FCPA Opinion Procedure Release: DOJ Does Not Intend to Take Enforcement Action Against "Requestor" Medical Device Manufacturer

28 August 2009 Publication

On August 3, 2009, the Department of Justice (“DOJ”) issued its first Foreign Corrupt Practices Act Opinion Procedure Release of the year, 09-01. Release 09-01 is in response to a request by a designer and manufacturer of a medical device. The Requestor’s competitors already operate and do business with the government of the country at issue, but the Requestor is not well known to the government as most of its sales have been in the private sector.

In order to introduce itself to the country’s government, Requestor met with a senior official (“Senior Official”) of a government agency (“Government Agency”) in March 2009. During that meeting, the Senior Official explained a program whereby the government planned to provide the type of medical devices produced by Requestor to private patients at a subsidized cost. However, in order to participate in this program, Requestor was informed that the Government Agency would have to endorse the specific product. As the Government Agency had no familiarity with Requestor’s devices, they would need to be evaluated before being endorsed. The Senior Official requested that sample devices be donated to government health centers for evaluation.

Requestor and the Government Agency tentatively agreed that 100 units would be equally distributed among ten experienced health centers in the country. These units, as well as standard follow-on support, would be provided free of charge. The approximate value of this donation would be $1.9 million. Under the agreement with the Government Agency, Requestor would be responsible for selecting the health centers and a group of health care professionals would select the individuals to receive the medical devices.

The 100 recipients would be selected from a list of candidates provided by the health centers. These candidates will be required to present a certificate of economic difficulty establishing their inability to pay. Additionally, close family members of the Government Agency’s officers or employees, working group members, or employees of the health centers who are participating in the selection process would be ineligible to be recipients unless they meet specific exemptions. As part of its request, Requestor promised to produce to DOJ any information regarding recipients allowed under these exemptions. Requestor also informed DOJ that it had no reason to believe that the Senior Official who suggested this plan would personally benefit from the donation.

Based on these facts, DOJ indicated that it does not intend to take any enforcement action with respect to this proposal. The Opinion Release explains that this is due to the fact that the medical devices fall outside the scope of the FCPA because the donated products will be provided to the foreign government, as opposed to any individual government officials. Further, DOJ noted the fact that the end-user of the product will be individual patients selected in accordance with the guidelines described above.