Israeli’s largest drugmaker Teva agrees to pay U.S. government $519M over foreign bribery charges

Israeil’s largest drugmaker Teva Pharmaceuticals Industries has settled with the United States government over international bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA).

The world’s largest generic drugmaker has agreed to pay $510 million.

FBI Assistant Director Stephen Richardson, said that the FBI with its global partners have goal to root out the corruption that threatens fair economy.

“Teva and its subsidiaries paid millions of dollars in bribes to government officials in various countries, and intentionally failed to implement a system of internal controls that would prevent bribery,” said Assistant Attorney General Leslie R. Caldwell. “Companies that compete fairly, ethically and honestly deserve a level playing field, and we will continue to prosecute those who undermine that goal.”

According to the U.S. Justice Department, Teva executives and Teva Russia employees paid bribes to a high-ranking Russian government official illegally increase sales of Teva’s multiple sclerosis drug, Copaxone, in annual drug purchase auctions held by the Russian Ministry of Health.

Teva held a deal with the Russian government official’s company

Between 2010 and at least 2012, the U.S. Justice department has said, because of an agreement with a repackaging and distribution company owned by the Russian government official, Teva earned more than $200 million in profits on Copaxone sales to the Russian government. Moreover, the Russian official earned approximately $65 million.

Ukrainian official engaged as “registration consultant”

As revealed in the U.S. Department of Justice’s statement on Thursday, between 2001 and 2011, Teva engaged a Ukraininan official as the company’s “registration consultant,” paid him a monthly fee and provided him with travel and other things of value totaling approximately $200,000. In exchange, the official used his official position within the Ukrainian government to influence the registration in Ukraine of Teva’s products, including Copaxone and insulins.

Teva bribed Mexican doctors to prescribe Copaxone

In addition, Teva admitted that it failed to enforce the controls it had in place at its Mexican subsidiary, which paid bribes to doctors employed by the Mexican government. Teva admitted that its Mexican subsidiary had been bribing these doctors to prescribe Copaxone since at least 2005.

Teva: past conducts, Russian entire leadership team replaced in 2013

Teva said in its announcement on Thursday that the bribery occurred in the past, and none of its employees involved in the bribery are still employed, including in Russia where the entire leadership team was replaced in 2013. None of the conduct in question involved Teva’s U.S. sales, the company added.

Teva also said that it had began internal investigation in early 2012, into its global operations, in addition to responding to the government’s specific requests for documents and information. Teva said it had engaged independent counsel to assist in the investigation and conducted a global corruption risk assessment and a multi-country survey.

Erez Vigodman: Conduct regrettable and unacceptable

“While the conduct that resulted in this investigation ended several years ago, it is both regrettable and unacceptable, and we are pleased to finally put this matter behind us,” said Erez Vigodman, Teva’s President and CEO. “Since becoming CEO, I have worked diligently to make our culture of compliance central to everything Teva does. The compliance program that Teva has in place is serious, rigorous, and comprehensive and is designed to protect the company and its subsidiaries against future violations.”

“The Teva of today is a fundamentally different company,” stated Vigodman. “We welcome working with the monitor as an added step in our process to ensure the program we have put in place is working as designed. Teva has a compliance culture that begins with a strong tone at the top, including our executive regional and local management and a culture of compliance that underpins every single business decision that Teva makes.”