Alexion Pharmaceuticals on Thursday reached a $21 million civil settlement with the Securities and Exchange Commission to resolve charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act concerning bribes made by subsidiaries to foreign government officials in numerous countries.
“Companies in frequent contact with foreign officials need to ensure that their internal controls appropriately address such risks,” said Melissa Hodgman, an associate director in the SEC’s Division of Enforcement.
As previously disclosed, Alexion first received a subpoena from the SEC’s Enforcement Division in May 2015, in which it requested information related to “grant-making activities and compliance with the FCPA in various countries.” The SEC order provided more details of the wrongdoing.
According to the SEC order, from 2010 to 2015, Alexion Turkey paid Turkish government officials to improperly influence them to approve patient prescriptions and provide other favorable regulatory treatment for Alexion’s primary drug, Soliris. The order also found that, from 2011 to 2015, Alexion Russia bribed Russian government healthcare officials to favorably influence the regulatory treatment of, and the budget allocated to, Soliris and to increase the number of approved Soliris prescriptions.
According to the SEC order, Alexion’s internal accounting controls failed to detect or prevent the improper payments made by Alexion Russia and Alexion Turkey. “Alexion had insufficient internal accounting controls to detect and prevent these payments and to provide reasonable assurances that these transactions were recorded accurately in the books and records of these subsidiaries, which were consolidated into Alexion’s books and records,” the SEC order states.
The payments continued through 2015 “due to Alexion’s inadequate internal accounting controls and the lack of an effective anti-corruption compliance program,” the SEC order states. “As a result, Alexion was unjustly enriched by over $14 million.”
Specific to anti-bribery compliance, “Turkey employees had received limited training,” the SEC order states. Furthermore, despite Alexion’s knowledge of the risk of doing business in Turkey, it failed to devise and maintain internal accounting controls that were sufficient to provide reasonable assurances that payments to third parties—including consultants and healthcare providers—were supported by adequate documentation and were for legitimate purposes, the SEC said.
Moreover, Alexion’s subsidiaries in Brazil and Colombia failed to maintain accurate books and records, “including by creating or directing third parties to create inaccurate financial records concerning payments to patient advocacy organizations,” according to the SEC order.
In determining to accept the offer, the SEC said it considered remedial acts undertaken by Alexion and cooperation afforded to the Commission staff. Such remediation efforts included:
- Strengthening and expanding its global compliance organization;
- Enhancing its policies and procedures regarding payments to third parties, including the implementation of a centralized system to track and monitor third-party payments;
- Revamping its HCP engagement process and oversight;
- Enhancing its internal audit function;
- Conducting proactive compliance market reviews; and
- Improving training provided to employees regarding anti-corruption.
Without admitting or denying the SEC’s findings, Alexion agreed to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA and pay $14.2 million in disgorgement; $3.8 million in prejudgment interest; and a $3.5 million civil penalty.
In October 2015, Alexion said it also received a request from the Department of Justice “for the voluntary production of documents and other information pertaining to Alexion’s compliance with the FCPA.” In May 2020, it announced the Justice Department had closed its inquiry into these matters.