Healthcare Matters

Pfizer has agreed to pay the federal government a $60 million fine to settle allegations that its employees bribed doctors and other foreign officials in Europe and Asia.

“Pfizer subsidiaries in China, Italy, Russia and other Eastern European 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, chief of SEC’s foreign enforcement division. For example, Pfizer’s China operation created a point program that allowed doctors to purchase gifts based on points earned for prescribing Pfizer medications. In other cases, Pfizer would invite high-prescribing doctors to club-like meetings as a reward for choosing Pfizer products.

And now for the twist you didn’t expect: It was Pfizer that first disclosed the misconduct to SEC and Justice Department officials all the way back in October of 2004. It invited the government’s investigation and fully cooperated. “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,” said Amy Schulman, executive vice president and general counsel for Pfizer.

The charges against Pfizer were brought under the Foreign Corrupt Practices Act (FCBPA), which bars companies from bribing officials in other countries and/or unfairly manipulating conditions to win or retain business. Having some personal experience with what you can and cannot do in a FCPA context, allow me to assure you that what the Act says won’t strike you as ambiguous or hard to interpret. The FCPA has two provisions- Anti-Bribery and Accounting.  The Anti-Bribery Provisions make it a crime for any US individual, business entity or employee of a US business entity to offer or provide, directly or through a 3rd party, anything of value to a foreign government official with intent to influence an award or continuation of business or to gain an unfair advantage. The Accounting Provisions basically make it illegal for a company that reports to the SEC to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls. The standard of intent and knowledge in the Anti-Bribery cases is minimal –intent and knowledge are usually inferred from that fact that bribery took place.  The Accounting Provisions do not require intent. The SEC brings Accounting cases as civil actions so its burden of proof is a mere preponderance of the evidence. In other words, the government does not lose FCPA cases.

Most of us with significant international business experience believe and frequently say “everyone knows you can’t do business in (Mexico, China, India, Russia – pick a country) without paying bribes. It is part of their culture. It is crazy to have a US law that makes paying bribes in foreign countries illegal in the USA.”  Of course the point is, regardless of whether that’s true, the FCPA is part of the legal environment for international business. Compliance is not optional because of the lack of enforcement in other parts of the world. And because the industry of healthcare is generally part of the government most everywhere else, paying a bribe to a hospital procurement employee in the UK (for example) quickly translates to a bribe of a government official.

Of course, industry experts say giving gifts and payments to doctors is not unusual for drug and medical device companies who operate in dozens of countries. In this case, Pfizer, the largest pharmaceutical company by sales, and the company that invited this investigation, still (in the end) neither admitted nor denied the allegations.

Source: Associated Press

—Tom Finn