Bristol-Myers Squibb will pay US$14.6 million to settle charges from US regulators that its joint venture in China gave cash and other benefits to government healthcare providers to boost drug sales.
The US Securities and Exchange Commission (SEC) on Monday announced the settlement of civil charges with the company, one of the largest drug makers in the world. Bristol-Myers Squibb, based in New York, makes and sells prescription and over-the-counter medicines worldwide.
The SEC says sales personnel at the company’s joint venture plied staff at hospitals owned or controlled by the Chinese government with cash, jewelry, meals, travel and entertainment to secure and expand prescription drug business.
The SEC says the joint venture, of which Bristol-Myers Squibb is majority owner, inaccurately recorded the cash and gifts as legitimate business expenses in its books. The payments allegedly were made between 2009 and last year.
Bristol-Myers Squibb was the latest multinational drug maker to be sanctioned for business practices in China.
In China’s health system, low salaries and strained budgets have driven doctors, nurses and hospital administrators to make ends meet by accepting money from patients, drug suppliers and others.
The UK-based drug maker GlaxoSmithKline was fined US$492 million by a Chinese court in September last year for bribing doctors in China. It was the biggest such penalty at the time imposed by a Chinese court.
Eli Lilly & Co agreed to pay US$29.4 million in 2012 to resolve SEC allegations of corrupt business practices by its overseas partners in China, Brazil, Poland and Russia. Also in 2012, Pfizer Inc agreed to pay US$60 million to settle SEC allegations that its employees bribed doctors and other healthcare personnel in China as well as Italy, Russia, Croatia and other Eastern European countries.
In the latest settlement, the SEC alleged that Bristol-Myers Squibb failed to take action in response to red flags indicating the payment of bribes by sales staff in the joint venture, including notations in internal audits of the Chinese joint venture.
The firm neither admitted nor denied wrongdoing in the settlement of alleged violations of the Foreign Corrupt Practices Act, which bars bribery of foreign government officials or company executives to secure or retain business.
The company is returning US$11.4 million in profits plus US$500,000 in interest and paying a US$2.75 million civil penalty. It also agreed to report to the SEC for two years on its progress in improving compliance with the anti-bribery law.
“We have resolved this matter with the United States Securities and Exchange Commission, and are committed to the highest standards of business integrity, vigilance and ethics across our organization,” Bristol-Myers Squibb said in a statement.
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