Sarbanes-Oxley’s (SOX) whistleblower protections can create tricky issues for public life sciences and health care companies. Consider taking steps now to help mitigate these risks.
Life sciences companies are often well versed in addressing regulatory and quality issues that arise in connection with product recalls, inspections, clinical trials, and the like. But what about when these regulatory compliance matters also cross into the employment space? Is your U.S. public company prepared?
We have recently seen an uptick in SOX whistleblower retaliation allegations against life sciences and health care companies by regulatory, quality and medical personnel who have been disciplined or discharged. Often these complainants will, after the fact, recast a routine job function — such as expressing an opinion about a recall decision or clarifying clinical trial data — as a complaint about shareholder fraud to contrive a retaliation claim under SOX.
However frivolous these claims may ultimately be, they carry risk and consume resources. Accordingly, they serve as a good reminder that public life sciences and health care companies should have in place certain protocols to mitigate the impact of these claims should they arise. If not already in place, companies should:
Implement policies and procedures that encourage employees to report internally if they believe they’ve been made aware of a violation of law and instruct them how to do so. Those policies should include strong...
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