SEC v. Pfizer Inc. (D.D.C. 2012)

• Case Name
• SEC v. Pfizer Inc. (D.D.C. 2012)

• Date Filed
• 08/28/2012

• Enforcement Agency
• SEC

• Countries
• Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, Serbia

• Foreign Official
• Officials and publicly employed doctors in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia.

• Date of Conduct
• 2001 to 2007

• Nature of Business
• Pfizer Inc. is a global pharmaceutical, animal health, and consumer products company incorporated in Delaware.  Its securities are registered with the SEC pursuant to Section 12(b) of the Exchange Act and its common stock is traded on the New York Stock Exchange.  Pfizer H.C.P. Corporation is an indirect wholly owned subsidiary of Pfizer Inc.  

• Influence to be Obtained
• According to the SEC, from 2001 to 2007, employees at Pfizer HCP and Pfizer Inc.’s other subsidiaries made and authorized payments of cash and other things of value to government officials (including doctors 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 and agents paid for domestic and international travel and provided equipment to government-employed doctors.  Employees also organized “Incentive Trips” for the healthcare providers, and Pfizer HCP sales representatives were instructed to reach agreements with the doctors on the specific quantities of Pfizer pharmaceuticals they would prescribe in return for participation in these events.
  
  In China, Pfizer’s Chinese subsidiary provided cash, hospitality, gifts, and support for international travel to doctors who were employed by Chinese government healthcare institutions.  The payments were intended to influence these officials to prescribe Pfizer products, provide hospital formulary listings, and otherwise use their influence to grant Pfizer China an unfair business advantage.
  
  In Croatia, Pfizer HCP employees made monthly payments to a doctor who served as a member of several Croatian government committees that oversaw the registration and reimbursement of pharmaceutical products.  During the period in which Pfizer HCP made payments, the committees on which the doctor served approved three Pfizer products.
  
  In the Czech Republic, Pfizer’s Czech subsidiary provided support for international travel and recreational opportunities to doctors employed by the Czech government with the intent to influence the government officials to prescribe Pfizer products.
  
  In Italy, Pfizer’s Italian subsidiary provided cash payments, gifts (such as televisions, mobile phones, photocopiers, and printers), support for domestic and international travel, and other benefits to doctors employed by Italian government healthcare institutions.  The payment of cash and other things of value was intended to influence those government officials to prescribe Pfizer products.
  
  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, 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.”

• Enforcement
• On August 7, 2012, the SEC filed a complaint against Pfizer Inc., alleging violations of the books-and-records and internal controls provisions of the FCPA.  On August 28, 2012, Pfizer Inc. consented to a final judgment, under which it was permanently restrained and enjoined from violating the FCPA and ordered to pay disgorgement and prejudgment interest of $26,339,944.84.  Pfizer was also ordered to periodically report to the SEC regarding its remediation and implementation of compliance measures.
  
  In a related criminal action, the DOJ entered into a deferred prosecution agreement with Pfizer Inc.’s subsidiary, Pfizer HCP, in which it agreed to pay a criminal penalty of $15 million.

• Amount of the Value
• Not Stated

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Subsidiary; Third-party Agents; Off-Shore Shell Companies.

• Total Sanction
• $ 26,339,944

• Compliance Monitor
• No

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 41,339,994

• Related Enforcement Actions
• United States v. Pfizer H.C.P. Corporation (D.D.C. 2012)
  SEC v. Wyeth LLC (D.D.C. 2012)
  

Pfizer Inc.

• Citation
• SEC v. Pfizer Inc., No. 1:12-cv-01303 (D.D.C. Aug. 28, 2012).

• Date Filed
• 08/28/2012

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States