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Corporate Integrity Agreements and Anti-Corruption Compliance Schedules

It is interesting to compare how the Justice Department handles compliance issues in different contexts.   

The Justice Department, with the Office of Inspector General/Health and Human Services, enters into Corporate Integrity Agreements to prevent off-label marketing violations, anti-kickback and False Claims Act violations.  CIAs are very detailed and prescriptive, and are enforced by the OIG using administrative procedures.  The CIA is not filed in court but administered by the OIG. 

In contrast, Schedule C is enforced by a court if it is part of a Deferred Prosecution Agreement, and by the Justice Department if it is part of a Non-Prosecution Agreement.  In the case of an NPA, the Justice Department’s only remedy is to file or refile a criminal case against the company which violates the NPA.

With the aggressive growth of healthcare fraud and corruption prosecutions, the number of requirements imposed by CIAs and Schedule C has increased dramatically.  Prosecutors and regulators are obviously frustrated by their perception (whether right or wrong) that companies are not taking compliance seriously.  As a result, the compliance requirements have become more detailed and prescriptive. 

A comparison of CIAs and Schedule C shows a number of similarities in purpose but not in the mechanisms to achieve compliance.  At bottom, CIAs and Schedule C seek to regulate or influence specific interactions between company representatives and a class of customers.  Adding to the complication, Schedule C also focuses on interactions between third parties, acting on behalf of a company, and foreign government officials. 

CIAs are focused on pharma and medical device marketing representatives and doctors or other service providers in order to prevent marketing representatives from promoting off-label uses, engaging in kick-backs or other improper influences.  Schedule C is intended to prevent improper payments to foreign government officials.

It is interesting to compare the specific mechanisms used in CIAs to more general requirements listed in Schedule C, particularly enhanced requirements.  CIAs provide some interesting ways in which to ensure compliance with the overall proscription. 

CIAs require detailed review and monitoring programs for interactions between sales representatives and health care providers and institutions.  In contrast, Schedule C has general requirements for monitoring activities of third party agents, consultants and distributors but there is no prescribed procedure for that requirement. 

Given the significant risk that third parties create for global companies, there are ways in which to increase a company’s ability to monitor such interactions, including new technologies (from the health care sector) for reporting or collecting data on a real-time basis on the substance of an interaction between a third party and a foreign government official; additional contractual obligations for reporting on a regular basis; and specific auditing programs of third parties as contemplated in Schedule C requirements in recent DOJ FCPA settlements.   

To help focus this comparison, I put together the following chart.  The specific details can vary among CIAs or Schedule C settlements but I tried to describe the general picture. 

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