Clinical Trials
Foreign Corrupt Practices Act risk is generally a function of a company – whether directly through employees or indirectly through third parties – having a point of contract with a “foreign official” in the global marketplace.
Points of contact are often industry/sector specific.
For healthcare companies (broadly speaking) points of contact may occur in the context of a clinical trial. Putting aside for the moment the DOJ/SEC’s dubious enforcement theory that employees of many foreign healthcare systems are “foreign officials” under the FCPA, several FCPA enforcement actions have involved, in whole or in part, clinical trials.
Clinical Trials
The recent enforcement action against Novartis (the second time the company has resolved an Foreign Corrupt Practices Act matter) concerned, in part, a clinical trial.
According to the DOJ’s information, the “clinical trial scheme” involved Novartis Greece making “improper payments to HCPs [healthcare professionals] related to an epidemiological study intended to increase sales of certain Novartis-branded prescription drugs.” According to the information, Novartis Greece “falsely recorded these payments … as advertising and promotion expenses in Novartis Greece’s internal accounting records.”
The SEC’s administrative order further found: “Novartis Korea employees in the neuroscience business unit devised a local non-interventional clinical study with 17 pre-selected HCPs to improve relationships with those HCPs. The study was organized in May 2013 through a local medical journal with Novartis Korea providing the list of HCPs to participate and the $100,000 funding necessary to complete the study. Novartis Korea recorded the funding to complete the study as advertising expenses and failed to have the study reviewed and approved by medical affairs as required by internal procedures.”
As highlighted below, prior to the Novartis enforcement action several other FCPA enforcement actions also referenced clinical trials.