In recent years, the Department of Justice and U.S. Securities and Exchange Commission have targeted multinational life sciences companies for investigations relating to alleged violations of the Foreign Corrupt Practices Act. In a March speech to a pharmaceutical industry group, the transcript of which was posted on the SEC’s website, Andrew Ceresney, director of the SEC’s Division of Enforcement, confirmed that the federal government has no intention of letting up. He noted that the Enforcement Division has been and will continue to be focused on the pharmaceutical industry as a high-risk area for FCPA violations. Ceresney’s speech emphasized many of the same principles set forth by the head of the Criminal Division of the DOJ six years earlier in a Nov. 12, 2009, address trancripted on the DOJ’s website that emphasized that the application of the FCPA to the pharmaceutical industry would be a focus of the Criminal Division going forward.
For his part, Ceresney described three types of misconduct to which pharmaceutical companies are particularly susceptible and that may serve as a basis for SEC enforcement under the FCPA: (1) when companies pay doctors or public hospitals in exchange for prescribing that company’s medicine or medical products, which he called “pay-to-prescribe” arrangements; (2) when companies pay bribes to government officials for assistance in placing drugs on a government insurance reimbursement list; and (3) when companies donate to charity in an effort to obtain or retain business. Ceresney promised that the SEC will continue to employ a broad interpretation of the FCPA in order to “address bribery in all forms,” including “cash, gifts, travel, entertainment or charitable donations.”
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