More Pain, Higher Up the Chain Is On the FCPA Enforcement Horizon

The US Department of Justice (DOJ) has long had its sights set on the Life Sciences industry. While little has changed in the marketplace since the first large-scale settlements of 2008, the DOJ's focus on Life Sciences has only gotten more rigorous. With many key players in the industry now veterans of FCPA enforcement action, the DOJ is likely to increase the level of scrutiny and penalties for repeated misconduct.

As sophistication of enforcement and compliance programs has grown, so has the criminal art of improper payments. With sales representative's travel and entertainment claims no longer easily embellished, today's improper payments often flow through third parties. These third parties utilize complicated co-marketing, distribution, or other service contracts and often provide little financial visibility. While third party agreements, like sports teams sponsorships, aren't explicitly improper, the potential for risk is there. Tied in with the fact that these agreements are often secured or agreed upon at higher levels, we can expect future FCPA enforcement to directly implicate individuals in upper-level management as the DOJ continues to focus on individual accountability.

In FRA's Michael Trahar's recent article for Policy and Medicine Compliance Update, he discusses a few popular third party agreements for Life Sciences and their potential risk for enforcement, paying special attention to the potential for enforcement towards upper-level management.