Teva fined $519 million by US government for foreign bribes

Israeli pharmaceutical giant reaches settlement on allegations involving government officials in Russia, Mexico, Ukraine

Ricky Ben-David is a senior news editor at The Times of Israel.

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)

Israeli pharmaceutical giant Teva will pay $519 million to settle US charges of bribery of foreign officials to win business in Russia, the Ukraine and Mexico, US officials announced Thursday.

Its alleged violations of the US Foreign Corrupt Practices Act, which makes it a crime to bribe a foreign government official — whether through direct payment or gifts — were settled with a $283 million penalty “in a deferred prosecution agreement” with the Department of Justice and $236 million “in disgorgement and interest” to the Securities and Exchange Commission, according to Reuters.

“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 US Assistant Attorney General Leslie Caldwell.

The case included bribes by Teva Pharmaceutical Industries to a “high-ranking Russian government” official who used his authority to boost sales of the Teva multiple sclerosis drug Copaxone, resulting in more than $200 million in profits for Teva and about $65 million for the Russian official between 2010 and 2012, the Justice Department said.

In Ukraine, Teva also admitted to paying bribes to a senior government official, who agreed to promote Teva drugs. The payments to the Ukraine government official date from 2001 and 2011.

In Mexico, Teva’s subsidiary paid bribes to doctors employed by the Mexican government since at least 2005, according to the Justice Department.

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)

Teva said that after an internal investigation into misconduct, its whole Russian leadership was replaced, that no workers of the company were involved in the improper payments, and that sales in the US were not involved in any improper conduct.

Teva said it commenced a probe of bribery after learning of problems from employees and the US government in early 2012. None of the employees involved in the wrongdoing are still at the company, it said.

“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 Teva chief executive Erez Vigodman. “The Teva of today is a fundamentally different company.”

According to the settlement cited by Reuters, Teva will also have to retain an outside corporate monitor for at least three years.

The Israeli company has been facing a number of legal troubles in recent months, including more bribery allegations in Romania and a class-action suit by US investors as a result of a separate US Department of Justice probe into alleged price-fixing alongside a number of other companies.

US prosecutors said last week that leading pharmaceutical companies, including Teva Pharmaceuticals and Mylan, have received subpoenas in a wide-ranging antitrust probe of the industry involving the price-fixing of an antibiotic, doxycycline hyclate and the diabetes drug glyburide.

According to the class-action lawsuit, Teva is accused of making “false and/or misleading statements and/or failed to disclose that [it] was engaging and/or had engaged in conduct that would result in an antitrust investigation” and possible “criminal charges against Teva by the end of 2016 for suspected price collusion.”

“In turn, Teva lacked effective internal controls over financial reporting; and… as a result, Teva’s public statements were materially false and misleading at all relevant times,” read the statement by Rosen Law Firm, a global investor rights law firm.

Earlier this month, Teva revealed that it is in the midst of an internal investigation into allegations that the company has been bribing Romanian healthcare workers into prescribing its medication.

The probe was launched in 2015 after an anonymous tipster sent a series of emails to Teva’s chief executive, accusing the company of courting Romanian doctors — paying them speaking and consulting fees, covering travel expenses — in exchange for their recommending a Teva medication “to as many patients as possible,” according to the email sent to the company by the tipster and which was reviewed by Reuters. The emails were also sent to Teva’s audit committee and compliance staff, according to the report.

The specific medication in question was the multiple sclerosis drug Copaxone, which generated $1.1 billion in sales in Teva’s last quarter, the company said last month in a regulatory filing, according to Reuters.

The tipster informed the company that the information was also being sent to the Securities and Exchange Commission and the US Department of Justice.

AFP contributed to this report

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