United States v. Pfizer H.C.P. Corporation (D.D.C. 2012)

• Case Name
• United States v. Pfizer H.C.P. Corporation (D.D.C. 2012)

• Date Filed
• 08/07/2012

• Enforcement Agency
• DOJ

• Countries
• Bulgaria, Croatia, Kazakhstan, Russia

• Foreign Official
• Unspecified Croatian official and professor; Russian medical doctors employed at public hospitals; High-ranking Russian government officials.

• Date of Conduct
• 1997 to 2006

• Nature of Business
• Pfizer Inc. is a global pharmaceutical, animal health, and consumer products company incorporated in Delaware.  Pfizer H.C.P. Corporation is an indirect wholly-owned subsidiary of Pfizer Inc.  

• Influence to be Obtained
• 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 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. Funds for these payments were often generated by Pfizer HCP 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.”
  
  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 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.

• Enforcement
• On August 7, 2012, the Pfizer HCP entered into a two-year deferred prosecution agreement with the DOJ under which Pfizer HCP agreed to pay a fine of $15 million, implement an “enhanced” corporate compliance program, and engage in regular reporting to the DOJ regarding the status of its remediation and implementation of the enhanced compliance measures.  In a related civil settlement with the SEC, Pfizer HCP’s parent company, Pfizer Inc., agreed to pay disgorgement and prejudgment interest of approximately $26.3 million.

• Amount of the Value
• $2 million.

• Amount of Business Related to Payment
• Not Stated.

• Intermediary
• Sales Agents; Consultants; Subsidiaries.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 15,000,000

• Compliance Monitor
• No

• Reporting Requirements
• Yes

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 26,811,509

• Related Enforcement Actions
• SEC v. Pfizer Inc. (D.D.C. 2012)
  SEC v. Wyeth LLC (D.D.C. 2012)
  

Pfizer H.C.P. Corporation

• Citation
• United States v. Pfizer H.C.P. Corp., No. 1:12-cr-00169 (D.D.C. 2012).

• Date Filed
• 08/07/2012

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Conspiracy: Anti-Bribery
  • Conspiracy: Books-and-Records

• Other Statutory Provision
• None

• Disposition
• Deferred Prosecution Agreement

• Defendant Jurisdictional Basis
• Domestic Concern

• Defendant's Citizenship
• United States