Teva's $520M bribery settlement with the federal government sparked a shareholder lawsuit to start off 2017. Teva paid $520 million in December 2016 to the DoJ and SEC to resolve violations of the Foreign Corrupt Practices Act (FCPA) related to bribing officials in Russia, Ukraine and Mexico to promote its drugs. The criminal fine to the DOJ totaled more than $283 million, while Teva paid $236 million to the SEC.
In announcements detailing Teva's admitted violations, the DoJ noted company executives and employees in Russia bribed a Russian official to boost the government’s purchases of its multiple sclerosis drug, Copaxone. The Russian official made $65 million between 2010 and 2012 setting up the purchases, even as Russia sought to cut costs on foreign drugs, prosecutors said. Between 2001 and 2011 in Ukraine, Teva bribed a top official in order to “influence” the government’s decisions on Teva drug approvals, prosecutors said, providing the “registration consultant” with $200,000 a month.
And in Mexico, a Teva subsidiary's employees bribed doctors to prescribe Copaxone since “at least 2005,” according to the DoJ release.
Israeli authorities cut Teva some slack as foreign bribery case resolved amid other big problems
by Eric Palmer | Jan 15, 2018
Teva has settled for $22 million a foreign bribery case with Israeli authorities that grew out of accusations first investigated by U.S. authorities.
Teva Pharmaceuticals, which has already paid half a billion dollars in U.S. penalties for having bribed foreign doctors, has now settled with authorities in Israel, but for a fraction of that amount.
Teva has been ordered to pay $22 million by the Israel Justice Department, reports the Israeli news service AFP but was a spared criminal charges as part of Sunday’s agreement.
In setting the amount, the ministry noted, the company in its agreement with U.S. authorities had already acknowledged its misdeeds and taken steps to avoid similar problems in the future. Israeli authorities also said that “a criminal conviction now could cause it significant damages," AFP reports.
"It should be noted that after the company learned of the U.S. investigation, it has implemented a robust compliance and enforcement program with very high standards designed to protect it and its subsidiaries from future violations," the company said in an emailed statement. "All employees that had been willfully involved in the wrongdoing are no longer employed by the company. The investigation and today's resolution are not due to new facts but rather relate to facts that were subject to FCPA resolution with the U.S. authorities in 2016."
The settlement comes as the drugmaker is already dealing with heaps of other issues, as acknowledged by Teva’s new CEO Kåre Schultz last week during the J.P. Morgan Healthcare Conference. To get the drugmaker back on track, Schultz has instituted 14,000 job cuts and the closing of up to 25 manufacturing plants in the next two years. That is slated to save Teva $3 billion in annual costs that Schultz said Teva was saddled with as the result of poor decisions by its previous management. His steps have included a management shakeup.
Israeli authorities began taking a look at the the bribery accusations a year ago after Teva agreed to pay nearly $520 million to the U.S. Department of Justice and Securities and Exchange Commission to resolve violations of the Foreign Corrupt Practices Act that reached back 15 years. The case also resulted in a shareholder lawsuit.
The U.S. agreement stemmed from federal bribery charges relating to its operations in Russia, Ukraine and Mexico, where the drugmaker acknowledged it had paid bribes to entice doctors to prescribe its multiple sclerosis drug Copaxone. Teva’s settlement is the largest fine paid by a pharma company over FCPA violations. It followed years of investigations into its practices.
Footnote (Riley): Teva also faces, along with other manufacturers in the generic drug industry, a broad price-fixing conspiracy claim that is still pending. And, you wonder why drugs in this country are so expensive. It requires hundreds of millions of dollars to engage in bribery around the world. And, when they get caught, guess who they pass the costs to.