The Securities and Exchange Commission on Tuesday announced that Paris-based pharmaceutical company Sanofi has agreed to pay more than $25 million to resolve charges that its Kazakhstan and Middle East subsidiaries made corrupt payments to win business.
“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, FCPA Unit Chief, SEC Enforcement Division. “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.”
According to the SEC order, the 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. In Kazakhstan, distributors were used as part of a kickback scheme to generate funds from which bribes were paid to officials to ensure that Sanofi was awarded tenders at public institutions. The kickbacks were tracked in internal spreadsheets, where they were coded as “marzipans.” In the Middle East, various pay-to-prescribe schemes were used to induce healthcare providers to increase their prescriptions of Sanofi products.
The SEC’s order finds that Sanofi violated the books and records and internal accounting controls provisions of the federal securities laws. Without admitting or denying the findings, Sanofi agreed to a cease-and-desist order and to pay $17.5 million in disgorgement, $2.7 million in prejudgment interest, and a civil penalty of $5 million.
In determining to accept the offer, the Commission said it considered remedial acts promptly undertaken by Sanofi. During the investigation, for example, Sanofi provided regular briefings regarding the facts developed in its internal investigation in Kazakhstan, Levant, and the Gulf, and with respect to other countries. Additionally, Sanofi “timely conveyed the facts it learned in the course of its investigation, including facts that the Commission would not have been able to readily and independently discover, produced and highlighted particularly relevant documents, promptly responded to additional requests by the Commission staff, and provided translations of documents as needed,” the SEC stated.
Sanofi also provided information regarding its remedial efforts, enhancements to its compliance program, and implementation of initiatives. Prior to the Commission’s investigation, Sanofi had begun independently enhancing its compliance program by, among other things, developing a centralized compliance program, revamping its internal controls and procedures over healthcare professionals (HCP) expenditures, increasing the number of its compliance officers globally, enhancing the operation of local compliance committees, and placing compliance personnel in high-risk local markets.
Additionally, it enhanced its policies governing interactions with HCPs and government officials, gifts, travel, meetings, congresses, contributions, and investigator sponsored trials (ISTs); anti-corruption training, audits, and due diligence procedures for third-party agents; and monitoring for certain Sanofi-sponsored events for HCPs. Sanofi also said it has terminated 121 employees, including senior local business managers, accepted resignations from another 14 employees, and disciplined 49 employees.