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What’s New/Significant
Alexion Pharmaceuticals agreed to pay $21.4 million to the Securities and Exchange Commission to resolve allegations that the company paid bribes to foreign officials in Turkey, Russia, Brazil and Colombia to influence the prescribing of Soliris, approved to treat two ultra-rare diseases, paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. In connection with the improper payments, the SEC found that the company lacked sufficient internal accounting controls to detect and prevent these payments and to provide reasonable assurances that these transactions were recorded accurately in the books and records of subsidiaries, which were consolidated into Alexion’s books and records.
Allegations
The SEC alleged that from 2010 to 2015, Alexion’s subsidiary in Turkey made payments to foreign officials in order to influence them to provide favorable regulatory treatment for Alexion’s primary drug (Soliris) and to approve Soliris prescriptions for individual patients. To facilitate the payments, Alexion Turkey hired a consultant with connections to top Ministry of Health officials and paid the consultant over $1.3 million (directly and through a third-party vendor), consisting of consulting fees and purported expense reimbursements. The consultant passed a portion of these funds on to Turkish government officials, in the form of cash, meals or gifts, to secure favorable treatment for Soliris. For some of the payments Alexion Turkey made to the consultant through a third-party vendor, it received falsified invoices for reimbursement by the company. Alexion Turkey employees recorded these payments inaccurately in the company’s books and records and further directed that the description of the consultant’s claimed expenses be written in pencil to allow the description to be easily changed or concealed.
The SEC also alleged that from 2011 to 2015, Alexion’s subsidiary in Russia made payments to foreign officials in order to i) influence the allocation of regional health care budgets for Soliris, ii) increase the number of approved Soliris prescriptions and iii) favorably influence the regulatory treatment of Soliris. The payments were made in a variety of ways, including through third-party consultants, honoraria and grants. In connection with these improper payments, false books and records were maintained by Alexion in Russia.
The SEC also alleged that Alexion subsidiaries in Brazil and Colombia falsified their records of payments to third parties, including patient advocacy organizations, by submitting fake invoices for personal expenses. Alexion’s inadequate internal accounting controls resulted in the failure of the Brazil and Colombia subsidiaries to maintain accurate books and records regarding third-party payments.
Scope of Settlement
In determining the penalties, the SEC considered Alexion’s cooperation, which included regular briefings to SEC staff regarding the facts developed in its internal investigation in multiple countries and the forensic accounting review that Alexion undertook as well as identifying and providing translations of key documents. Furthermore, the SEC noted that Alexion’s remediation activities included strengthening and expanding its global compliance organization; enhancing its policies and procedures regarding payments to third parties, including the implementation of a centralized system to track and monitor third-party payments; revamping its HCP engagement process and oversight; enhancing its internal audit function; conducting proactive compliance market reviews; and improving training provided to employees regarding anti-corruption.