Beware Sponsored Events and Honoraria: A FCPA Trap for the Unwary

Under the U.S. Foreign Corrupt Practices Act (“FCPA”), foreign health care professionals (“HCPs”) are considered “foreign officials” for purposes of the statute’s antibribery prohibitions and recordkeeping requirements. Most life sciences companies will have some sort of policy in place concerning kickbacks, and the conduct prohibited by such policies and the False Claims Act if undertaken in the U.S. risks breaching the FCPA if undertaken outside the U.S.

Several recent enforcement actions have included allegations that foreign HCPs received speaker fees or honoraria from pharmaceutical or medical device companies in violation of the FCPA. Most recently, the 2018 Sanofi enforcement action included allegations that an HCP was provided “with consulting, speaking, and clinical trial fees over a period of years despite the lack of documentation or other support to demonstrate the services had been provided.”

On November 16, 2020, the Department of Health and Human Services – Office of Inspector General released a Special Fraud Alert regarding Speaker Programs. While the Alert is specific to the Anti-Kickback Statute, U.S. life sciences companies should use the Alert’s recommendations to minimize FCPA risk given the FCPA enforcement theories and actions undertaken by the Justice Department. Specifically, as to foreign HCPs, U.S. life sciences companies should:

• Only pay HCP speakers fair market value for the speaking service and document how the company made a determination as to such fair market value. Paying above-market compensation or compensation that takes into account the volume or value of past business generated or potential future business generated by the HCPs creates significant FCPA risk.

• Ensure that company-sponsored speaker programs present significant substantive information to attendees and are not ‘no-show’ programs.

• Beware of providing meals exceeding a modest value and/or meals with alcohol.

• Hold programs and events at locations conducive to the exchange of educational information. Companies should be wary of sponsoring a large number of programs on the same or substantially the same topic or product, especially in situations involving no recent substantive change in the relevant information.

• Ensure that foreign HCPs attend programs on the same or substantially the same topics no more than once. Further, ensure that only HCPs and others with a legitimate business reason attend company-sponsored programs.

• Make sure the company’s sales and marketing units do not influence the selection of HCP speakers at a given event.