Pfizer To Pay $60M For Making Foreign Bribes
As promised, the US Securities and Exchange Commission has charged Pfizer (PFE) with violating the Foreign Corrupt Practices Act after finding various subsidiaries bribed doctors and other health care professionals employed by foreign governments in order to win business. The FCPA, you may recall, forbids US companies from bribing foreign government officials (read here).
The SEC alleges that Pfizer employees and agents in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales and increased prescriptions for its medicines. And they tried to conceal the bribes by improperly recording payments in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising, according to an SEC statement (read here).
At the same time, the SEC separately charged Wyeth, which Pfizer purchased three years ago, with its own FCPA violations. Pfizer and Wyeth agreed to separate settlements in which they will pay more than $45 million combined to settle the charges. And in what the SEC called a parallel action, the US Department of Justice says Pfizer HCP Corporation agreed to pay another $15 million penalty to resolve an investigation of FCPA violations.
The news, at worst, interrupted a year-to-date rise in Pfizer shares, as the company has been paring costs in an effort to make up for patent expirations on big drugs.
“Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,” Kara Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit says in the statement. “These charges illustrate the pitfalls that exist for companies that fail to appropriately monitor potential risks in their global operations.”
The settlement, which was expected after Pfizer disclosed the payments voluntarily to the SEC, come amid growing interest by the feds in foreign bribes. Last week, Teva Pharmaceuticals (TEVA) disclosed it received a subpoena (read here) and Bristol-Myers Squibb (BMY) received one a few months ago (see this). And last year, Johnson & Johnson (JNJ) was fined $70 million for bribing public doctors in several European countries – and paying kickbacks to Iraq – to illegally obtain business. Specifically, various J&J 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, and public doctors in Romania to prescribe J&J meds (back story).
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