OIG Signals Importance of Board-Level Compliance Committee in J&J Corporate Integrity Agreement

November 13, 2013

In the just issued Johnson & Johnson Corporate Integrity Agreement (CIA), the Office of Inspector General (OIG) has, for the second time in less than a year, required that a company maintain a committee of the Board of Directors with specific responsibility for oversight of the company’s corporate compliance program. By the terms of the J&J CIA, the company’s Regulatory, Compliance and Government Affairs Committee (RCGAC) existed prior to the effective date of the CIA and J&J must maintain the RCGAC for the duration of the CIA. Importantly, the CIA requires that the RCGAC include independent members.

Similarly, in December 2012, the OIG required that Amgen’s Board-level Corporate Responsibility and Compliance Committee (CRCC) be responsible for oversight of the Amgen corporate compliance program. Like J&J’s RCGAC, the CRCC was in existence prior to the effective date of the Amgen CIA. Unlike J&J’s RCGAC, the Amgen CIA does not require that the CRCC include independent members.

Also unlike the Amgen CIA, the J&J CIA requires that the company engage a Compliance Expert to conduct a Compliance Program Review, or in other words, an evaluation of the effectiveness of the J&J corporate compliance program. According to the J&J CIA, the Compliance Expert must be independent of J&J and possess “expertise in compliance with Federal health care program and FDA requirements.” The Compliance Expert must create both a work plan for the review and a Compliance Program Review Report that includes recommendations for the J&J Compliance Program.

The concept of a compliance expert to evaluate the effectiveness of a corporate compliance program is not unique to the J&J CIA. As I discussed in a previous blog, the Bayer, Novartis, Forest, Ortho-McNeil-Janssen, and Synthes CIAs all require compliance program review by an independent compliance expert.

What is unique, however, is the coupling of the requirement of a compliance program review by an independent compliance expert with the requirement that a designated Board committee have responsibility for oversight of the compliance program. Under the J&J CIA, the RCGAC is specifically responsible for reviewing the Compliance Program Review Report prepared by the Compliance Expert as part of its evaluation of the effectiveness of the J&J compliance program.

The J&J RCGAC – like the Boards of many companies subject to a CIA – must annually adopt a resolution summarizing its evaluation of the effectiveness of the company’s compliance program efforts. The resolution must specifically state that the RCGAC “has reviewed the results of a Compliance Program Review, including the Compliance Program Review Report prepared by a Compliance Expert with expertise in compliance with Federal health care program and FDA requirements.” The Boards of the other companies required to engage a compliance expert must adopt resolutions containing similar language.

What this coupling of review by an independent compliance expert with designated Board committee responsibility for oversight of the compliance program means going forward remains to be seen. Could this signal an approach by the OIG where independent compliance program oversight by a Board-level committee dedicated to compliance program oversight becomes the norm in future CIAs?




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