Novartis has faced years of investigations into its overseas conduct, including kickbacks probes in Greece and South Korea. Now, it’s admitting it paid doctors to use more of its products in certain countries—and agreed to pay $347 million for violating the U.S. Foreign Corrupt Practices Act.
The company will shell out $234 million to the Department of Justice and $113 million to the Securities and Exchange Commission to wrap up FCPA probes relating to conduct in Greece, Vietnam, South Korea and China.
The drugmaker "profited from bribes that induced medical professionals, hospitals, and clinics to prescribe Novartis-branded pharmaceuticals and use Alcon surgical products, and they falsified their books and records to conceal those bribes," DOJ assistant attorney general Brian Benczkowski said in a statement.
In Greece, Novartis' local subsidiary provided “improper benefits” to doctors between 2012 and 2015 to boost sales of its eye drug Lucentis and falsified records to conceal the scheme, according to the agreement. A deferred prosecution deal with its local subsidiary also covers conduct "related to a 2009 epidemiological study,” the drugmaker says. The deal doesn’t include allegations that Novartis bribed Greek politicians.
In Vietnam, former Novartis subsidiary Alcon Pte Ltd. entered a deferred prosecution agreement, again over "inappropriate economic benefits” to doctors and recordkeeping between 2011 and 2014. Novartis says a distributor ran the program.
Novartis itself entered a SEC settlement over recordkeeping infractions in Greece, Vietnam, South Korea and China.
With the agreements, “all outstanding FCPA investigations into the company are now closed,” general counsel Shannon Thyme Klinger said in a statement.
“Today’s settlements represent another milestone in our commitment to resolving legacy compliance issues and ensuring that Novartis truly lives its values,” she added.
Meanwhile, the company has faced a years-long probe over alleged kickbacks to doctors in the United States. The company last summer set aside $700 million to resolve that issue, but the deal has not yet been finalized.
Following years of scandals in Greece, South Korea and elsewhere, the company has pledged to improve its trust with society under CEO Vas Narasimhan. Among changes it’s implemented are adopting “principles-based” compliance policies and a “speak-up culture.”
Novartis’ FCPA deal is larger than many by Big Pharma companies over the last decade, but it isn’t the industry’s largest-ever FCPA settlement. Teva in December 2016 inked a $519 million FCPA settlement with U.S. authorities, eclipsing deals by some of the industry’s biggest players.
Pfizer entered a $60 million FCPA settlement in 2012, followed by a $14 million deal by Bristol Myers Squibb in 2015, a $5.5 million agreement by AstraZeneca in 2016, a $20 million deal from GSK in 2016 and a $25 million deal from Sanofi in 2018.
Alexion recently proposed a $25 million settlement as part of a 5-year probe into “grant-making activities” in numerous countries.