Foreign bribery penalties in US for drug makers might lack biteUS federal authorities have been casting a wide net in their efforts of weeding out the suspected giving of gifts and kickbacks to government officials and foreign doctors in order to gain an entry to new markets in Eastern Europe, Latin America and Asia. About eight of the top ten drug makers in the world, including Johnson &, Bristol- Myers Squibb Co and Pfizer Inc have disclosed these probes in U.S under the 1077 FCPA- Foreign Corrupt Practices Act.

Drug makers pay millions in penalties

This year, Pzifer agreed to a payment of $60 million as settlement for FCPA charges while last year, J & J reached a $70 million settlement and is on a track record of pocketing $10 billion in pure sales. J & J said that China, India, Russia and Brazil accounted for no more than 10% of the $65 billion sales that were reported last year. There is no doubt to the fact that quite a lot is at stake, especially outside the well established markets in US and United States and experts are saying that even the huge fines aren’t a deterrent as such.

To an average person, the $60 million fined to Pfizer may sound to be quite a huge amount of money, but the truth of the matter is that raising this money took not more than two days during its peal. This is simply a chump change to them. At its height, the cholesterol pill was a cash cow for them netting $13 billion in a year. According to Kara Brockmeyer, the Department of Justice and the SEC need to make considerable efforts of ensuring that the penalties charged are deterrent and appropriate. A FCPA repeat prosecution is yet to be realized. SEC majorly relies on various legal provisions, which call for profits to be disgorgement depending on penalties and ill gotten gains. Those companies reporting violations and ready to cooperate with authorities end up being rewarded with reduced penalties.

Brockmeyer told Reuters that he hated to think that these companies are viewing enforcement of actions as a cost of engaging in business. If the authorities find out this, they will increase the penalties considerably on such companies.

Paying the right away

U.S government sees a great potential for abuse in the business model of drug industry. Most of their marketing, research and development, distribution, sales and pricing have been happening in foreign countries. They often occur through big subsidiary chains and other kinds of operations put in place, which makes compliance a challenge. Companies subjected to FCPA probes spend a large deal of money investigating these charges which can make the final cost amount to hundreds of millions.