Dive Brief:
- Sanofi has agreed to pay $25 million in a settlement with the Securities and Exchange Commission to resolve charges of corrupt payments in a number of countries across the Middle East, the agency announced Wednesday.
- The SEC claimed in a statement that Sanofi's "schemes spanned multiple countries and involved bribe payments to government procurement officials and healthcare providers in order to be awarded tenders and to increase prescriptions of its products."
- The French pharma neither admitted nor denied the findings, which were violations of the Foreign Corrupt Practices Act, according to the SEC.
Dive Insight:
Despite not admitting to the charges, Sanofi agreed to a cease-and-desist order. The company will pay out $17.5 million in disgorgement, $2.7 million in prejudgment interest, and a civil penalty of $5 million. It also agreed to a two-year period of self-reporting on the effectiveness of its enhanced internal controls and anti-bribery and corruption compliance program.
"Bribery in connection with pharmaceutical sales remains as a significant problem despite numerous prior enforcement actions involving the industry and life sciences more generally," said Charles Cain, chief of the SEC's Foreign Corrupt Practices Act unit, in the Sept. 4 statement.
"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 charges arose from an SEC-Department of Justice investigation spanning from 2006 to 2015 in Kazakhstan, Jordan, Lebanon, Bahrain, Kuwait, Qatar, Yemen, Oman, the United Arab Emirates and the Palestinian territory.
The SEC said Sanofi distributors in Kazakhstan took part in a kickback scheme to generate funds. These kickbacks, coded as "marzipan" in internal spreadsheets, were then used to bribe officials to award tenders. In the Middle East, the SEC accused Sanofi of various pay-to-prescribe schemes used to get healthcare providers to increase Sanofi product prescriptions.
"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," CEO Olivier Brandicourt in Sanofi's own Sept. 4 statement. "We will continue to strengthen internal controls, anti-bribery and corruption compliance programs, and our oversight and training of teams worldwide."
Sanofi isn't the first big pharma over the past few years to have been charged by the SEC for violating the FCPA.
In 2015, Bristol-Myers Squibb agreed to pay more than $14 million to settle with the SEC over charges that BMS China sales representatives gave Chinese healthcare providers gifts including cash and jewelry to secure and increase business.
And in 2016, GlaxoSmithKline paid $20 million and Novartis paid $25 million to independently settle charges of pay-to-prescribe schemes by their China-based subsidiaries. Biggest of all in 2016 was Teva Pharmaceuticals, which paid out a mammoth $519 million to settle parallel civil and criminal allegations after being charged for paying bribes to foreign government officials in Russia, Ukraine, and Mexico.
Things appear to have gotten better in recent years, as there were no pharma or biotech violations in 2017, and Sanofi one is the sole FCPA settlement thus far in 2018.