AstraZeneca has often been pointed to as a company that knows how to succeed in emerging markets like China, and CEO Pascal Soriot has made growth in these areas as one element of in his 5-part growth program. But the SEC suggests AstraZeneca’s success in emerging markets hasn’t all been about business savvy. Bribery played its part as well, the agency said.
AstraZeneca ($AZN) will shell out $5.5 million to settle charges that its units in Russia and China bribed healthcare workers to sell more drugs, The Wall Street Journal reports. The U.K. drugmaker, of course, didn’t acknowledge any wrongdoing and by current standards, the payment doesn’t amount to much, but it and other recent cases illustrate that Big Pharma continues to push the limits of ethics around the world.
The case, brought by the SEC under the Foreign Corrupt Practices Act, alleged that AstraZeneca’s units in Russia and China paid off state-employed health-care workers, including doctors. The payments were disguised as things like payments for faked speaker events, the SEC said.
Without any accounting controls in place at the time, the payments were disguised as justifiable business expenses, according to the WSJ. The payments track back at least to 2005 and continued, at least through 2010, the SEC alleged. The agency acknowledged the company beefed up its compliance program before the probe began and has continued to do so.
This is the second settlement this year between the SEC and a Big Pharma player over bribery in China that dates back some years. In March, Swiss drugmaker Novartis ($NVS) agreed to pay $25 million to settle charges that it also used faked payments to entice Chinese state healthcare workers to buy more drugs until 2009.
Novartis said at the time that it had put those practices behind it and pointed out the case predated many new compliance standards it has put into place. But there are newer suggestions of such shenanigans by Novartis in Asia. Earlier this year, authorities in South Korea raided Novartis' offices, confiscating documents and account books. They reportedly were looking into "rebates" paid to local doctors--in the form of cash and other incentives--that might be construed as illegal kickbacks designed to juice sales.
Of course, the biggest settlement of this kind came in 2014 when GlaxoSmithKline ($GSK) paid a $489 million fine to settle an investigation by Chinese authorities into hundreds of millions in inducements for doctors and other healthcare officials, many of them booked as travel and meeting expenses. Since then allegations about similar practices have popped up against GSK in other emerging markets, including Iraq, Syria, Jordan, Poland and Romania.
- read the WSJ story (sub. req.)
Emerging markets still beat elsewhere for Big Pharma growth, with AstraZeneca in the lead
Novartis wraps up China bribery probe with $25M payment to SEC
Prosecutors raid Novartis South Korea in kickbacks probe