FCPA Enforcement Paused At DOJ, But Biopharma Shouldn't Pause Compliance

By Ben Comer, Chief Editor, Life Science Leader

Over the last 15 years, biopharmaceutical compliance departments, and chief compliance officers, have been better resourced, with more direct reporting lines to company leadership, than ever before. A big part of that is thanks to the many Corporate Integrity Agreements (CIAs) companies entered into with government agencies in the late 2000s and up through the present (for background, see my 2013 article in Pharmaceutical Executive). The expanding scope of CIA requirements over the years — while derided by some as overly expensive “regulation by enforcement” — have nevertheless succeeded in raising the compliance bar across the biopharmaceutical industry, for U.S.-based companies as well as global organizations with American affiliates.       

Now that HHS Inspector General Christi Grimm has been fired (she is suing), and enforcement of the Foreign Corrupt Practices Act (FCPA) was  paused on February 10 by a Trump administration Executive Order (EO), some global country heads might be considering whether a little extra grease, or a suitcase full of cash (or flash drive full of crypto), could help push their product sales numbers into quarterly target range.

Perish the thought, and not just because bribery and kickbacks are unethical.   

SEC Enforcement Of FCPA

There are other excellent reasons for companies to remain compliant with the FCPA, which is ultimately “not going away,” according to two former Department of Justice (DOJ) attorneys. The first good reason is that the EO pauses DOJ enforcement of criminal prosecutions; FCPA-related civil and regulatory enforcement is the province of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), two agencies that jointly enforce the FCPA with the DOJ.

The DOJ, SEC, and CFTC can and often do refer cases to one another, and the SEC and CFTC can initiate enforcement actions independently, noted Albert Stieglitz, a Washington DC-based partner at Alston & Bird, and a former federal prosecutor. So just because the DOJ is pausing FCPA criminal enforcement — for 180 days, with an option to extend the pause for an additional 180 days, per the EO —doesn’t mean that the SEC and/or CFTC can’t proceed with civil enforcement actions. “The EO doesn’t say anything about SEC or CFTC enforcement,” says Stieglitz. 

The EO also requires Attorney General (AG) Pam Bondi, who was confirmed and sworn in as AG on February 5, to “issue updated [FCPA] guidelines or policies.”  Would the SEC and CFTC be required to adopt those updated guidelines and policies, if issued by the AG? “Not according to the language of the EO,” says Stieglitz, “but we will have to wait and see how those other agencies might decide to align with whatever approach the DOJ decides to take to FCPA enforcement.”

The Trump administration nominated Paul Atkins to chair the SEC, but he has not yet been confirmed. For a list of SEC enforcement actions in FCPA cases, click here — more than a few involve biopharma companies.    

Global Footprint Equals Global Enforcement Risk

A second good reason not to backslide on FCPA compliance is the fact that several other countries and regions have anti-bribery and corruption laws applicable to biopharma companies that operate globally. “There are other statutes out there that are just as applicable, such as the U.K. Bribery Act,” says Kurt Erskine, government investigations chair at Polsinelli, and former U.S. Attorney for the Northern District of Georgia. “Any company that has an international footprint, or does business anywhere outside of the U.S., needs to consider other enforcement acts and other enforcement bodies they could encounter.”  

The Trump administration’s overarching argument for pausing and reviewing the FCPA is that the law, or at least “overenforcement” of the law, makes U.S. companies less competitive on the world stage. The FCPA prohibits companies “from engaging in practices common among international competitors, creating an uneven playing field,” according to a White House fact sheet. It’s true that industry criticism of the FCPA has sometimes been that it makes U.S. companies less competitive, since companies based elsewhere don’t face the same constraints and strictures, says Erskine. “I think the new DOJ administration is going to hear those comments, and it’s going to be a part of the FCPA review process … I would expect [DOJ] to want to have a dialogue about that, which may shape enforcement efforts in the future.”

Stay Vigilant

It is not yet clear how the DOJ’s approach to FCPA enforcement will change, and biopharmaceutical companies would be wise to continue investing in and maintaining strong compliance departments and procedures.     

“You can’t have an on the shelf compliance program,” says Erskine. “It has to be a living, breathing, robust program that is led by a compliance officer who’s empowered to take certain steps and make reports.” When it comes to compliance, “best practices remain best practices,” says Stieglitz.