Drug manufacturers Pfizer and Pfizer H.C.P. Corporation have reached settlements with the Securities and Exchange Commission (SEC) and the Justice Department totaling $60 million. The fines will resolve charges that the company and its subsidiaries paid bribes to foreign doctors and health care workers to increase sales of their medications.
The allegations date back to 2001 and involve the drug maker's violations of the Foreign Corrupt Practices Act, a bill which outlaws bribing foreign government officials. In many overseas countries, doctors are employees of the government and thus fall under the scope of the act. Kara Brockmeyer, chief of the SEC unit assigned to enforce the Foreign Corrupt Practices Act, said, "Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers. These charges (against Pfizer) illustrate the pitfalls that exist for companies that fail to appropriately monitor potential risks in their global operations."
Under the settlement, Pfizer will pay the SEC $45 million and Pfizer HCP will pay the justice Department $15 million. The alleged bribery activities covered by the settlement occurred in countries from Bulgaria to Italy, Russia and China. In China, for example, Pfizer created a "points program" where physicians could receive gifts like cellphones and tea sets based on how many prescriptions they wrote for Pfizer medications. Wyeth, a subsidiary of Pfizer, made cash payments and offered gifts to government doctors who recommended their nutritional supplements in China, Indonesia and Pakistan. The company then created fake invoices to hide their improprieties.
Pfizer is not alone in addressing charges of foreign bribery. Last year, Johnson & Johnson paid a $70 million fine after admitting they bribed European doctors to prescribe their medications. The Justice Department and SEC are also actively pursuing foreign bribery and inappropriate marketing cases against several other drug makers. Merck, Eli Lilly and Bristol-Myers Squibb have all publicly admitted that they are cooperating with investigations into their overseas practices.