Pfizer Unit to Pay $15 Million Penalty Gets FCPA Prosecution Deferred

Pfizer H.C.P. Corporation, a unit of Pfizer Inc., will pay a $15 million penalty to resolve an investigation of Foreign Corrupt Practices Act (FCPA) violations. Pfizer Inc. and Wyeth LLC reached settlements with the Securities and Exchange Commission (SEC) under which Pfizer will pay more than $26.3 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of its subsidiaries.

Wyeth, which had been acquired by Pfizer Inc. in 2009, will pay $18.8 million in disgorgement of profits, including pre-judgment interest, to resolve concerns involving the conduct of Wyeth subsidiaries. Pfizer was represented by Bret Campbell and Peter Clark, partners at Cadwalader in Washington, D.C.

The Department of Justice filed a two-count criminal information charging Pfizer H.C.P. with conspiracy and violations of the FCPA in connection with improper payments made to government officials, including publicly-employed regulators and health care professionals in Bulgaria, Croatia, Kazakhstan and Russia.

Pfizer H.C.P. agreed to resolve the investigation by entering into a deferred prosecution agreement.

Pfizer H.C.P. is incorporated under the laws of the State of New York, and its parent company, Pfizer Inc., is a global pharmaceutical, animal health and consumer product company headquartered in New York City.

Federal officials alleged that Pfizer H.C.P. made a broad range of improper payments to numerous government officials in Bulgaria, Croatia, Kazakhstan and Russia – including hospital administrators, members of regulatory and purchasing committees and other health care professionals – and sought to improperly influence government decisions in these countries regarding the approval and registration of Pfizer Inc. products, the award of pharmaceutical tenders and the level of sales of Pfizer Inc. products.

Federal officials also alleged that Pfizer H.C.P. used numerous mechanisms to improperly influence government officials, including sham consulting contracts, an exclusive distributorship and improper travel and cash payments.

Pfizer H.C.P. admitted that between 1997 and 2006, it paid more than $2 million of bribes to government officials in Bulgaria, Croatia, Kazakhstan and Russia.

Pfizer H.C.P. also admitted that it made more than $7 million in profits as a result of the bribes.

Pfizer H.C.P. received a reduction in its penalty as a result of Pfizer Inc.’s cooperation in the ongoing investigation of other companies and individuals.

Federal officials said that due to Pfizer Inc.’s extensive remediation and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, the company will not be required to retain a corporate monitor, but Pfizer Inc. must periodically report to the department on implementation of its remediation and enhanced compliance efforts for the duration of the agreement.

The SEC alleged that Wyeth subsidiaries engaged in FCPA violations primarily before but also after the company’s acquisition by Pfizer in late 2009.

Starting at least in 2005, subsidiaries marketing Wyeth nutritional products in China, Indonesia, and Pakistan bribed government doctors to recommend their products to patients by making cash payments or in some cases providing BlackBerrys and cell phones or travel incentives.

They often used fictitious invoices to conceal the true nature of the payments. In Saudi Arabia, Wyeth’s subsidiary made an improper cash payment to a customs official to secure the release of a shipment of promotional items used for marketing purposes.
The promotional items were held in port because Wyeth Saudi Arabia had failed to secure a required Saudi Arabian Standards Organization Certificate of Conformity.

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