Pfizer agrees to pay $60M to settle foreign bribery case

August 7, 2012

Pfizer Inc. agreed Tuesday to pay $60 million to settle charges alleging that some of its foreign subsidiaries bribed doctors and health-care officials in order to gain regulatory approval for the company’s drugs and boost sales in those countries.

The Securities and Exchange Commission and the Department of Justice, which brokered separate settlements with Pfizer, said the New York-based pharmaceutical giant flagged regulators to some improper payments in 2004 and cooperated with federal investigators. No one at Pfizer headquarters knew of the bribery, regulators said.

The SEC negotiated two civil settlements — one with Pfizer and another with Wyeth, which Pfizer purchased in 2009 — for a total of $45 million. The settlements resolve charges of misconduct in about a dozen countries, including Bulgaria, Croatia, Kazakhstan and Russia. Under the Justice Department deal, Pfizer agreed to another $15 million in penalties after admitting that the company paid $2 million in bribes to foreign government officials and reaped $7 million in profits as a result.

“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,” said Kara Brockmeyer, who heads the SEC unit that enforces the Foreign Corrupt Practices Act, which makes it a crime to bribe foreign government officials.

In its complaint, the SEC alleged that Pfizer’s misconduct dates to 2001 and detailed some of the violations in a country-by-country breakdown.

The company’s China subsidiary, for instance, created programs that enabled government doctors to accumulate points based on the number of Pfizer prescriptions they’d written and then redeem the points for medical books, cellphones and other gifts.

Pfizer’s China employees also used travel incentives to bribe doctors, the SEC complaint said. In 2006, a Pfizer China marketing manager told his regional sales manager that the company would foot the travel bill for two doctors attending a conference in Australia only if the doctors promised to use no fewer than 4,200 injections a year and to prescribe a Pfizer product to more than 80 percent of their patients.

On Tuesday, Pfizer said that it alerted federal regulators to improper payments made by a Pfizer affiliate in Croatia immediately after learning of those payments in 2004.

“The actions which led to this resolution were disappointing, but the openness and speed with which Pfizer voluntarily disclosed and addressed them reflects our true culture and the real value we place on integrity and meeting commitments,” Amy Schulman, executive vice president and general counsel for Pfizer, said in a statement.

Federal regulators noted Pfizer’s prompt disclosure and praised the anti-corruption practices the company has adopted. The Justice Department said Pfizer’s cooperation and its internal probe of its operations worldwide helped the firm avoid criminal enforcement actions. By agreeing to help federal authorities with ongoing investigations of other firms, Pfizer “received a reduction in its penalties,” the Justice Department said.

Dina ElBoghdady covers housing policy for The Washington Post.
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