Novartis agrees to pay $25 million in SEC settlement of bribery charges in China

The Securities and Exchange Commission announced last week that it deems it appropriate and in the public interest that public administrative and cease and desist proceedings be issued under the SEC Act against Swiss pharma giant Novartis (NOVN: VX), alleging bribery activities in China.

The SEC statement said: “From at least 2009 to 2013, certain employees and agents of Novartis subsidiaries conducting business in China engaged in transactions and provided things of value to foreign officials, principally healthcare professionals (HCPs). These payments took varied forms and were intended to influence the HCPs and thereby increase sales of Novartis pharmaceutical products.

Novartis has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in China. In doing so, the company became the latest drugmaker to be fined for paying bribes in order to boost sales in a foreign country. However, it is by no means the largest amount, It will be recalled that, in 2014, a Chinese court fined GlaxoSmithKline (LSE: GSK) £297 million ($420 million) after finding the company guilty of bribing non-government personnel in the country (The Pharma Letter September 19, 2014). The Changsha Intermediate People’s Court in Hunan Province, China, ruled that GSK China Investment Co Ltd had, according to Chinese law, offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel.

Novartis says the issues raised by the SEC “largely pre-date many of the compliance-related measures introduced by Novartis across its global organization in recent years. We believe these measures, which we review and update on an ongoing basis, address the issues raised by the SEC and reflect a broader initiative by Novartis to align and enhance our compliance standards globally.”