Pharmaceutical And Medical Device Companies: Taking It On The Chin (Part II Of III)

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clinical5As the Glaxo controversy unravels each day, it is important to remember the enforcement context in which the current prosecution in China is occurring.  The Glaxo case will go down in FCPA enforcement history as the equivalent of the Siemens and Wal-Mart case — it represents a new, and risky trend in anti-corruption enforcement: China is now entering the arena with its enforcement muscle.  For global drug and device companies operating in China, the current scandal is more than a shot across the bow — it is a bomb across the bow.

You have to sympathize with pharmaceutical and medical device companies.  From a regulatory and enforcement perspective, the last five years have not been a particularly fun set of years.  Domestic enforcement has been unprecedented.  And starting in 2009, FCPA enforcement has been particularly rough.

The facts tell the story. In 2009, then-AAG Breuer announced that FCPA enforcement against the pharmaceutical industry would be “a focus for the Criminal Division in the months and years ahead.”  He meant what he said.  Let’s look at the facts:

FCPA Compliance for Pharmaceutical and Medical Device Companies

As of today, the Department of Justice and the SEC have prosecuted eighteen drug and device companies (excluding Siemens since its medical device business was only a portion of the overall operations) for FCPA violations.  Three companies have publicly disclosed declinations (of course, there may be more which were never made public).  And sixteen companies are currently under investigation.

FCPA Compliance for Pharmaceutical and Medical Device Companies Slide 2

Over the last five years, FCPA enforcement actions peaked in 2012 when a total of $142.2 million was collected by DOJ and the SEC.

FCPA Compliance for Pharmaceutical and Medical Device Companies Slide 3

The top-10 FCPA settlements involving the drug and device industry looks paltry in comparison to other industries, or even the Siemens prosecution, but it is significant nonetheless in the number of companies involved. The largest settlement continues to be the Johnson & Johnson case which resulted in total fines and penalties of $70 million.

FCPA Compliance for Pharmaceutical and Medical Device Companies Slide 4

It is important to breakdown, however, where the FCPA violations occurred.  As everyone would expect, particularly in light of the Glaxo scandal, China continues to stand as the most often country involved in foreign bribery schemes.

Pictures do not lie.  The message from the numbers above confirm what everyone has long known – the pharmaceutical and medical device industries have– and will continue to be — subject to strict FCPA scrutiny.

Topics:  Biotechnology, Bribery, China, Criminal Prosecution, FCPA, GlaxoSmithKline, Manufacturers, Medical Devices, Pharmaceutical, White Collar Crimes

Published In: General Business Updates, Criminal Law Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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