Pfizer To Settle Bribery Charges

Drug maker, Pfizer, will be settling bribery charges, paying over $60 million to resolve United States government probes into if it paid bribes to secure overseas business.

The settlement, to be made public by the end of the year, is part of a governmental probe that has altered how overseas business is conducted with the drug industry, said The Wall Street Journal, citing U.S. anti-bribery regulations. Johnson & Johnson also settled bribery charges earlier this year, giving U.S. authorities industry practice details that could reveal how the Foreign Corrupt Practices Act (FCPA) is violated, said The Journal, citing court papers and those familiar with the investigations.

Pfizer said in its November 10 regulatory filing that it reached agreements in principle with the Securities and Exchange Commission (SEC) and the U.S. Justice Department (DOJ) over “potentially improper payments” made by its units and Wyeth, said the Journal, noting that Pfizer acquired Wyeth 2009. Negotiations are ongoing, said the Journal and it remains unknown if Pfizer or Wyeth will admit to wrongdoing.

The Journal noted that in 2004, Pfizer voluntarily contacted the DOJ and SEC over an internal investigation into “potentially improper payments” in Croatia. After acquiring Pharmacia Corp. in 2003, Pfizer unearthed possible corruption in its Eastern European operations; additional evidence of improper payments was revealed after Pfizer acquired Wyeth, said the Journal.

This April, Johnson & Johnson agreed to pay $70 million to settle allegations its subsidiaries paid bribes to Greek doctors who opted for Johnson & Johnson’s surgical implants, and Polish and Romanian doctors in exchange for contracts and agreements in which they would prescribe the company’s drugs, said The Journal. In a deferred prosecution agreement with the Department of Justice (DOJ), Johnson & Johnson admitted to violations of the anti-bribery law—but did not admit or deny civil accusations—and will avoid prosecution if the government is satisfied that it implemented changes to prevent future misconduct. According to the DOJ, Johnson & Johnson received a $17 million discount on a $21.4 million criminal fine for “substantial assistance in the prosecution of others,” the Journal reported.

Last year, we wrote that GlaxoSmithKline, Merck, Johnson & Johnson, and Eli Lilly were among a dozen medical device makers under investigation for possible violations of the FCPA. The Act bars U.S. companies from bribing government or corporate officials in other countries to win business, among other things. We have also previously explained that is illegal for drug and device makers to pay U.S. doctors consulting fees to market their products at medical conventions and other gatherings; however, in other countries, healthcare professional are often government employees, and such payments could constitute bribes might be violations of the FCPA. This would be especially true if the payments were not disclosed to oversees governments.

The FCPA was enacted in 1977 and prohibits firms from obtaining business as a result of paying out bribes to foreign officials, the Journal explained. The DOJ and the SEC collaboratively enforce the FCPA, which includes physicians and government-run overseas hospitals staff. The agencies could potentially find that some practices, such as financially compensating a physician to purchase a specific medication, are in violation of the Act if that physician is employed by a foreign state-owned institution, said the Journal.

Meanwhile, both drug makers helped in the probe that has impacted a number of key drug makers such as Merck & Co., AstraZeneca PLC, Bristol-Myers Squibb Co., and GlaxoSmithKline PLC, said the Journal. As a matter-of-fact, last year, four companies—which say they are cooperating with investigators—stated in regulatory filings, that they received letters of inquiry from the DOJ and SEC. Since, drug makers are looking to develop high-cost compliance programs and to identify those people who could be considered foreign officials, wrote the Journal.

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