A recent study of “life sciences companies” (i.e. biotechnology, medical device, and healthcare companies) revealed that False Claims Act qui tam liability is a primary issue discussed in general counsels’ offices. The study was sponsored by Foley Hoag and conducted by ALM Legal Intelligence.
According to Kevin Iredell, vice president of ALM Legal Intelligence, “[t]he survey revealed a surprising disconnect between the concern among legal departments over False Claims Act compliance and the internal procedures designed to address those risks.” Iredell observed that “[o]ne in four respondents did not have internal compliance policies in place, despite the fact that one in three had been subject to an FCA investigation in the past five years, with the Department of Justice siding with the whistleblower in half of those cases.”
One would think that life science companies would take notice, given that the Department of Justice recently reported that it recovered almost $6 billion from qui tam cases in 2014 and that the number was expected to grow next year.
According to ALM, the study’s other key findings included:
• Over half of the general counsels surveyed listed the False Claims Act as one of the top three risks their companies face.
• Potential “off-label” claims for marketing products for unapproved uses also ranked as a concern.
• Most general counsels cited damage to the company’s reputation as their chief vulnerability.
• Virtually all respondents said their companies offer compliance or ethics training to executives and senior managers, and most require the training.