FCPA corporate enforcement policy and international collaboration
Impact on life sciences companies


Anti-bribery and corruption being an important Biden administration foreign policy focus,(1) it is expected that the US Department of Justice (DOJ) will step up its work with foreign governments. It will likely increase its Foreign Corrupt Practices Act (FCPA) activity, too. This article looks at what this means for life sciences companies.

Multinational life sciences companies should review and, where necessary, update and enhance their FCPA compliance programmes. These companies should stay alert to the administration's efforts when issues are identified and should brace themselves for potentially major international investigations.

During this process, life sciences companies may identify potential anti-bribery and corruption issues that might be a candidate for self-disclosure. But there are factors unique to these companies that should be considered first.

FCPA corporate enforcement policy and international collaboration

Throughout the past five years, changes in FCPA enforcement have largely been driven by the FCPA enforcement pilot programme, known as the "FCPA corporate enforcement policy". The policy was created in April 2016 "to motivate companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs." It includes a general, but critical, benefit for engaging in all three steps: a potential declination.

The fraud section reports that the policy has resulted in an:

increase in the number of voluntary self-disclosures, and better cooperation and remediation by companies in connection with corporate criminal investigations. To date, the FCPA Unit has announced fourteen declinations pursuant to the Pilot Program and CEP.

However, independent studies show more mixed results. According to one review, between 2016 and 2020, only 25% of disclosing companies received full credit for meeting all three elements needed to qualify for the maximum benefit: voluntary self-disclosure, cooperation and remediation.

It is possible that this low figure is driven by whistleblowers reporting potential violations before the companies do. This may also reflect a lack of adequate remediation or the result of a lack of specific guidance regarding the benefits of cooperation. But it is also noteworthy that less than half (44%) of the fraud section's 2018 resolved actions involved a voluntary self-disclosure. In 2020, the number of matters initiated by a self-disclosure dropped to 17%.

Impact on life sciences companies

Life sciences companies have more touchpoints with government officials than companies in other industries. And this exposes them to more potential FCPA risk. For one thing, they need their products approved for use in foreign jurisdictions. This means engaging with government officials for those approvals.

Life sciences companies conduct numerous clinical trials in countries where the health system is largely nationalised. Again, this results in interactions with scientists and other officials who might be considered foreign officials under the FCPA.

Moreover, life sciences companies often sponsor educational and speaker programmes that involve health care professionals, including those associated with public hospitals or government entities – so those health care professionals might be considered foreign officials under the FCPA, too.

When compounding these multiple touchpoints with government officials, there is the need to often rely on third parties, such as clinical research organisations or site management organisations. This results in interactions that a life sciences company may not fully control. Yet the company may still be liable if the third party engages in misconduct acting on the company's behalf.

Recognising these risks, many companies have spent the past few years enhancing their compliance programmes and third-party contracting practices to improve compliance with anti-bribery and corruption laws.

However, no compliance programme is fool-proof, and issues will be identified. While the policy emphasises self-disclosure and cooperation, life sciences companies in particular should consider the following factors as they decide whether to engage the DOJ under the programme.

What is the true cost-benefit of self-disclosure?
This analysis can cut in two ways. First, while self-disclosure may help a company get a declination, that doesn't mean it won't be subject to disgorgement or large civil penalties by the US Securities and Exchange Commission.

Given the ill-gotten gains on some products and the potential time period covered, that amount could be substantial and as burdensome as a significant criminal fine. Further, in other circumstances, self-disclosure may not result in disgorgement. But it might invite an investigation that costs the company far more, including in terms of reputational harm, than the value of the issue being disclosed.

Could there be collateral consequences?
If, despite fulfilling all the elements of the policy, the DOJ pushes for a criminal conviction, it could result in substantial collateral consequences, exposing the company to exclusion.

The Department of Health and Human Services (Office of the Inspector General) has been taking a more aggressive position on exclusion in recent years. It emphasises that exclusion is mandatory for criminal convictions involving "fraud, theft, or other financial misconduct". Given the books and records violations often triggered by FCPA investigations, mandatory exclusion is a real possibility if a company is forced to accept a criminal conviction related to anti-bribery and corruption.


The increased FCPA enforcement activity and the policy have changed the enforcement environment. They are designed to encourage self-disclosure, cooperation and remediation. But, because the risk profiles for life sciences companies are unique, a different set of questions must be asked.

For further information on this topic please contact Gejaa Gobena or Greg Noonan at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600) or email ([email protected] or
[email protected]​ The Hogan Lovells US LLP website can be accessed at

Ricky Sachar, Global Head of Government Investigations at Viatris, contributed to this article.


(1) For further information see "Biden administration releases first US strategy on countering corruption" and "Bribery and corruption enforcement around the world".