The US charged Pfizer and its subsidiary Wyeth on Tuesday with paying millions of dollars in bribes to build their business in Eastern Europe and China, and set hefty fines on the two to settle the charges.
The Department of Justice and the Securities and Exchange Commission both said Pfizer subsidiaries paid off officials, doctors and healthcare professionals in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia during 2001-2007 in violation of the US Foreign Corrupt Practices Act.
Employees of subsidiaries made the payoffs to secure approval and registration of Pfizer and Wyeth products, and obtain sales contracts for them, according to court filings and statements from the department and SEC.
“Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,” said Kara Brockmeyer, head of the SEC’s Foreign Corrupt Practices Act Unit.
But the Justice Department and SEC said Pfizer officials had not been aware of the payments, and were strongly cooperative with investigators, mitigating the need for criminal prosecution and heavy penalties.
Pfizer subsidiary Pfizer HCP agreed to pay a $15 million penalty to the department under a deferred prosecution agreement to resolve the investigation.
Pfizer will also pay the SEC $26.3 million in forgone profits, while Wyeth, the drugmaker that Pfizer took over in 2009, will give up $18.8 million in disgorged profits.
“Pfizer HCP received a reduction in its penalty as a result of Pfizer Inc.’s cooperation in the ongoing investigation of other companies and individuals,” the Justice Department said.
“Corrupt pay-offs to foreign officials in order to secure lucrative contracts creates an inherently uneven marketplace and puts honest companies at a disadvantage,” said James McJunkin, assistant director of the Washington field office of the Federal Bureau of Investigation.
“Those that attempt to make these illegal backroom deals to influence contract procurement can expect to be investigated by the FBI and appropriately held responsible for their actions.”