Effective Compliance Actions
Most companies have responded to the threat with an internal program designed to prevent, identify, and address possible FCPA
violations. In doing so, manufacturers should conduct a thorough review of the particular risk areas relating to each country
in which they operate and develop clear policies and procedures tailored to the specific dynamics of each market. This country-specific
focus should not only be reflected in a company's written policies and procedures, but should also guide how the organization
implements, monitors, and audits compliance on the ground.
Through its compliance program, a company should seek to address the unique pressure points within each market that may create
specific FCPA vulnerabilities. For example, to conduct clinical testing in certain countries, sponsors must first obtain a
number of approvals from a complex web of regulatory bodies, sometimes at both a national and local level. Where this process
results in long delays in completing clinical trials or obtaining product approvals, the risk of improper payments may be
greater than in countries where the drug approval process is relatively fast.
An effective compliance program must also address the risks posed by third-party intermediaries. Drug companies may retain
a variety of third parties in connection with their overseas operations, including contract research organizations, sales
agents, distributors, and customs clearance agents. Since companies may be liable for corrupt payments made by their agents,
it is important for them to establish and follow through on due diligence procedures before retaining a third party to perform
services in another country. In addition, because an intermediary may also be considered a "foreign official" under the FCPA
(such as a principal investigator employed by a state-owned medical institution), companies should adopt written criteria
for retaining foreign intermediaries similar to the criteria for hiring consultants in the United States under the PhRMA Code
on Interactions with Healthcare Professionals. For example, companies should permit the hiring of third-party intermediaries
only where a legitimate need for the intermediary's services has been identified in advance, the criteria for selecting the
intermediary are directly related to the identified purpose, and a written contract is entered into specifying the nature
of the services to be provided and the basis for payment of those services.
Finally, a number of countries are taking steps to reduce public corruption and commercial bribery within their own borders.
It is important that drug companies closely monitor legal and regulatory developments in the countries where they operate
to ensure that their compliance policies and procedures account for any additional requirements or prohibitions imposed by
the local governments. The UK, which is building an anticorruption regulatory regime that in many areas complements and reinforces
the FCPA, is another example. Compliance now has to be orchestrated on a multiple-country front; it should not be seen exclusively
as an outgrowth of aggressive US application of extraterritorial reach.
By adopting robust compliance programs, drug companies may greatly reduce the FCPA risks that surround their efforts to capitalize
on the significant growth potential that emerging markets now offer.
Anjali Chaturvedi is a partner at Nixon Peabody and a member of the Government Investigations & White Collar Defense practice. She can be reached
at achaturvedi@nixonpeabody.com
Brian K. French is a partner in Nixon Peabody's Government Investigations & White Collar Defense practice and is also a member of the firm's
Life Sciences initiative. He can be reached at bfrench@nixonpeabody.com
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