Joshua M. Robbins, partner, Greenberg Gross. (Courtesy photo)

It is a fearsome time for general counsel and chief compliance officers at drug companies, as aggressive federal prosecutors are increasing scrutiny—as well as indictments—over their work.

Joshua Robbins, a former federal health care prosecutor and now chair of the white collar defense and government investigations practice at Greenberg Gross in Los Angeles, noted that a “government press release in one recent case said it wanted 'to send shock waves' through the pharmaceutical industry” when it indicted a company and two executives in April over illegally distributing opioids.

That company was the Rochester Drug Co-operative in New York, and one of the indicted executives was its chief compliance officer. Then, on July 22, prosecutors arrested the chief compliance officer of Miami-Luken Inc. for allegedly helping the company to illegally sell millions of dollars' worth of opioids.

Only a few executives were charged at each company, Robbins noted, and the chief compliance officer was among them. “That is not a random choice,” he said.

“They want companies and compliance counsel to be afraid,” Robbins continued. “There is an immense deterrent effect on any companies that would think about dismissing or minimizing their compliance obligations.”

While it's not unprecedented to see the U.S. Department of Justice go after an in-house counsel or chief compliance officer, he said such action “is not typical, and I consider it to be pretty aggressive.”

He said the indictments reflect DOJ's view “that perhaps a deliberate breakdown of the compliance function, knowing and willful, allowed companies to operate in violation of their regulatory obligations and to engage in conspiracies to distribute illegal products.”

Jacques Smith, national leader of Arent Fox's complex litigation group, agreed that the focus on individuals is a rising trend.

“The focus on individual accountability—as recently seen in DOJ's trend of going after executives of opioid drug companies—is not surprising,” Smith said. “Individual accountability increased with the Yates memo, was reinforced with some modifications under former [Deputy Attorney General Rod] Rosenstein, and has found permanence in the revised Justice Manual.”

Attorney Julie Myers Wood, chief executive of Guidepost Solutions, a compliance solutions company in Washington, D.C., said, given the seriousness of the nation's opioid crisis, she expects continued scrutiny of drug companies.

Wood advised that companies give the general counsel or chief compliance officer a “safety valve” to express their opinions at the highest levels of the organization, including with the board of directors.

She also suggested that companies benchmark their compliance programs on a regular basis, and, “when overruling a chief compliance officer on a major matter, consider getting an independent compliance opinion about the appropriateness of the decision.”

Robbins said he would advise in-house counsel at drug companies to “assume the risks are heightened. Government is sending a message to compliance counsel that they are more under the spotlight. It certainly gives ammunition to fight back any efforts by management to discourage a strong compliance function.”

But it's not just drug companies that should be afraid, Robbins warned.

“The psychology of fear is not unique to the opioid distribution market,” Robbins explained.

“If this [tactic] works in this area, why wouldn't it work in others? DOJ may be looking at these cases as a blueprint for how to go after companies and individuals in other industries.”