In a November 2009 speech before the Tenth Annual Pharmaceutical Regulatory and Compliance Congress in Washington D.C., Assistant Attorney General Lanny A. Breuer put big pharma on notice that DOJ intended to aggressively investigate potential violations of the FCPA within the pharmaceutical and medical device industry.  The DOJ’s FCPA team appears to be backing that warning up with a broad investigation into drug trial-related activities occurring in foreign locations.

The focus of the investigation appears to be whether drug companies conducting clinical trials outside the United States may be offering improper inducements to influence the outcomes of those trials, either directly or through third parties.  Utilizing data from foreign clinical trials is an increasingly prevalent pattern among companies seeking approval of new drugs.  According to a June 22, 2010 report from the Department of Health and Human Services’ Office of Inspector General that may have been a trigger for this investigation, it is “estimated that between 40 percent and 65 percent of clinical trials investigating FDA-regulated products are conducted outside the United States.” The report cited a survey that found “the 20 largest United States-based pharmaceutical companies were conducting one-third of their clinical trials exclusively at foreign sites.”  It further noted that “[e]ighty percent of approved marketing applications for drugs and biologics contained data from foreign clinical trials,” with 78 percent of all subjects who participated in clinical trials enrolled at foreign sites and 54 percent of all trial sites located outside the United States.  The report was critical of the FDA’s monitoring of foreign clinical trials, and noted that the reliance on such trials appears likely to grow.  

The link to the FCPA, which prohibits bribery of foreign officials, is the expansive view the DOJ has taken as to who may be considered a “foreign official,” particularly in the context of countries where healthcare and government can be closely intertwined.  In his November speech, Mr. Breuer said “it is entirely possible, under certain circumstances and in certain countries, that nearly every aspect of the approval, manufacture, import, export, pricing, sale and marketing of a drug product in a foreign country will involve a ‘foreign official’ within the meaning of the FCPA.” 

It has been reported that a number of large drug manufacturers have already been targeted by the DOJ’s pharma initiative, with several having received letters of inquiry.  Given that Mr. Breuer has noted that a significant focus of this enforcement effort will be the investigation and prosecution of senior executives, it can be expected that many drug companies will soon be taking a fresh look at how they handle key aspects of their non-U.S. activities, including their affiliations with third-party clinical research organizations (“CROs”), due diligence for those and other third party partners and representatives, and relationships with government-affiliated or state-run academic and health care facilities.