Novartis settles bribery charges in China for $25m
pharmafile | March 24, 2016 | News story | Medical Communications, Sales and Marketing | Novartis
Novartis will pay $25 million to the US Government’s Securities and Exchange Commission to settle charges that it bribed healthcare professionals in China in a bid to increase sales.
The SEC issued a cease and desist order Wednesday, which said that between 2009 and 2013, employees and agents of Novartis subsidiaries “engaged in transactions and provided things of value to foreign officials, principally healthcare professionals (“HCPs”).”
The order claimed that these employees made varied payments and gifts to influence the HCPs to boost sales of Novartis drugs, as well as trying to cover up these actions by incorrectly recording the transactions in records. For example, some payments were recorded as legitimate expenses for travel and entertainment, conferences, lecture fees, marketing events, educational seminars, and medical studies.
“Novartis also failed to devise and maintain an effective system of internal accounting controls or an effective anti-corruption compliance program,” the SEC said.
The cease and desist order listed specific incidents, including one from 2011, where two sales representatives submitted fake receipts for around $8,100 as expenses, which were used to entertain and provide gifts to HCPs.
Another sales rep was said to have submitted a fake $1,154 receipt to purchase holiday gifts for 25 HCPs, but in fact had used the funds to pay for spa and sauna sessions for HCPs.
Regional sales managers were said to have approved both these purchases.
Novartis has paid to settle these charges without admitting or denying them, but has said that the alleged wrongdoing took place before it put in place compliance measures to prevent such activity.
In an emailed statement, company spokesman Eric Althoff said: “We believe these measures, which we review and update on an ongoing basis, address the issues raised by the SEC and reflect a broader initiative by Novartis to align and enhance our compliance standards globally.”
The agency said Novartis had co-operated with its investigation and noted the company had conducted its own “expansive review” into the allegations. “Novartis promptly took remedial steps to improve its internal controls at Novartis China,” the SEC said.
Joel Levy
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