Plea Agreements Including Compliance Measures and Probation: A New Trend?
Pharmaceutical Law Update
Over the past few years, the criminal investigation of pharmaceutical companies by the Department of Justice (DOJ) has been a central topic of discussion for those in the drug and medical device industry. Oftentimes, those investigations result in the entry of an agreement that requires the payment of fines and a Corporate Integrity Agreement (CIA) with the Office of Inspector General at the Department of Health and Human Services (HHG-OIG). Most recently, an investigation by the DOJ resulting in a plea agreement with a major pharmaceutical manufacturer has added a new layer to this landscape – the inclusion of compliance elements and a probationary period in the Plea Agreement. This new layer raises important considerations that pharmaceutical companies and their attorneys should evaluate.
Last month, the DOJ announced a global resolution of pending state and federal governmental investigations into the sales and marketing practices of a major pharmaceutical company. The resolution resulted in the entry of a Plea Agreement pursuant to which the company will likely be required to enter into a CIA with the HHG-OIG.The Plea Agreement also takes the unique step of incorporating compliance measures within the agreement and imposing a probationary period with certain conditions for probation. Specifically, under the “Conditions of Probation ” section of the Plea Agreement, the company’s chief executive officer must, after conducting a review of the effectiveness of the company’s compliance program, submit a signed certification to the probation office stating that to the best of his or her knowledge, the company’s compliance program continues to include the compliance policies set forth in the plea agreement, and to the extent a reportable event has occurred, the company has fully complied with the reporting requirements of the Plea Agreement. The section also sets forth requirements for an annual review and entry of a resolution by the company’s Board of Directors.
In accordance with the “Compliance Measures” section, the company must institute a Compliance Program that includes policies that ensure that: (1) the incentive compensation for sales representatives does not inappropriately motivate off-label promotion; (2) Continuing Medical Education grants are approved by a division separate from sales and marketing, controlled by a third-party CME provider and must only be provided if they foster increased understanding of scientific, clinical or healthcare issues; (3) medical information letters are unsolicited, accurate and unbiased; and (4) specific requirements surrounding the funding, purposes, disclosures and approval of clinical trials are implemented.
Should the company fail to comply with any provision of the Plea Agreement – including the compliance and probationary measures – the DOJ can take a number of actions, including declare the Plea Agreement void, file any charges that were filed (or could have been filed) with respect to the matters involved in the underlying investigation, or not be bound by the “Completion of Prosecution” section of the Agreement.
Ultimately, the Agreement includes an added layer of oversight and reporting requirements and underscores the need for fulfillment of compliance obligations. It also makes clear the continued obligations of company executives in overseeing actions of their companies. Only time will tell whether the terms of this Plea Agreement, along with its compliance and probationary measures, are foreshadowing what is to come with respect to future DOJ investigations and settlements with pharmaceutical companies. Should this be the new trend, companies that are the subject of DOJ investigations will likely need to implement a rigorous compliance policy with adequate protections, as an inadequate compliance policy could lead to a breach of a plea agreement.