New British Bribery law will mean trouble for American pharmaceutical firms

Jan 05, 2011   

A new British anti-bribery law taking effect in April, in certain ways more stringent than the Foreign Corrupt Practices Act (“FCPA”) in the United States, is worrying American drug companies enough begin  strengthening existing compliance programs in anticipation of the new law.

In recent years, the U.S. Department of Justice has exacted severe monetary penalties against pharmaceutical companies for violating the FCPA, which prohibits U.S. companies from engaging in bribery of foreign government officials. A recent Wall Street Journal article found here reported that, not surprisingly, British officials may specifically target pharmaceutical companies for enforcement of this new law once it is in effect. The new law is known simply as “The Bribery Act”.  

The Bribery Act prohibits any company operating in the United Kingdom, whether foreign or domestic, from making any illicit payments to foreign government officials. However, unlike the U.S. FCPA, The Bribery Act also prohibits illicit payments to private citizens or businesses, and even applies if the person making the payment does not even realize he or she is paying a bribe.

Notably, the Bribery Act does not include a crucial exemption included in the FCPA: Facilitation payments, or “grease” payments, permissible under the FCPA under certain circumstances, are not allowed under The Bribery Act.  As such, conduct which may be perfectly legal for an American pharmaceutical company based in Britain under the FCPA, may be illegal under The Bribery Act.

A stringent compliance regime, along with an understanding of both the FCPA and The Bribery Act is necessary for a company engaged in international business to avoid the traps and pitfalls both these laws can erect to harm its business. Our firm is experienced in conducting internal investigations to ferret out potential problems and to suggest policies and procedures to steer clear of violations.