At least a dozen major pharmaceutical and medical device companies are under investigation by the federal government and securities regulatory agencies as to whether these companies made illegal payments to doctors and health officials in foreign companies to push their products to patients.

In recent years, federal officials have charged drug manufacturers and medical device companies for making payments to "encourage doctors abroad to order or prescribe their products." According to a recent New York Times article, U.S. pharmaceutical companies routinely hire practicing doctors as consultants to market drugs and devices to their colleagues at medical conventions and gatherings. These practices are legal in the U.S. as long as companies do not pay doctors to write prescriptions for their products. However, in the rest of the world, most doctors are government employees and consulting arrangements which are legal in the U.S. may violate the Foreign Corrupt Practices Act. Especially if the payments are large in size and these arrangements are not disclosed to the governments.

Federal officials continue to investigate these companies for the unusually large payments made to "foreign doctors conducting a growing number of clinical trials that drug and device makers conduct abroad. Interestingly, over 80 percent of the drugs approved for sale in 2008 involved trials in foreign countries and 78 percent of all people who participated in clinical trials were enrolled at foreign sites." The federal government fears that because many of these trials are being held overseas that federal auditors may not frequently visit these sites and research controls may be non-existent.

As a result, federal prosecutors are investigating whether these payments made to doctors who conducted these studies abroad were justified and legal. If federal investigators find evidence that the results of these trials were influenced by payments to doctors abroad, there will continue to be major charges filed against these companies and potentially increased federal supervision of these trials in the future.

Source: New York Times "U.S. Inquiry of Drug Makers is Widened" 08/13/2010