In a November 2009 speech, Assistant Attorney General for the Criminal Division Lanny Breuer outlined an aggressive FCPA enforcement agenda targeting pharmaceutical and medical device companies. He noted that the depth of government involvement in foreign health systems, combined with fierce industry competition and an economic climate in which companies are tempted to invest fewer resources in compliance efforts, poses a significant risk of corruption.

Lanny Breuer meant what he said. The business community does not have to look for tea leaves to figure out where the Justice Department is heading with its FCPA enforcement program. If you look and listen carefully, they are telling you which industries they are focusing on and even disclosing how they are doing it.

What Lanny Breuer will not tell you is how and when they may be conducting proactive, undercover investigations which involve informants, undercover officers, and even wiretaps. But make no mistake the Justice Department is out there working hard to develop new industry-wide FCPA enforcement actions. They have been successful up to now and there is no reason for them to stop or alter its course. Who can argue against prosecuting foreign bribery cases? Of course, there are many issues at the margins as to how you do it, how you interpret the FCPA, and when enforcement actions make good public policy sense. That dialogue will always continue.

So, going back to the medical device and pharmaceutical industries, the Justice Department has an impressive record of prosecutions against the industry. In the last few years, the number of prosecutions and settlements has grown to include many major companies. 

Medical device and pharmaceutical companies operate in the global marketplace and typically are regulated by foreign governments. In addition, the pharmaceutical industry has made a concerted effort to move clinical trials to foreign countries. About 80 percent of all clinical trials now are conducted in whole or in part in foreign countries. Hospitals in many countries are state-owned and therefore create real risks for abuses in dealing with doctors and other professionals. For all of these reasons, the corruption risks are significant for companies in the health care industry.

What can we expect over the next several months? It does not take a rocket scientist to predict more cases against device and drug companies. The enforcement trend will continue, and companies will be settling more cases with hefty fines. The possibility of a proactive, undercover investigation is real in this industry given the extraordinary amount of cooperation among the international community.

For now, watch for new headlines and new reports.