J&J Announces Settlement for Corrupt Practices - Pharmaceutical Technology

Latest Issue
PharmTech

Latest Issue
PharmTech Europe

J&J Announces Settlement for Corrupt Practices


ePT--the Electronic Newsletter of Pharmaceutical Technology

Johnson and Johnson (J&J) has agreed to pay more than $77 million after being charged for violations of the US Foreign Corrupt Practices Act (FCPA), which include bribing public doctors in several European countries and paying kickbacks to illegally obtain business in Iraq. The charges stem from investigations conducted by the US Securities and Exchange Commission (SEC), the US Department of Justice (DOJ) and the UK’s Serious Fraud Office (SFO) according to an US Securities and Exchange Commission (SEC) press release.

The investigations have already been publicly disclosed by J&J. The company voluntarily notified the DOJ and SE in 2007 that it believed its subsidiaries had made improper payments related to sales of medical devices.

“More than four years ago, we went to the government to report improper payments and have taken full responsibility for these actions,” William C. Weldon, chairman and CEO at J&J, explained in a statement. “We have undertaken significant changes since then to improve our compliance efforts, and we are committed to doing everything we can to ensure this does not occur again.”

J&J has agreed to pay $48.6 million in disgorgement and prejudgment interest and a $21.4 million fine to settle the SEC and DOJ charges, respectively. The company has also been ordered by the SFO to pay a Civil recovery Order of approximately $7.9 million. Overall, J&J will have to pay more than $77 million.

According to releases from the SEC and the DOJ, various subsidiaries, employees and agents of J&J rewarded public doctors and administrators in Greece, Poland, and Romania who ordered or prescribed J&J products. Rewards reportedly included cash and inappropriate travel. J&J also acknowledged that kickbacks were paid to Iraq’s former government, on behalf of J&J subsidiary companies, to secure contracts to provide humanitarian supplies.

“The message in this and the SEC’s other Foreign Corrupt Practices Act cases is plain—any competitive advantage gained through corruption is a mirage,” Robert Khuzami, director of the SEC's Division of Enforcement, said in the SEC press release. “J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks.”

However, J&J has also been recognized for its disclosure and cooperation during the investigations. Part of the settlement also includes a Deferred Prosecution Agreement with the DOJ and a Consent to Final Judgement with the SEC. In its press statement, J&J explained: “These agreements reflect the recognition by DOJ and SEC of Johnson & Johnson’s voluntary disclosures and subsequent cooperation, as well as the company’s compliance efforts over the past four years. If the company completes three years of enhanced FCPA compliance undertakings and reporting to the DOJ and the SEC, the charges filed by the DOJ against a subsidiary company will be dismissed.”

ADVERTISEMENT

blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
|Monthly
| Weekly

Survey
Which of the following business challenge poses the greatest threat to your company?
Building a sustainable pipeline of products
Attracting a skilled workforce
Obtaining/maintaining adequate financing
Regulatory compliance
Building a sustainable pipeline of products
30%
Attracting a skilled workforce
27%
Obtaining/maintaining adequate financing
14%
Regulatory compliance
30%
View Results
Eric Langer Outsourcing Outlook Eric LangerBiopharma Outsourcing Activities Update
Cynthia Challener, PhD Ingredients Insider Cynthia Challener, PhDAppropriate Process Design Critical for Commercial Manufacture of Highly Potent APIs
Jill Wechsler Regulatory Watch Jill Wechsler FDA and Manufacturers Seek a More Secure Drug Supply Chain
Sean Milmo European Regulatory WatcchSean MilmoQuality by Design?Bridging the Gap between Concept and Implementation
Medicare Payment Data Raises Questions About Drug Costs
FDA Wants You!
A New Strategy to Tackle Antibiotic Resistance
Drug-Diagnostic Development Stymied by Payer Concerns
Obama Administration Halts Attack on Medicare Drug Plans
Source: ePT--the Electronic Newsletter of Pharmaceutical Technology,
Click here