Cubist Subsidiary Under Investigation For Possible FCPA Violations

September 15, 2014 — The Foreign Corruption Practices Act (FCPA) is an effective tool for discouraging multinational corporations from unfairly making contracts abroad by paying off foreign government officials or their family members with travel, gifts, cash or “research grants.” To redress the problem of foreign bribery, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 offers whistleblowers substantial financial rewards for collaborating with the government to end illegal FCPA violations.

SEC Probe Of Drug Manufacturer Involves Possible Foreign Bribery Of Doctors Running Clinical Trial With “Grant” To Research Laboratory Abroad

Cubist Pharmaceuticals (Cubist) has recently revealed in an SEC 10-Q filing that Optimer Pharmaceuticals, a subsidiary that Cubist acquired in 2013, is under investigation for possible FCPA violations relating to payments made in 2011 to a foreign research laboratory.
In many countries abroad, doctors and medical officials often work for the government and are thus “foreign officials” under the FCPA. It is not uncommon for these foreign doctors to supplement their incomes with bribes from multinational pharmaceutical companies and medical device manufacturers. The supplemental income may take the form of traditional cash and gifts or it may include attendance at medical conferences in posh locations and “research grants.”
U.S. drug makers reportedly have been cutting costs and regulatory oversight by offshoring their research and clinical trials. Many of these drug trials are conducted in foreign laboratories owned by the state. In some instances, the doctors and medical personnel who run the labs receive their expected supplemental income in the form of a “grant.” This grant money is at the heart of the current FCPA investigation of Cubist’s subsidiary.

Insiders Notify SEC About Foreign Bribery Schemes

While Waters & Kraus is not involved in this particular FCPA investigation, we are representing whistleblowers in similar matters involving foreign bribery violations. If you have comparable claims against your employer or another business, contact us by email or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can collaborate with the government to redress illegal foreign bribery schemes. Our experienced lawyers, such as Paul Lawrence in the firm’s Washington D.C. area office and Louisa Kirakosian in the California office, are devoted to working to level the playing field in international business operations.

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