Healthcare is among the most penalized sectors when it comes to FCPA enforcement. Pharmaceutical, medical supply, and medical technology companies face extensive exposure to government officials due to high volumes of sales to government end-users and a heightened need for regulatory approvals. In addition to these typical FCPA risk factors, the healthcare sector presents unique risks. The DOJ and SEC pursue FCPA cases on the principle that healthcare practitioners (HCPs) in state-run healthcare systems should be considered “foreign officials” subject to the statute’s restrictions.
This extension of the “foreign official” designation creates two related problems. First, the overlap between public and private spheres makes it difficult to determine who such government-connected HCPs are. Second, because HCPs themselves often have multiple affiliations, identifying and mitigating against potential channels of illicit payments can be difficult
PSA has created a brief exploring the challenges that these dynamics present to conducting due diligence on third parties in the healthcare sector.