AstraZeneca is required by U.S. regulators to pay $5.52 million to resolve an issue regarding a foreign bribery case into improper payments by its sales and marketing staff to state-employed healthcare officials in China and Russia.
In a detailed settlement given by the U.S. Securities and Exchange Commission, the London-based drug company has been ordered to begin administrative proceedings arising from violations of the provisions of the Foreign Corrupt Practices Act.
AstraZeneca cooperated with the investigation and has neither denied nor confirmed the allegations. According to a statement, it said the U.S. Justice Department has meanwhile closed a related foreign bribery investigation.
“We are pleased to have resolution of these matters,” the company said.
According to the SEC, the company from, at the earliest, 2010, failed to devise and maintain a system of internal accounting controls in relation to its interaction between its subsidiaries and Chinese and Russian government officials.
Sales and marketing staff operating in those countries were reported as far back as 2005 to give gifts, conference support, travel, cash and other benefits to the state-employed healthcare providers in order to buy or prescribe the company’s products, according to the SEC.
The Chinese subsidiary of the company has also been found to have been paying healthcare providers speaker fees, sometimes for “totally fabricated” engagements. In 2008, the company was also reported to be paying local officials to get reductions or dismissals of proposed financial sanctions it was facing, the SEC said.
According to the allegations, AstraZeneca was also falsifying records claiming that the improper payments to China and Russia were bona fide business expenses.
The regulators heading the probe said AstraZeneca was cooperative with the probe, which factored into the size of the penalty that was assessed against it.
The SEC also claimed that the company has been addressing the deficiencies with the company’s compliance program. It is also taking several steps with employees involved with the case, with some of them being reassigned and the others fired.
The SEC and the Justice Department have not responded for comment on the issue.