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U.S. v. Pfizer H.C.P. Corp.

 
:
Pfizer - Pfizer H.C.P. Corporation
:
DOJ Criminal
:
August 7, 2012
:
U.S. v. Pfizer H.C.P. Corp.
:
U.S. v. Pfizer H.C.P. Corp., No. 1:12-cr-00169 (D.D.C. 2012)
:
The SEC brought a parallel action against another Pfizer subsidiary, Wyeth LLC, concerning conduct that is wholly unrelated to the conduct alleged in the DOJ's action against Pfizer H.C.P.

Pfizer H.C.P.'s DPA includes a provision regarding the non-public nature of the written reports Pfizer agreed to submit to the DOJ regarding the progress of its compliance program: "the reports will likely include proprietary, financial, confidential and competitive business information. Moreover, public disclosure of the reports could discourage cooperation, impede pending or potential government investigations and thus undermine the objectives of the reporting requirement. For these reasons, among others, the reports and the contents thereof are intended to remain and shall remain non-public, except as otherwise agreed to by the parties . . . ."

:
Healthcare-Pharmaceutical
:
Bulgaria, Croatia, Kazakhstan, Russia
:
1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004; 2005; 2006
:
Officials and publicly-employed doctors in Bulgaria, Croatia, Kazakhstan, and Russia.
:
Pfizer H.C.P. Corporation ("Pfizer HCP") is an indirect wholly owned subsidiary of Pfizer Inc., a global pharmaceutical, animal health, and consumer product company incorporated in Delaware.

According to court documents, employees at Pfizer HCP and Pfizer Inc.'s Russian subsidiary made and authorized payments of cash and other things of value to government officials (including doctors and employed by state-owned hospitals), for the purpose of improperly influencing their decisions regarding regulatory and formulary approvals, purchase decisions, prescription decisions, and customs clearance.

In Bulgaria, Pfizer HCP employees gave doctors employed in Bulgarian public hospitals a specific target for prescriptions, and provided support for international travel on the basis of promises to prescribe Pfizer products by the doctors. Managers referred to the bribes as "sponsorships," and instructed sales staff to "very precisely state the grounds for recommending the sponsorship, and also what the doctor in question is expected to do or has already done."

In Croatia, Pfizer HCP employees entered into a bogus "consulting agreement" with a Croatian government official to secure the registration of Pfizer products. Pfizer HCP's Croatian employees entered into agreements with doctors employed at public hospitals, who promised purchases of a Pfizer product in exchange for travel benefits and bonuses based on a percentage of sales.

In Kazakhstan, Pfizer HCP entered into an exclusive distribution contract for a Pfizer product with a Kazakh company, believing that all or part of the value of the contract would be provided to a high-level Kazakh government official, in order to corruptly obtain approval for the registration of a Pfizer product in Kazakhstan.

In Russia, Pfizer Russia employees used conference attendance and travel as a corrupt inducement for healthcare providers to prescribe or purchase Pfizer products. Pfizer Russia employees also used purported sales initiatives to make corrupt payments. The sales initiative, known as the "Hospital Program," appeared to be a mechanism for Pfizer Russia to provide the equivalent of indirect price discounts or in-kind benefits to government hospitals in connection with their purchases of Pfizer products. In practice, however, the Hospital Program was used to make cash payments to individual healthcare professionals to corruptly influence purchases and prescriptions.

Funds for these payments were often generated by Pfizer employees through the use of collusive vendors to create fraudulent invoices. The payments were falsely recorded in Pfizer's books and records, as "Travel and Entertainment," "Convention and Trade Meetings and Conference," "Distribution Freight," "Clinical Grants/Clinical Trials," "Gifts," and "Professional Services - Non Consultant."
:
Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Deferred-prosecution Agreement, Fine
:
Pfizer H.C.P. entered into a two-year deferred prosecution agreement, with a potential one-year extension. Pfizer H.C.P. agreed to pay a fine of $15 million, a 34% reduction off the bottom of the recommended Guidelines fine range, for Pfizer's voluntary disclosure, "extensive" cooperation in both this matter and the DOJ's investigation into other misconduct in the industry, and "extraordinary and ongoing" remediation.
:
15,000,000
:
0
:
Offense Level
(a)(2) Base Offense Level: 12
(b)(1) Offense involved more than one bribe: +2
(b)(2) Value of benefit received more than $7 million: +20
TOTAL: 34

Base Fine: $28.5 million.

Culpability Score
(a) Base Culpability Score: 4
(b)(2) 1,000+ employees and high-level personnel involvement: +4
(g)(1) self reporting: -5
TOTAL: 4

Calculation of Fine Range
Base Fine: $28.5 million
Multipliers: .8 (min) / 1.6 (max)
Fine Range: $22.8 million / $45.6 million

:
Domestic Concern
:
U.S.
:
Contract Procurement/Retention, License/Permit, Other Business Advantage
:
Not stated.
:
Cash, Travel, Wire/check
:
Direct, Sales Agent/Consultant, Subsidiary Company
:
2,000,000
:
Bulgaria, Croatia, Kazakhstan, Russia
:
Austria, Belgium
:
No
:
Yes