ostensibly because of what the DOJ said last year. The feds said they were interested in looking at industry through the legal lens of the FCPA. In that speech [second paragraph], the assistant AG talked about how much money the department made in other cases it had tried -- $1.6 billion in one, $579 million in another. The assistant AG mentioned that the department has brought more prosecutions since 2005 (58), than between 1977, when the FCPA was passed, and 2005.

We think the DOJ will continue to examine industry practices in a manner that will make it more difficult to operate, cost more to complete innovative drug research, and challenge or change the way the industry conducts business. Maybe it’s time to say, enough.

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