Editor's Note: This post has been updated with a response from Novartis.
Greek prosecutors continue their investigation against Novartis, which is at the center of a bribery and corruption investigation concerning allegations that the Swiss pharmaceutical company paid bribes to politicians in exchange for fixing the prices of its drugs at artificially high prices and increasing its access to the Greek market.
Details of the investigation were not made public, but Parliament last week named ten politicians alleged to be involved, who held office between 2006 and 2015, Greek media outlet, AMNA, reported. The politicians were identified in a report submitted by Tasia Christodoulopoulou, head of Parliament’s transparency committee and a lawmaker for governing party, Syriza.
The named politicians are:
Dimitris Avramopoulos, current European Commissioner for migration, for his tenure as health minister;
Yannis Stournaras, current central banker and former finance minister;
Former Prime Minister Antonis Samaras;
Former caretaker Prime Minister Panagiotis Pikrammenos;
Former health minister Andreas Loverdos;
Former health minister Andreas Lykourentzos;
Former alternate health minister Marios Salmas;
Former health minister Adonis Georgiadis;
Former finance minister Evangelos Venizelos and government vice-president; and
Former labour and social welfare minister Giorgos Koutroumanis.
According to prosecutors, the payment of kickbacks amounted to roughly 50 million euros, and involved the testimony of 20 individuals, AMNA reported.
In January 2017, Greek authorities raided Novartis’ offices searching electronic documents and files. The raid followed allegations made by certain Novartis employees that kickbacks were paid to more than 4,000 doctors and government officials in exchange for the promotion of Novartis drugs, Greek news agency, Protothema, reported.
Under Greek law, judicial authorities cannot directly prosecute politicians. Cases must first be referred to Greek parliament who will decide if the former ministers should be prosecuted.
Novartis has been plagued by several other kickback scandals. In November 2015, Novartis settled a civil fraud lawsuit for $390 million to resolve claims that the company gave kickbacks to specialty pharmacies in return for recommending two of its drugs, Exjade and Myfortic.
It was the third settlement in that lawsuit; in January 2014 and April 2015, two specialty pharmacies, Bioscrip and Accredo Health Group, agreed to pay a total of $75 million to resolve federal and state claims against them based on the same allegations. In total, the federal and state governments recovered $465 million based on the kickback allegations in its lawsuit.
Then in March 2016, Novartis settled an FCPA enforcement action with the SEC for $25 million after its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales. An SEC investigation found that employees of two China-based Novartis subsidiaries gave money, gifts, and other things of value to health care professionals, leading to several million dollars in sales of pharmaceutical products to China’s state health institutions.
The schemes lasted several years and involved certain complicit managers within Novartis’ China-based subsidiaries. According to the SEC order, Novartis failed to devise and maintain a sufficient system of internal accounting controls and lacked an effective anti-corruption compliance program to detect and prevent these schemes.
As a result, the improper payments were not accurately reflected in Novartis’ books and records. The SEC order found that Novartis violated the FCPA’s internal controls and books-and-records provisions.
Novartis consented to the order without admitting or denying the findings and agreed to pay $21.5 million in disgorgement of profits plus $1.5 million in prejudgment interest and a $2 million penalty. It also agreed to provide status reports to the SEC over the next two years on its remediation and implementation of anti-corruption compliance measures
One month later, in April 2016, Novartis announced in a securities filing that now Korean prosecutors have also initiated a criminal investigation against it. In that securities filing, Novartis said that in the first quarter of 2016, “the Seoul Western District Prosecutor initiated a criminal investigation into allegations that Novartis Korea utilized medical journals to provide inappropriate economic benefits to healthcare professionals.”
“Novartis is aware of reports relating to our business practices in Greece and ongoing investigations by both the Greek and U.S. authorities,” the company stated. “As the investigations are ongoing, we can’t comment on the allegations raised, nor will we comment on the speculation we are seeing in the media, which appears driven in large part by the selective leaking of portions of a confidential and preliminary investigative file. This file has to date not been shared with Novartis, nor has Novartis received any notification from either the public prosecutor in Greece or the Parliament related to the investigation. Neither Novartis nor any of our current associates have received formal allegations from the authorities, let alone an indictment connected with this investigation.”
“While Novartis continues to cooperate fully with the Greek and U.S. authorities, we have also been conducting our own comprehensive internal investigation,” the company stated. “We are determined to fully understand the situation and accept responsibility for any actions that fell below our high standards of ethical business conduct. If any wrongdoing is found we will take fast and decisive action and do everything possible to prevent future misconduct.”
“At the same time, publicity around the case has included many sensational and unfounded claims in a politicized debate of which Novartis should not be a part, often directed with little or no sensitivity at our employees. We believe this is highly inappropriate and will defend our people and company against these claims.”