Daily Management Review

More Pharma Companies Expected To Settle Foreign Bribery Cases


A number of top pharma companies are being investigated for of the US Foreign Corrupt Practices Act (FCPA) – some for the second time.
The list includes names like GlaxoSmithKline, Teva Pharmaceutical Industries Ltd., Sanofi, AstraZeneca, UCB, Novartis, Novo Nordisk, Eli Lilly.
And the rumor is that after Bristol-Myers Squibb has settled its foreign bribery case with the US government more such settlements are in the anvil by companies who are being investigated.
A bigger squeeze on companies for foreign bribery practices meanwhile would be put in by the US Department of Justice. The Department of Justice is adding to the resources devoted to investigating foreign bribery cases and is focusing on large-value, high-impact matters, the Wall Street +Journal reported recently quoting a DOJ official. The number of FBI agents working on foreign corruption investigations has been tripled by the DOJ, the report said.
The allegations against Bristol-Myers was that the company’s majority-owned joint venture in China, BMS China, gave healthcare providers in China cash, jewelry, meals, travel, entertainment and sponsorships for conferences and meetings between 2009 and 2014.. the company settled the matter with the Security and Exchange Commission for $ 14 million.
“Red flags” indicating sales personnel were bribing healthcare providers in China were overlooked by the company, alleged the SEC. The claims from former BMS employees about improper payments were not investigated by the company and ignored similar concerns raised by internal audits.
Allegations of improper and illegal sales and marketing practices have been rising against the pharma companies earlier on plenty of occasions and there were signals and internal and external information on this issue.
The whistle blower-initiated cases alleging improper marketing practices in the US – including allegations concerning inducements paid to doctors and other healthcare professionals – that pharma companies have paid billions to US enforcement authorities to resolve are the most important ‘red flags’.
The pharma companies have simply exported improper practices they developed first in the US to international markets instead of cleaning up their act and taking action against the culprits.
Earlier, Eli Lilly and Pfizer had settled such allegations brought in by the FCA for $29 million and $60 million respectively in 2012. The settlement were reached by both the drug makers after those very companies paid hundreds of millions to the US to settle allegations of illegal kickbacks and other improper marketing practices.
One of the primary examples in this aspect is Glaxo which is by far the leading company to have paid the largest healthcare fraud settlement ever of $3 billion to the US in 2012 to resolve criminal and civil allegations of improper marketing practices. A couple of years later, the same company was forced to pay a settlement claim of nearly $500 million to China after a court found the local Chinese subsidiary of Glaxo guilty of bribing healthcare officials.
Both US and UK regulators are investigating the drugmaker’s practices in China, Poland, Jordan and Lebanon and market analysts are of the view that Glaxo is likely to pay millions more to settle bribery charges.
Another investigation is pending against Teva and any settlement with federal regulators is unlikely until 2016 at the earliest. Last year, the company paid $27.6 million to settle allegations that it had made payments to a doctor to induce the prescription of generic clozapine for Medicare and Medicaid patients despite potentially deadly side effects for elderly patients.
Coupled with the Justice Department’s decision to increase the resources it devotes to FCPA cases and the commitment combined with the SEC’s whistle blower enforcement efforts will attract well-placed company insiders who have detailed information about wrongdoing and will undoubtedly lead to many more foreign bribery cases.

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