Fraud and Abuse Compliance in the U.S.: Compliance Programs Impact the Bottom Line

Donielle McCutcheon and David Ludlow discuss how an uptick in False Claims Act enforcement actions is leading to life sciences companies doubling down on their compliance programs at an earlier stage in clinical development.

In 2023, we anticipate that life sciences companies will need to double down on their U.S. healthcare fraud and abuse compliance programs to ensure that they are adequately resourced and empowered to prevent, detect, and address potential instances of noncompliance. This is particularly important given recent guidance issued by the DOJ, coupled with an uptick in FCA enforcement actions arising from the covid-19 pandemic. This guidance includes a September 2022 memorandum from Deputy Attorney General Lisa Monaco announcing additional revisions to the DOJ’s existing corporate criminal enforcement policies and practices. The DOJ memorandum stresses that an effective compliance program can have a “direct and significant impact” on the terms of a corporation’s potential resolution with the DOJ. Assistant Attorney General Kenneth A. Polite Jr. also made remarks in 2022 that emphasized the DOJ’s continued focus on evaluating compliance programs during investigations.  

In 2023, we expect to see an increasing number of emerging drug and device companies prioritize compliance programs at earlier stages in clinical development. Life sciences companies are realizing that the true value-add of an effective compliance program is not just that it supports an organization’s ability to comply with applicable law and mitigates the severity of an organization’s resolution terms with the DOJ and other government agencies, but that it has an impact on a company’s bottom line. For example, companies are achieving cost savings by establishing better oversight and monitoring of their quality, manufacturing, and sales and marketing teams as well as through a more collaborative and productive workforce with increased transparency and open lines of communication. A robust compliance program is also a proven strategic advantage in M&A due diligence, as it enables an acquiring or investing company to more readily gain comfort in a target company’s operations and practices. Those companies that continue to invest the time and resources in developing and enhancing their compliance programs in 2023 will reap the benefits in enhanced corporate resilience.


  • Those life sciences companies that anticipate an upcoming transaction should ensure that their compliance programs are ready for due diligence. They must also be ready to remedy compliance issues identified during due diligence in a timely manner. 
  • Life sciences companies should review current guidance from the DOJ and the U.S. Department of Health and Human Services, Office of Inspector General, and evaluate and update their compliance programs accordingly.
The views expressed in these articles are exclusively those of the authors and do not necessarily reflect those of Sidley Austin LLP and its partners. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.
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