U.S. authorities have been looking into possible bribery at Sanofi subsidiaries in the Middle East for several years, and on Tuesday, both the government and drugmaker disclosed a civil settlement worth more than $25 million to close the matter.
Sanofi agreed (PDF) to pay more than $25 million to resolve charges that its subsidiaries in Kazakhstan and the Middle East paid bribes to win business, according to statements from the parties. The SEC said the schemes “spanned multiple countries” and included payments in exchange for prescriptions.
The company acknowledged an emerging markets bribery investigation in 2013, and in March disclosed that the DOJ wouldn’t be proceeding with its case. At the time, Sanofi noted that the SEC was still looking into the allegations.
The SEC charged that Sanofi violated record-keeping and internal accounting provisions in federal securities laws. Sanofi didn’t admit fault as part of the deal, but agreed to a cease-and-desist order. The company will pay $17.5 million in disgorgement, $2.7 million in prejudgment interest and a civil penalty of $5 million.
Under the deal, Sanofi will also enter a two-year self-reporting program to update the agency on the “effectiveness of its enhanced internal controls and anti-bribery and corruption compliance program,” the drugmaker said in a statement.
The investigation spanned the company’s activities in Kazakhstan, Jordan, Lebanon, Bahrain, Kuwait, Qatar, Yemen, Oman, the United Arab Emirates and the Palestinian territories from 2006 to 2015, according to Sanofi. In a statement, CEO Olivier Brandicourt said the company “requires all our employees to act with integrity and to follow the highest standards of conduct."
“We have worked diligently to strengthen our compliance program worldwide and we are pleased the DOJ and SEC recognized these efforts and our close cooperation," he added.
The case wasn’t the first time Sanofi has faced bribery allegations. In 2013, a German court convicted former Sanofi employees of bribery and ordered the company to pay €28 million ($39 million). Aside from the French drug giant, Novartis and GlaxoSmithKline are among other drugmakers to run into high-profile bribery scandals in recent years. Novartis, for instance, has dealt with a string of allegations in Greece and South Korea; investors recently urged the company to boost its oversight of staff.
Charles Cain, FCPA Unit Chief at the SEC Enforcement Division, said in the agency's statement that pharma bribes remain “a significant problem despite numerous prior enforcement actions involving the industry and life sciences more generally.”
“While bribery risk can impact any industry, this matter illustrates that more work needs to be done to address the particular risks posed in the pharmaceutical industry,” Cain added.
The Department of Justice, FBI and authorities in France assisted with the investigation, according to the SEC.
Aside from Sanofi, other large drugmakers have recently faced allegations of bribery in Iraq. Last fall, veterans and their families alleged in a lawsuit that Pfizer, Johnson & Johnson, Roche and AstraZeneca paid bribes to a terrorist-run Ministry of Health in order to win business. More recently, the companies have disclosed that the DOJ is investing the claims.
In a motion to dismiss, attorneys for the defendants said the companies "sympathize with plaintiffs, recognize their sacrifices, and are grateful to all who served.” But they argue the “claims are misguided, without support in U.S. law, and brought against the wrong parties in the wrong forum.”