Two Regulatory Bodies Are Better Than One in Policing the Pharmaceutical Industry
The Food and Drug Administration (FDA) isn’t the only government regulatory body cracking down on fraud and other misconduct in the pharmaceutical industry. According to a recent speech by Securities & Exchange Commission (SEC) Enforcement Principal Andrew Ceresney, pharmaceutical companies must also contend with the primary federal securities regulator if their financial dealings are not aboveboard. Ceresney’s speech highlighted three main “problem” areas for pharmaceutical companies: bribery, disclosure, and internal control. Violations of the Foreign Corrupt Practices Act, which regulates transparency in international dealings particularly with concern for the payment of bribes, are prevalent in the industry due to the sheer frequency of international contact between drug companies and international doctors, hospitals, government agencies, and manufacturing plants, which may lead to undue pressure on medical professionals to prescribe certain drugs. Misleading corporate disclosures to company investors are often a source of SEC ire, including false information on FDA regulatory approval of a drug and inaccurate clinical testing results. Finally, Ceresney warned pharmaceutical companies to maintain and develop their internal controls to engage senior management and create meaningful discussions.