In its quarterly report filed with the SEC last week, pharma giant Pfizer Inc said it has reached agreement in principle with the SEC and DOJ to resolve 'improper payment' matters outside the United States.
It expects final settlements by year end.
In 2009, New York-based Pfizer paid a $2.3 billion civil and criminal penalty for unlawful prescription drug promotions in the U.S. As we said then, using similar sales techniques with doctors at government-owned hospitals overseas could violate the FCPA.
That same year, a senator in the Philippines accused Pfizer of using illegal tactics to block legislation aimed at lowering drug costs. Senator Mar Roxas wrote a letter to the U.S. Justice Department requesting an FCPA investigation. He alleged that Pfizer offered the Philippines' health secretary 'discount cards' in exchange for not implementing the retail drug-price law.
Pfizer then bought full-page ads in Philippines newspapers saying, 'We categorically deny this allegation and consider this a grave affront to our reputation … We have always sought to provide wider access to our high quality medicines.'
In a post last month, a flock of pharmas, a reader asked why our 2011 corporate investigations list is full of pharmaceutical and medical-device companies. Those on the list were AstraZeneca, Biomet, Bio-Rad Laboratories, Bristol-Meyers Squibb, Covidien, Eli Lilly, GlaxoSmithKline, Medtronic, Merck, Orthofix International, Pfizer, Sciclone Pharmaceuticals, Smith & Nephew, Stryker Corporation, Talecris Biotherapeutics, and Zimmer.
Their sales practices for a long time involved (and may still involve) payments of some sort to doctors, in exchange for recommendations for their products or actual sales. Because doctors overseas who work in government owned or managed hospitals are considered to be 'foreign officials' under the Foreign Corrupt Practices Act, those payments may create offenses under the U.S. law.
Will Pfizer's settlement with the DOJ and SEC open the industry floodgates? It could. As we've said, when the feds can bring in for questioning multiple companies from a single industry, usually at least one is willing to squeal on the others in exchange for leniency.
Pfizer Inc is the world's biggest research-based drug company. It has about 110,000 employees and revenue last year was $69 billion. It acquired Wyeth in 2009.
It trades on the NYSE under the symbol PFE.
Pfizer Inc's complete disclosure regarding the potential SEC and DOJ settlements from its Form 10-Q filed on November 10, 2011 (pdf) said,
The Company has voluntarily provided the DOJ and the U.S. Securities and Exchange Commission (SEC) with information concerning potentially improper payments made by certain Pfizer and Wyeth subsidiaries in connection with certain sales activities outside the U.S. In recent discussions, we have reached agreements-in-principle with the SEC staff and with the DOJ for the resolution of these matters. We anticipate entering into and announcing final agreements in the fourth quarter. In addition, certain potentially improper payments and other matters are the subject of investigations by government authorities in certain foreign countries, including a civil and criminal investigation in Germany with respect to certain tax matters relating to a wholly owned subsidiary of Pfizer.
Our thanks to Josh, who asked for some coverage of Pfizer and last week's disclosure.