2. Training: FDA and SEC are working together to identify opportunities for the two agencies to engage in simultaneous training.
FDA suggested that one such area could be responding to requests for non-public information or testimony.
3. Electronic communication: FDA will use electronic communications—e-mail and file sharing—with SEC whenever possible, to provide
technical or scientific support, to respond to requests from SEC for non-public information, and to review statements by FDA-regulated
companies in public SEC filings, such as annual reports.
4. Non-public records/information: FDA will provide certain employees with "blanket" authorization to share non-public information
with SEC. In the past, authorization was only granted on a case-by-case basis. The agencies also agreed to consider additional
ways to improve their collaborative process.
No proactive policing. The new initiative has led some to question whether FDA staff will now be proactively policing all statements by all public
companies. The agency addressed this issue head on in a press release, in which it said, "FDA employees will not be expected
routinely to police statements by publicly held, FDA-regulated companies. However, FDA can be in a position to identify statements
that may be of interest to the SEC and its staff, and FDA employees will now have a centralized procedure to make SEC referrals
if, in the normal course of their activities, they come to believe that a company may have made a false or misleading statement
to the investing public."
Impact on Industry
IT IS STILL TOO EARLY TO DETERMINE THE extent to which the new FDA-SEC collaboration will affect drug companies' pre-approval promotional statements. But it is
clear that there are several practical steps companies can take to avoid costly mistakes and minimize the risk of government
investigations and private-party litigation.
Assessment. First, assess all the manners and venues in which companies make promotional statements about ongoing clinical trials. Prepare
an inventory of your company's activities involving pre-marketing promotional statements, such as SEC filings, periodic press
releases, and company newsletters. Determine when and how such promotional statements are made and who verifies the accuracy
of the statements.
Policy. Re-evaluate your company's policy on the use of pre-approval promotional statements. If your company does not have such a
policy, consider creating one. The parameters can help the company properly evaluate pre-approval statements when they are
proposed. It can also address the different ways in which such promotional statements may permissibly be used in public filings,
as well as in marketing initiatives and press releases. To minimize risk of liability, a company should have such statements
reviewed by legal counsel.
Communication. It's important to communicate your company's policy within, and when appropriate, outside the company. Some firms have opted
to use this as a public relations opportunity.
Training. The appropriate executives and business unit leaders must be trained to understand the impact of the new rules as well as
on the company's own policy. No matter how good a company's policies and procedures are, if its executives do not follow them,
the company could face legal risk. A well-known corporate compliance survey, conducted by Corporate Legal Times and PricewaterhouseCoopers,
found that despite having written policies and procedures on various compliance matters, 60 percent of the corporations interviewed
had been faced with litigation, claims, and government investigations on the very same policies and procedures covered by
their written compliance programs. This suggests that training and periodic assessments to identify risks and vulnerabilities
should be key components of any compliance program.
Monitor implementation. Monitoring and corrective action are part of any effective compliance effort. It may make sense to regard pre-approval promotional-statement
compliance as part of a larger program of corporate integrity and legal compliance.
The fallout from the ImClone scandal has permanently affected the industry. Consequently, pharma and biotech companies need
to increase their scrutiny of pre-approval promotional statements in public filings and press releases to ensure they do not
run afoul of the new rules.