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What’s New/Significant
Novartis Hellas S.A.C.I. (Novartis Greece), a subsidiary of Novartis AG, a Switzerland-based global pharmaceutical company, and Alcon Pte Ltd., a former subsidiary of Novartis AG and current subsidiary of Alcon Inc., have agreed to pay a combined total of more than $233 million in criminal monetary penalties to the U.S. Securities and Exchange Commission (SEC) to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA).
Novartis AG also agreed to disgorge more than $112 million in profits that the SEC alleges were associated with improper payments made to health care providers in Greece, Vietnam and South Korea.
Allegations
Novartis Greece: Novartis Greece admitted that between 2012 and 2015, it bribed employees of state-owned and state-controlled hospitals and clinics in Greece to increase the sale of Novartis pharmaceutical products. Specifically, Novartis Greece paid for employees of these hospitals and clinics to travel to international medical congresses, including events held in the United States, in order to bribe these officials to increase the number of prescriptions they wrote for Lucentis, a prescription drug sold by Novartis Greece. Novartis Greece employees also traveled to the United States and, while there, facilitated the provision of the improper benefits to publicly employed Greek health care providers.
Novartis Greece also admitted that between 2009 and 2010, it made improper payments to health care providers in connection with an epidemiological study intended to increase sales of certain Novartis products. Novartis Greece employees recognized that many participating health care providers believed that they were being paid in exchange for writing prescriptions of Novartis products and not for providing data as part of a clinical study.
Alcon: Alcon Pte Ltd. admitted that from 2011 through 2014, it caused Novartis AG (its parent company at the time) to maintain false books, records and accounts as a result of a scheme to bribe employees of state-owned and state-controlled hospitals and clinics in Vietnam. The corrupt payments were made through a third-party distributor to employees of state-owned and state-controlled hospitals and clinics in Vietnam in order to increase sales of intraocular lenses. Alcon employees in Vietnam reimbursed the distributor for up to 50% of the cost of the corrupt payments, and these reimbursements were falsely recorded as, among other things, consulting expenses, marketing expenses and human resource expenses.
Scope of Settlement
The settlements with Novartis Greece and Alcon Pte Ltd. were based on a number of factors, including the failure to timely disclose the conduct that triggered the investigations; the seriousness of the offenses, which spanned multiple years and involved high-level employees; and the lack of an effective compliance and ethics program at the time of the misconduct. Credit was also given for each company’s respective cooperation, including adoption of remedial measures such as terminating and disciplining individuals who orchestrated the misconduct, adopting heightened controls and anti-corruption protocols, and increasing the resources devoted to compliance.
Novartis Greece entered into a deferred prosecution agreement (DPA) with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the District of New Jersey in connection with a criminal information filed in the District of New Jersey charging Novartis Greece with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the books and records provision of the FCPA. Pursuant to the DPA, Novartis Greece will pay a criminal penalty of $225 million, implement a comprehensive compliance program and report regularly to the SEC.
Alcon Pte Ltd. also entered into a DPA in connection with a criminal information filed today in the District of New Jersey charging Alcon Pte Ltd. with conspiracy to violate the books and records provision of the FCPA. Pursuant to the DPA, Alcon Pte Ltd. will pay a total criminal penalty of approximately $8.9 million, implement a comprehensive compliance program and report regularly to the SEC.