by Tom Schoenberg and Drew Armstrong
August 7, 2012
Pfizer Inc., the world’s
biggest drugmaker, agreed to pay
$60.2 million to settle foreign bribery cases it brought to U.S.
authorities involving alleged payments paid by employees and agents
Pfizer entered into two agreements with the Securities and Exchange
Commission (SEC) and the New York-based drugmaker reached a deferred
prosecution accord with the Department of Justice, according to
filings today in federal court in Washington.
The settlements stem
from payments and gifts Pfizer Inc.’s
business units made to doctors in Eastern Europe and the Middle
East, the U.S. said.
U.S. law enforcement authorities have
been probing drugmakers including,
Teva Pharmaceutical Industries
AstraZeneca Plc (AZN)
Bristol-Myers Squibb Co. (BMY)
GlaxoSmithKline Plc (GSK),
...for possibly breaking an overseas
anti-bribery law that bars employees or their agents from paying
bribes to foreign government officials to obtain or retain business.
Today’s settlements stem from payments
and gifts Pfizer said its foreign units made to government-employed
doctors and workers in eastern Europe, China and the Middle East,
according to the filings.
“These improper payments were
variously made to influence regulatory and formulary approvals,
purchase decisions, prescription decisions, and to clear
customs,” according to a complaint filed by the SEC.
The SEC said the payoffs were made “without the knowledge or
approval of officers or employees of Pfizer, but the inaccurate
books and records of Pfizer subsidiaries were consolidated in the
financial reports of Pfizer.”
Pfizer alerted U.S. authorities in 2004 after probing the claims.
More payments were found when the drugmaker bought its Wyeth unit in
“The actions which led to this
resolution were disappointing, but the openness and speed with
which Pfizer voluntarily disclosed and addressed them reflects
our true culture and the real value we place on integrity and
meeting commitments,” Amy Schulman, Pfizer’s general counsel,
said in an e-mailed statement.
“We expect every colleague across
Pfizer to adhere to the highest standards of conduct.”
Pfizer shares fell 2.1 percent to $23.74
at the close of New York trading.
The Justice Department charged the Pfizer HCP Corp. unit with two
criminal counts, conspiracy to violate the Foreign Corrupt Practices
Act (FCPA) and a violation of the FCPA’s anti-bribery provisions.
Prosecutors agreed to defer prosecution and drop the charges after
two years if Pfizer continues to cooperate and take remedial steps.
The settlements must be approved by a
Prosecutors agreed to a criminal fine of $15 million, a 34 percent
reduction, because of the company’s “extraordinary cooperation”
after voluntarily disclosing the payments, and its “extraordinary
and ongoing remediation.”
Pfizer disclosed in regulatory filings last year that it had reached
agreements in principle with the Justice Department and the SEC “to
resolve matters concerning potentially improper payments” made by
the company outside the U.S., without specifically citing the
Foreign Corrupt Practices Act.
Pfizer has been voluntarily cooperating with government
investigators since 2004, the company said.
Governments in other countries also are
investigating potentially improper payments, Pfizer said in the
The settlements announced today include Pfizer operations in eight
the Czech Republic
Wyeth settlement, over its nutrition
business, was for China, Indonesia, Saudi Arabia and Pakistan.
Pfizer agreed for two years to submit reports to the SEC on the
company’s anticorruption efforts and the status of implementing
compliance measures, according to court filings. The company won’t
be subject to direct monitoring by the Justice Department of the
Wyeth agreed to settle without admitting or denying the bribery
allegations, according to a court filing by Wyeth vice president,
In Bulgaria, local representatives spent $28,000 to invite
government doctors on “incentive trips” to Greece, as a reward for
the physicians who were the biggest prescribers of Pfizer’s
products, Pfizer admitted according to the Justice Department
They also paid $17,000 to send doctors
to medical conferences, again in exchange for commitments to
prescribe Pfizer drugs.
In Croatia, the unit there had used a consulting agreement with a
government doctor to help influence which drugs were allowed to be
sold in the country, paying the physician in cash and travel
expenses, Pfizer admitted.
Pfizer also admitted to what was called the “hospital program,” in
Russia, where doctors were given a 5 percent kick-back on certain
“Pfizer Russia used the Hospital
Program to make cash payments to individual government
healthcare professionals to corruptly reward past purchases and
prescriptions of Pfizer products, and to corruptly induce future
purchases and prescriptions,” the Justice Department said in the
Pfizer’s Russian unit also used
intermediary companies to pay off doctors and government officials,
the company admitted.
The 1977 Foreign Corrupt Practices Act makes payments to foreign
officials to win business illegal. It was created after a SEC
investigation in the 1970s found that 400 U.S. companies had paid
$300 million in bribes abroad, according to the Justice Department.
Bristol-Myers, based in New York, said April 26 it received a
subpoena in March from the SEC and the company is cooperating.
Glaxo said in its 2010 and 2011 annual reports that the SEC and the
Justice Department were conducting an industry-wide investigation
into whether drug companies bribed officials in,
Glaxo is among the companies that
received inquiries, and it is cooperating, the London-based company
Stephen Rea, a spokesman, said
Aug. 6 the company had nothing to add.
“We continue to cooperate with the
ongoing investigation,” he said by e-mail.
AstraZeneca received inquiries from the
SEC and the Justice Department, according to the London-based
company in its 2010 and 2011 annual reports.
The company also,
“is investigating indications of
inappropriate conduct in certain countries, including China,”
according to the 2011 report.
The investigations are continuing and
the company is cooperating, Sarah Lindgreen, an AstraZeneca
spokeswoman, said by e-mail on Aug. 6.
Manufacturers of medical devices also have reported getting requests
in the past year for information from U.S. prosecutors and
regulators on compliance with the act in Europe and South America.
The law bars corporate employees or
their agents from paying bribes to government officials to obtain or
Olympus Corp., the world’s largest maker of endoscopes, said Aug. 1
it had uncovered “irregularities” at a doctor- training program in
Brazil that may have violated the U.S. law.
Smith & Nephew Plc (SN/), Europe’s
biggest maker of artificial hips and knees, agreed in February to
pay $22.2 million to settle U.S. allegations that it paid bribes to
doctors employed by government hospitals or agencies in Greece.
In April 2011,
Johnson & Johnson (JNJ), the world’s biggest
health-products maker, agreed to pay $70 million after admitting
that the company bribed doctors in Europe and paid kickbacks in Iraq
to win contracts and sell drugs and artificial joints.
Biomet Inc., a closely held maker of medical devices,
agreed to pay $22.9 million to settle U.S. accusations it bribed
foreign doctors to win business.
The Justice Department and SEC are investigating allegations that
Wal-Mart Stores Inc. approved as much as $24 million in bribes in
Mexico. Wal-Mart disclosed the payments to the Justice Department
and the SEC, according to a December 2011 regulatory filing.
The Pfizer cases are,
U.S. Securities of Exchange Commission v.
Pfizer Inc. (PFE), 12-cv-01303
U.S. Securities of Exchange
Commission v. Wyeth LLC, 12-cv-1304
U.S. v. Pfizer HCP Corp.,
12-cr-00169, U.S. District Court, District of Columbia