British Bribery Law Worries U.S. Drug Companies

By Patrick Corcoran on December 28, 2010

A new British anti-bribery law taking effect in April is spurring multinational companies to strengthen their compliance programs.

According to The Wall Street Journal, British officials may use the law — modeled after the U.S. Foreign Corrupt Practices Act but considered more stringent — to target pharmaceutical companies.

The Bribery Act, as the law is called, bars any company operating in Britain, whether foreign or domestic, from making an illicit payment not only to public officials, but also to private citizens or businesses. It also covers bribes between individual businessmen and applies, legal experts say, even when an individual making the payment doesn’t realize the transaction is a bribe.

Officials at Britain’s Serious Fraud Office point to investigations by the U.S. Department of Justice into charges of bribery against drug companies and medical device manufacturers as the sorts of cases that the new law would allow them to pursue. In August, for example, the Financial Times reported that the Department of Justice had initiated an investigation into pharmaceutical giants such as Pfizer and Merck for potentially illegal payoffs.

In addition to industries with a track record for illegal payoffs, firms from regions of the world with high incidences of corruption will also be targeted, the Journal reported.

UK officials have said that a robust compliance regime is the best way for a company to avoid being singled out. But while pharmaceutical companies and other firms scramble to strengthen their compliance procedures and otherwise prepare for the law’s implementation, a cloud of uncertainty regarding how zealously the law is to be enforced hangs over the activity.