Novartis ($NVS) faces bribery allegations in yet another country. A whistleblower has accused the Swiss drugmaker of paying bribes in Turkey to increase prescriptions of its drugs, Reuters reports.
The bribes were paid through a consulting firm, the anonymous whistleblower claims, and they helped Novartis gain market advantages worth $85 million.
Novartis says it's investigating the allegations, leveled in a 5,000-word email to CEO Joe Jimenez and a board member in charge of audit and compliance, Srikant Datar, Reuters reports.
According to the whistleblower, as cited by Reuters, Novartis paid Alp Aydin Consultancy $290,000 plus costs during 2013 and 2014, to persuade government-run hospitals to add its drugs to their formularies, and to win government approval to change the names of two drugs to avoid price cuts in other countries.
Novartis says it's looking into allegations that Aydin used Novartis money to pay Turkish health officials and that its Turkey unit hired relatives of doctors who wrote a high volume of prescriptions for its meds.
"We take any allegation of inappropriate behavior extremely seriously and investigate all allegations thoroughly," spokesman Eric Althoff told the news service. "As a matter of policy, we don't comment on such investigations even if the complainant decides to make them public."
Aydin was able to persuade hospitals to adopt Novartis drugs for multiple sclerosis, respiratory disease and juvenile arthritis, the whistleblower said in the email, Reuters reports. Those moves were worth $20 million to the company, the email said.
Aydin no longer does consulting work for the company, Novartis says. The company dropped the firm after Turkey's Social Security Institution launched an investigation into its practices.
Last week, Novartis agreed to pay the U.S. Securities & Exchange Commission more than $25 million to settle allegations of bribery in China.
And last month, South Korean law enforcement raided Novartis' offices there, confiscating documents and account books, The Korea Herald reported at the time. At issue are "rebates" paid to local doctors--in the form of cash and other incentives--that might be construed as illegal kickbacks designed to juice sales, the newspaper said.
Separately, in Australia, the Sydney Morning Herald this week rounded up payments by pharma companies there for catering and travel expenses, finding that the Swiss pharma paid for 5 oncologists to attend a four-day cancer conference in Vienna, with expenses and 14 nights' accommodation totaling AU$32,569 (about $25,000).
It's not just Novartis under scrutiny in a variety of countries for alleged kickbacks and bribes. As pharma has moved into emerging markets, where most healthcare workers are government employees--many of them underpaid--some typical marketing techniques have run afoul of anti-corruption laws. Local practices presented even larger pitfalls.
Meanwhile, U.S. officials have stepped up enforcement under the Foreign Corrupt Practices Act and local prosecutors are conducting their own crackdowns. Most notably, GlaxoSmithKline ($GSK) shelled out $489 million to settle bribery charges in China in 2013 after a long, painful investigation.
Several other multinational drugmakers also faced Chinese investigations as well, but no charges or fines resulted. U.S. watchdogs launched their own investigations into bribery in China, as evidenced by Novartis' recent settlement with the SEC. Bristol-Myers Squibb ($BMY) agreed to pay $14.7 million last year to settle SEC charges that its Chinese joint venture shelled out cash and other gifts as incentives to increase scripts for its drugs. Earlier this month, BMS said it would stop all doctor payments in China.
A range of other drugmakers have settled claims--or are under investigation for--FCPA violations, including Pfizer ($PFE), Johnson & Johnson ($JNJ), Teva Pharmaceutical Industries ($TEVA) and AstraZeneca ($AZN).
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