Overseas Regulatory Approvals Bring Additional Risks

FCPA enforcement actions often focus on corruption at the marketing and sales level, where life science companies have discovered a myriad of ways to improperly market and sell their products. However, Supreme Court rulings surrounding disgorgements suggest that companies improperly obtaining product approval are putting their entire product line at risk, regardless of how compliant their marketing and sales actions are once approved.

The 2017 unanimous Supreme Court ruling in Kokesh v. SEC stated that disgorgements are to be classified as punishments, and as a result, subject to the five year statute of limitations. Whereas previous enforcement actions were left to a wide timeline of transactions, the ruling severely limits that window leaving the SEC in a time-crunch to quickly scrutinize a company's conduct in the five years immediately preceding disclosure. As a result, the SEC now has motivation to be much more aggressive with its "ill-gotten gains" calculations.

The increase in motivation married with the shortened window for enforcement could lead to trouble for any company under investigation having received improper regulatory approval within that five year period. In his latest article in Policy and Medicine, Overseas Regulatory Approvals Bring Additional Risks, FRA Director, Mike Trahar, takes a look at past disgorgement calculations and discusses the importance of compliance at every stage of product development, especially regulatory approval.