Teva bribery settlement raises questions on Argentina, Romania probes

Pharmaceutical giant — fined half-billion dollars for bribery in Russia, Ukraine and Mexico — says internal review of Argentina case is closed and it’s premature to discuss Romania

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

The Jerusalem office of the Israeli drug company Teva Pharmaceuticals (Yonatan Sindel/Flash90)
The Jerusalem office of the Israeli drug company Teva Pharmaceuticals (Yonatan Sindel/Flash90)

A half-billion dollar settlement reached between Teva Pharmaceutical Industries Ltd. and the US government last week for the resolution of criminal charges in the bribery of officials in Russia, Ukraine and Mexico raises questions about the fate of other Teva bribery probes, in Argentina and Romania.

Teva and the US Department of Justice (DOJ) said in separate statements on Thursday that they had reached a settlement over the charges relating to Russia, Ukraine and Mexico, and that Teva would pay a combined total of US criminal and regulatory penalties of almost $520 million. The accord made no reference, however, to bribery probes Teva has acknowledged have been underway in Argentina and Romania.

A person familiar with the matter told The Times of Israel that the DOJ deal does not cover the investigations into bribery claims in Argentina and Romania. This source indicated that there could be additional US government fines relating to these investigations.

The Times of Israel has learned that Teva was contacted in 2012 by someone who called himself a whistleblower. This person told Teva that its employees at Teva-Tuteur, SA, a joint venture entity in Argentina, gave doctors money in exchange for prescribing its multiple sclerosis drug Copaxone to patients.

In an emailed statement to The Times of Israel on Friday, Teva confirmed that it had been conducting an internal investigation into allegations of bribery in its operations in Argentina, but said the matter was closed.

“While Argentina was not referenced in yesterday’s resolution papers, Argentina was included in our world-wide compliance review,” Teva stated in an email on Friday. “We have disclosed the results of this review to the DOJ and SEC, and taken appropriate remedial action as necessary. The internal review in connection with Argentina you reference has been closed.”

Earlier this month, Reuters reported that Teva was investigating allegations by a tipster about bribery in Romania, with a Teva spokesperson confirming the internal investigation.

Regarding Romania, Teva said in an email to The Times of Israel: “We are aware that a report was received by our internal compliance team anonymously, relating to alleged conduct in Romania. In line with our global policy to comply with all laws and to compete fairly, we take all such reports seriously and are investigating. It would not be appropriate for us to comment further at this stage.”

Spokespeople for the US Securities and Exchange Commission and the DOJ declined to comment on the issue.

The information about alleged bribery activities by Teva employees in Argentina came from an anonymous informant who referred to himself in correspondence both with Teva and with The Times of Israel as Teva Whistleblower. This whistleblower told The Times of Israel that on June 28, 2012, he emailed Teva’s board of directors and senior Teva company officials, including its then-CEO Jeremy Levin and its chief financial officer Eyal Desheh, alleging that the company was violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) by paying Argentinian doctors approximately $80 each time they prescribed Copaxone for multiple sclerosis. The physicians were also offered international trips.

This whistleblower alleged that Teva failed to institute adequate controls to detect and prevent its employees and Teva-Tuteur from engaging in bribery. He further said that in his email to Teva officials he told them he was considering disclosing this information to the relevant authorities.

The person also named nine neurologists in Buenos Aires and other locations in Argentina who, he claimed, were offered or are suspected to have been offered bribes from Teva-Tuteur’s medical representatives and or sales managers to prescribe Copaxone. Some of the doctors listed accepted the bribes, the tipster claimed. He listed their names, location and phone numbers.

His information about the bribery schemes came from various sources, he said, including doctors and Teva competitors.

The tipster said he received a notification in July 2012 from Michael Dearborn, Teva’s global compliance officer, who told him that Teva takes “allegations such as these very seriously” and that he would be personally overseeing the company’s investigation.

A month later, Teva said in a filing that it was subpoenaed by the SEC because of potential FCPA compliance problems in Latin America. The company said in the filing that it received a subpoena dated July 9, 2012, from the SEC to produce documents with respect to compliance with the FCPA in Latin America. Teva said it was cooperating with the government and that it was also conducting a voluntary investigation into certain business practices which could have FCPA implications and had engaged independent counsel to assist in its investigation. These matters were in their early stages and no conclusion could be drawn at this time as to any likely outcomes, Teva said in the 2012 filing.

In August 2015, the tipster said, Teva’s Kathleen Veit, director of Teva’s Global Compliance, wrote to him saying the matters had been examined as part of Teva’s internal investigation. The company had “fully cooperated” with the FCPA investigation and had disclosed all relevant facts to the US authorities regarding Argentina, she wrote, according to the tipster. The company had also made the disclosures relevant to these issues in its public securities filings, Veit said, according to materials the tipster has made available to The Times of Israel.

Sales of Copaxone, totaling $1.1 billion in sales in the third quarter of 2016, accounted for around 20 percent of Teva’s total revenue, the company said in a filing in November.

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