Pfizer settles foreign bribery case

Aug 07, 2012, 2:01 PM EDT
REUTERS/Brendan McDermid

* Pfizer to pay $60.2 mln to settle foreign bribery charges

* Settlement also involves Wyeth

* Settlement is part of broad crackdown on bribery overseas

By Toni Clarke

Aug 7 (Reuters) - Pfizer Inc has agreed to pay $60.2million to settle a U.S. government probe of the drugmaker's use of illegal payments to win business overseas, government officials said on Tuesday.

The settlement is part of a broad crackdown on bribery bymultinational companies in foreign countries that has hitseveral of the world's biggest pharmaceutical companies.

Pfizer in 2004 became the first pharmaceutical company tovolunteer information about past wrongdoing to the JusticeDepartment, but the case has taken years to resolve.

Last year, Johnson & Johnson agreed to pay $70million to settle U.S. charges that it paid bribes and kickbacksto win business in Greece, Iraq, Poland and Romania, the firstsuch settlement by a big drug company.

The 1977 Foreign Corrupt Practices Act makes it illegal forU.S. companies and foreign firms whose stock is traded in theUnited States to bribe government officials in foreigncountries.

Eight of the world's top 10 drugmakers have warned ofpotential costs related to charges of corruption in overseasmarkets, according to a Reuters examination of U.S. filings.

Pfizer's general counsel, Amy Schulman, said of thesettlement, "The actions which led to this resolution weredisappointing, but the openness and speed with which Pfizervoluntarily disclosed and addressed them reflects our trueculture and the real value we place on integrity and meetingcommitments."

According to a complaint filed by the Securities andExchange Commission in U.S. District Court for the District ofColumbia, Pfizer's misconduct dates back to 2001. Companyemployees bribed foreign officials to use Pfizer's products andboost prescriptions, the complaint said.

The improper payments were made to officials in Russia,Bulgaria, Croatia, Kazakhstan, Serbia, Czech Republic, China andItaly.

In China, for example, Pfizer employees hosted "club-likemeetings" with recreational and entertainment activities forgovernment doctors who wrote a lot of prescriptions.

The company also created programs under which governmentdoctors could accumulate points based on the number of prescriptions they wrote for Pfizer products. The points couldbe redeemed for gifts ranging from medical books to cell phones,tea sets, and reading glasses.

Separately, the SEC charged Wyeth, which Pfizer acquired in2009, with similar violations. The agency said subsidiariesmarketing Wyeth's nutritional products in China, Indonesia andPakistan bribed government doctors with cash, BlackBerrys, cellphones and other incentives.

Pfizer and Wyeth agreed to separate settlements in whichthey will pay a total of more than $45 million. They neitheradmitted nor denied wrongdoing.

In a parallel action, the U.S. Department of Justice said aPfizer subsidiary, Pfizer H.C.P. Corp, had agreed to pay a $15million penalty to resolve a department investigation of similarviolations.

Pfizer H.C.P. admitted that between 1997 and 2006, it paidmore than $2 million of bribes to government officials inBulgaria, Croatia, Kazakhstan and Russia, and admitted that itmade more than $7 million in profits as a result of the bribes,the Justice Department said.

Pfizer H.C.P.'s penalty was reduced because of Pfizer Inc'scooperation in the ongoing investigation of other companies andindividuals, the department said. The agreement requires thecompany to implement rigorous internal controls and to cooperatefully with the department.