Public life sciences companies uniquely positioned as SOX retaliation defendants

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 anti-retaliation provisions, which make clear that retaliating against an employee for raising concerns is strictly prohibited and will result in discipline. Internal reports should, in the first instance, be handled by someone who has no control or influence over the whistleblower’s employment status. A complaining employee’s supervisors should be advised of complaints only if and to the extent they need to know, for example, to conduct a proper investigation.

  • Ensure that internal complaints are investigated by individuals who are trained and experienced to conduct such investigations. The right investigator can be situation-dependent, but could include human resources personnel, compliance personnel, inside counsel or outside counsel.

  • Adopt internal procedures to ensure that adverse job actions are taken for legitimate business reasons. If an adverse action is contemplated against an employee who is known to have made an internal complaint, consider consulting with counsel.

Your public life sciences or health care company may not be able to prevent SOX claims, but it can hedge against exposure by being aware of these types of claims and taking proactive measures to be prepared should they arise.

Next steps

Our teams routinely advise on developing internal best practices across the life sciences and health care sector. Our Master Drug Compliance Program provides pharmaceutical and biotech companies with a comprehensive set of compliance policies that are always kept up to date. For more information, please visit


Please contact the Hogan Lovells attorneys with whom you regularly work for additional information.


Authored by David Baron


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