Legal: Foreign Policy - Pharmaceutical Executive

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Legal: Foreign Policy
Drug companies doing business abroad—and who isn't?—face a special risk of running afoul of stepped-up enforcement of anticorruption laws. Travel alert: When in Rome, don't!


Pharmaceutical Executive


Beyond these basics, finding the risks is not always easy. For large pharmas, it may be difficult to gather the precise details of particular business practices in foreign jurisdictions. Where company reps are independent contractors, for example, monitoring compliance can be tricky. One solution is to conduct interviews with these individuals as a way both to collect information about the business practices in question and to communicate the company's commitment to obeying the law.

Training programs are another approach to getting employees in foreign nations up to speed on compliance—while also gathering intel. Such sessions often result in participants asking questions about specific situations they have experienced, so legal counsel should be present to address any noncompliance that may be discovered.

Drafting anticorruption policies for operating in a foreign country is relatively straightforward. In short, the company needs a strong, unequivocal statement of its commitment to ethical conduct and compliance with the law. The policies should clearly instruct employees how to distinguish appropriate from inappropriate conduct, including which types of marketing and sales expenditures are permissible and which are prohibited. All processes for training, reporting, and investigating misconduct and improper payments should be clearly spelled out—as should how, if allegations are substantiated, the company will respond.

Good Faith Goes Far, but Save the Receipts

The hardest part of preventing corrupt activities is putting policies into effect. The danger typically arises from a company's failure either to adequately support and enforce those policies or to expend the effort necessary to implement the program.

The costs of anticorruption efforts vary with the scope of operations and the nature of the risks. Administering the program may require overcoming not only language differences but cultural barriers. To start with, in some countries the taboo against bribery is simply not as strong as it is in the United States, and the dangers of this activity must be emphasized in communications to foreign company agents.

When it comes to implementing anticorruption compliance, the point is not to look good on paper but to get results in practice. Companies should keep their eye on the prize: reducing the real-world risk that an employee or agent will pay a bribe, whether through ignorance, self-interest, or a misguided notion of helping the company. At the same time, since the program is a testament to the firm's good faith, careful documentation is critical. That way, if a bribe is paid to a doctor or hospital, the company can demonstrate the steps it took to obey the law.

When allegations of improper payments arise, management should conduct a prompt, thorough investigation, gathering all relevant facts. Only then will the company be in a position to decide, with the guidance of counsel, whether it is necessary or advantageous to make disclosure to DOJ or the SEC. A failure to do so will likely weigh heavily against the company if the violations are later brought to light.

No anticorruption program is perfect. Bribery and corruption have been around since the very first economies, and are eternal temptations to the greedy soul. Still, drug firms are now duty-bound to reduce the likelihood that every rep in every foreign country is on the up and up—and as daunting as this may seem, the fact is that serious efforts and reasonable policies can be effective. As more and more developing-world markets see double-digit growth, the growing opportunities—and competition—will only extend pharma's business. The sooner the industry nails down its anti-corruption compliance, the better.

R. Christopher Cook and Jonathan B. Leiken both former federal prosecutors, are attorneys in the Corporate Criminal Investigations practice group of the international law firm Jones Day. Cook can be reached at
and Leiken can be reached at


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