Global pharmaceutical giant Novartis has agreed to pay $112 million to settle with the Securities and Exchange Commission over charges it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act.
According to the SEC, between 2012 and 2016, the company’s local subsidiaries or affiliates engaged in schemes to make improper payments to private healthcare providers in South Korea, Vietnam, and Greece in exchange for prescribing or using Novartis products or the products of its former subsidiary Alcon, which was also involved in the bribery scheme.
Novartis’ subsidiaries also agreed to pay more than $233 million in criminal fines as part of a deferred prosecution agreement with the U.S. Department of Justice.
The SEC settlement includes disgorgement of $92.3 million and $20.5 million in prejudgment interest.
It has also agreed to a three-year period of self-reporting on the status of its remediation and compliance efforts.
According to the DOJ, in Greece, Novartis paid “key opinion leaders” more than $5,000 to attend events, in exchange for which the health care providers would prescribe the drug Lucentis, which is used to treat macular degeneration.
Alcon, which merged with Novartis in 2011, used a Vietnamese distributor to bribe providers to use intraocular lenses. In South Korea, a Novartis unit paid $16.3 million to third-party medical journals.
“Poor control environments are fertile soil for malfeasance,” said Charles Cain, chief of the SEC enforcement division’s FCPA unit. “As illustrated by Novartis’ misconduct, weaknesses in one part of the business can often serve as a harbinger of larger unaddressed problems.”
In a statement, Novartis Group general counsel Shannon Thyme Klinger said the settlements were a milestone in resolving “legacy compliance issues” and all outstanding FCPA investigations into the company are now closed.
The company said it has adopted principles-based compliance policies, combined its risk-management and compliance functions, and reinforced its “speak-up culture” so associates can more effectively raise concerns.