Following a vivid and lively debate in France, the French Joint Committee voted the Sapin II anti-corruption enforcement law1 into effect on Tuesday, November 8, 2016.
Mandatory establishment of a robust compliance program
Sapin II requires pharmaceutical companies with more than 500 employees and annual gross profits of 100 million EUR or more to have a thorough compliance program in place to mitigate potential corruption.
Typically, such compliance programs call for companies to have clear policies, processes and procedures in place to preemptively (and retroactively) mitigate potential corruption risks, as well as risk assessments detailing and prioritizing these potential risks. Additionally, to comply with the new law, companies are now required to implement an alert system that helps personnel share unapproved actions internally. Lastly, the law stipulates that companies train their employees and management on the firm’s anti-corruption policies and potential risks.
Creation of the Agence Française Anti-corruption and penalties related to compliance deficiencies
France is creating a national regulatory body to detect and counter corruption: the Agence Française Anti-corruption. Not only does the new legislation require companies to create and implement a compliance program, but it also specifies penalties if it is determined that the compliance program is not robust enough to meet the Agence Française Anti-corruption (AFA) standards. While the US does not have explicit criteria to evaluate the effectiveness of compliance programs, the AFA has in fact developed criteria and will be evaluating the quality and efficacy of compliance programs.2
Additionally, the law enhances penalties already in place by placing sanctions on non-compliant companies including three years of AFA supervision and a hefty fine.
Protection of whistleblowers
The new law ensures better protection for whistleblowers by prohibiting retaliation from the company, while also allowing individuals to report corrupt actions anonymously. However, contrary to the whistleblower program in the US, the new French legislation does not provide financial compensation for those who report wrongdoing. Nevertheless, it is expected that this reinforced protection will encourage witnesses of corruption to alert authorities.
Deferred prosecution agreements
The law will introduce deferred prosecution agreements that will provide opportunities for civil settlements when a company is found to have breached anti-corruption law. In theory, this could allow French authorities to close more cases in a shorter time period. However, it is still too early to tell if this will happen in practice as there are no incentives, such as reduced sanctions, for companies to self-report.
Like other countries, France’s legal framework is dynamic and is the result of increased scrutiny of potential corruption within Life Sciences organizations. Slowly but surely, France is striving for tougher regulations that will be followed by more investigations from the government. Life Sciences companies based or operating in France should therefore proactively establish robust compliance programs, backed up with comprehensive and reoccurring risk assessments.