Pfizer, the world’s biggest drug company (at least until their blockbuster cholesterol drug Lipitor truly loses its patent protection for real) has reached a legal agreement in principle to resolve a foreign bribery investigation. A final deal could be struck by the end of the month, according to an SEC filing reported on Pharmalot. Three months ago, Pfizer officials said they had “voluntarily” provided information about “potentially improper payments” made by unspecified Pfizer and its Wyeth subsidiaries in connection with sales activities “in countries other than the U.S.”
The other countries were not named.
The move, as described by Pharmalot, comes amid increased scrutiny by the U.S. government into the pharmaceutical industry and its interactions with foreign health care systems.
“In late 2009, the head of the Justice Department’s Criminal Division warned drugmakers that there will be more criminal enforcement against interactions with foreign officials as they seek violations of the Foreign Corrupt Practices Act (FCPA).”
And he apparently meant it.
In April, the drug giant Johnson & Johnson was fined $70 million for bribing doctors in several European countries – and paying kickbacks to Iraq – in order to illegally obtain business.
The FCPA apparently forbids U.S. companies from bribing foreign government officials. Perhaps J&J sales execs didn’t know this.
Johnson & Johnson units paid bribes to:
- public doctors in Greece who chose J&J surgical implants
- public doctors and hospital administrators in Poland who awarded contracts to J&J
- public doctors in Romania to prescribe J&J meds
And J&J subsidiaries – including DePuy and Janssen Pharmaceutica – also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program, according to an SEC complaint.
Besides the $70 million fine to settle these claims, J&J is also paying $8 million to resolve an investigation by the United Kingdom Serious Fraud Office into its DePuy unit.
“The doctors and administrators working for public facilities in Greece, Poland, and Romania, who ordered or prescribed J&J products, were rewarded with cash and inappropriate travel, among other goodies. And J&J subsidiaries, employees and agents used slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man to carry out the bribery.
Four years ago, by the way, Johnson & Johnson made a “voluntary disclosure” to U.S. authorities about improper payments, which were made by unspecified foreign subsidiaries in connection with the sale of medical devices in a pair of unnamed countries.
Meanwhile, J&J’s CEO Bill Weldon says this:
“I know that these actions are not representative of Johnson & Johnson employees around the world who do what is honest and right every day, in the conduct of our business and in service to patients and customers worldwide. We will continue to demonstrate that Johnson & Johnson is a company that embraces responsible corporate behavior.”
Allow me to use my 37+ year background in the public relations field to translate that PR-speak into plain English on Bill’s behalf:
And as Pharmalot went on to explain:
“Of course, a few other J&J employees did conduct a surreptitious recall of numerous over-the-counter problems in an attempt to paper over system manufacturing problems. A congressional probe labeled this the case of the Phantom Recall, and tens of millions of products have since been recalled.
“The episode led to a consent decree and caused a loss of trust among consumers and investors; hurt sales; reduced employee bonuses; prompted government probes and lawsuits, and a reorganization at the McNeil Consumer Healthcare unit.
And over the past year, at least five other drugmakers, including Merck and Eli Lilly, received letters as the U.S. governent seeks to uncover any FCPA violations.
Other countries are also probing bribes. For instance, Pfizer noted in its filing that investigations are under way by authorities in other countries.
Last August, AstraZeneca received a criminal indictment in Belgrade, Serbia, over allegations that local AstraZeneca employees offered alleged bribes to physicians at the Institute of Oncology and Radiology, according to a filing made with the U.S. Securities and Exchange Commission.
The indictment follows the arrests last year of several officials at the Institute for Oncology and Radiology of Serbia, including director Nenad Borojevic and representatives from several pharmaceutical companies, including AstraZeneca and Roche, on suspicion of accepting and giving bribes totaling about $1.4 million.
An AstraZeneca spokesman told Pharmalot:
“We intend to vigorously defend the matter and have filed a number of pending preliminary procedural objections that ask the Serbian criminal court to dismiss the indictment.”
Earth to AstraZeneca: see above story from Johnson & Johnson.