There is no doubt about it: drug companies and medical device manufacturers spend a large amount of money in getting their product FDA approved. In recent years, manufacturers conducting more clinical trials abroad, including Europe. Congress began invoking a 1977 law, the Foreign Corrupt Practices Act (FCPA), to return the clinical trial industry to the United States.
According to the Department of Justice (DOJ), the FCPA, was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.
In addition, bribes are prohibited that, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.
What motivated Congress to enact the FCPA? According the Department of Justice, the result of SEC investigations in the mid-1970’s, over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. The abuses ran the gamut from bribery of high foreign officials to secure some type of favorable action by a foreign government to so-called facilitating payments that allegedly were made to ensure that government functionaries discharged certain ministerial or clerical duties. Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.
Drug makers in the United States hire doctors as consulting salesmen to sell to other doctors; but, Europe doctors usually are government employees, so hiring a consulting doctor could be considered an illegal bribe based on FCPA definitions. The key is to determine reasonable compensation for the sales consultant; any excess compensation constitutes a bribe.
According to the New York Times, the government is investigating a dozen drug and device makers, and they are concerned that doctors who manage clinical trials in Europe are highly paid, and so may be sweeping bad trial results under the rug. The government has not made fraud charges, but they are suspicious. Numerous companies have settled bribery accusations in recent years, but the amounts were small.