The<br />Foreign Corrupt Practices Act (FCPA)<br /> & the Pharmaceutical Industry<br />Dominic Lai, Pharm.D.<br />
Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977...<br />...to prevent the bribery of foreign officials i...
5 elements of the anti-bribery provision<br />1) any individual, firm, officer, employee, or agent acting on behalf of a f...
The Accounting Provisions of the FCPA require publically-held corporations to:<br /><ul><li>Maintain accurate records and ...
 Create an adequate system of internal accounting controls</li></ul>Lay Persons Guide to the FCPA.  US Department of Justi...
SO WHAT?<br />Why should the pharmaceutical industry care about the FCPA?<br />
In 2008, 80%ofapproved FDA marketing applications for drugs and biologics<br />contained data in clinical trials outside t...
54% of all trial sites were<br />outside the United States<br />Levinson D.  Challenges to FDA’s ability to monitor and in...
78% of patients were enrolled outside the U.S.<br />Levinson D.  Challenges to FDA’s ability to monitor and inspect foreig...
Outside the U.S., the perceived levels of corruption are very high<br />
32 of 33 developed countries have a national healthcare system1<br />Persons employed by state facilities can be considere...
Ongoing investigations of several pharmaceutical companiesin connection with alleged bribes to foreign officials<br />Doub...
Since 2004, the number of enforcement actions by<br />both the SEC and DOJ have notably increased1<br />As of 2009, the DO...
FCPA criminal fines have also increased dramatically since 2004<br />2010: >$1.53 BILLION in criminal fines <br />2004: $1...
The U.S. files >70% of the world’s foreign anti-bribery charges.  <br />The U.K. is in 2nd place<br />Funk TM and Coie P. ...
WHAT CAN COMPANY’S DO TO MINIMIZE THEIR RISK OF FCPA LIABILITY<br />
Voluntary disclosure.<br />Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Complianc...
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The Foreign Corrupt Practices Act and the Pharmaceutical Industry

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  • ...as well as restore public confidence in the integrity of the American business system
  • Each year, Transparency International, which is a global coalition whose purpose is to fight corruption at all levels worldwide, ranks the perceived levels of corruption of almost 200 countries. The darker, or more red the color, the higher level of perceived corruption in that country.
  • Lanny Breuer, the Assistant Attorney General of the Criminal Division of the Department of Justice, declared a couple of years ago that a “new era of FCPA enforcement” is underway, specifically targeting the pharmaceutical industry. This is evidenced by several ongoing investigations of pharma companies shown here.
  • If you discover an FCPA violation, you should voluntarily disclose the violation with the DOJ and cooperate with the resulting investigation.You may receive a favorable resolution from the DOJ for cooperating.Also, if your company remediates the problem that led to the FCPA violation and establishes procedures to ensure that FCPA violations will not be repeated again, your company will benefit from that as well.In 2004, Pfizer voluntarily disclosed information about an internal investigation regarding improper payments in connection to sales activities in CroatiaIn 2010, Pfizer announced plans to fully cooperate with the SEC and DOJ’s investigation into their sales activities in certain countries outside the U.S.
  • The Foreign Corrupt Practices Act and the Pharmaceutical Industry

    1. 1. The<br />Foreign Corrupt Practices Act (FCPA)<br /> & the Pharmaceutical Industry<br />Dominic Lai, Pharm.D.<br />
    2. 2. Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977...<br />...to prevent the bribery of foreign officials in order to obtain or retain business<br />(anti-bribery provision)<br />Lay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf<br />
    3. 3. 5 elements of the anti-bribery provision<br />1) any individual, firm, officer, employee, or agent acting on behalf of a firm, with<br />2)corrupt intentwho<br />3)pays, promises, or offers to paymoney or any other thing of value to a<br />4)foreign official, political party, or any candidate for political office to<br />5)obtain or retain business with, or direct business to any person, in a foreign country<br />Lay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf<br />
    4. 4. The Accounting Provisions of the FCPA require publically-held corporations to:<br /><ul><li>Maintain accurate records and books of company transactions
    5. 5. Create an adequate system of internal accounting controls</li></ul>Lay Persons Guide to the FCPA. US Department of Justice. http://www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf<br />
    6. 6. SO WHAT?<br />Why should the pharmaceutical industry care about the FCPA?<br />
    7. 7. In 2008, 80%ofapproved FDA marketing applications for drugs and biologics<br />contained data in clinical trials outside the US<br />Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510. <br />
    8. 8. 54% of all trial sites were<br />outside the United States<br />Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510. <br />
    9. 9. 78% of patients were enrolled outside the U.S.<br />Levinson D. Challenges to FDA’s ability to monitor and inspect foreign clinical trials. DHHS OIG Report. June 2010. OEI-01-08-00510. <br />
    10. 10. Outside the U.S., the perceived levels of corruption are very high<br />
    11. 11. 32 of 33 developed countries have a national healthcare system1<br />Persons employed by state facilities can be considered foreign officials2<br />http://coto2.wordpress.com/2010/03/22/list-of-countries-with-universal-healthcare/<br />Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009.<br />Double standard for big pharma bribers. CNN Money. Aug 17, 2010. http://money.cnn.com/2010/08/17/news/international/pharma_FCPA_bribery_investigations.fortune/index.htm<br />
    12. 12. Ongoing investigations of several pharmaceutical companiesin connection with alleged bribes to foreign officials<br />Double standard for big pharma bribers. CNN Money. Aug 17, 2010. http://money.cnn.com/2010/08/17/news/international/pharma_FCPA_bribery_investigations.fortune/index.htm<br />
    13. 13. Since 2004, the number of enforcement actions by<br />both the SEC and DOJ have notably increased1<br />As of 2009, the DOJ was pursuing more than <br />120 FCPA investigations2<br />http://tfoxlaw.wordpress.com/2011/03/11/fcpa-enforcement-why-the-increase-between-the-first-25-years-and-the-last-5/<br />Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009.<br />
    14. 14. FCPA criminal fines have also increased dramatically since 2004<br />2010: >$1.53 BILLION in criminal fines <br />2004: $11 million in criminal fines<br />Funk TM and Coie P. Another Landmark Year: 2010 FCPA Year-In-Review and Enforcement Trends for 2011. Bloomberg Law Reports. 2010.<br />
    15. 15. The U.S. files >70% of the world’s foreign anti-bribery charges. <br />The U.K. is in 2nd place<br />Funk TM and Coie P. Another Landmark Year: 2010 FCPA Year-In-Review and Enforcement Trends for 2011. Bloomberg Law Reports. 2010.<br />
    16. 16. WHAT CAN COMPANY’S DO TO MINIMIZE THEIR RISK OF FCPA LIABILITY<br />
    17. 17. Voluntary disclosure.<br />Breuer LA. Prepared Keynote Address to The Tenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum. November 12, 2009.<br />
    18. 18. Ensuring a rigorous <br />FCPA compliance policy is established<br />The Organization for Economic Cooperation and Development (OECD), an international organization promoting policies that will improve the economic and social well-being of people around the world, released anti-bribery guidelines for international business transactions. <br />Endorsed by 38 countries.1<br />1. www.oecd.org<br />

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