Novartis, Alcon settle US bribery charges with £347 million payout

Novartis and eyecare spinout Alcon have agreed to settle bribery charges brought by the US federal authorities, focused on activities in Greece and other countries, for $347 million.

Novartis’ Greek subsidiary Novartis Hellas and Alcon will pay around $234 million to the Department of Justice under the settlement, with another $113 million going to the Securities and Exchange Commission (SEC). The payments are part of a deferred prosecution agreement under the US Foreign Corrupt Practices Act (FCPA).

Novartis Hellas was accused of bribing employees of hospitals and clinics in Greece to boost prescriptions of Lucentis (ranibizumab), the company’s drug for wet age-related macular degeneration (AMD) as well as other medicines, and falsifying records to cover up the activity. Its share of the DoJ settlement is $225 million.

When news of the corruption scandal in Greece first broke, there were allegations of bribery of Greek politicians, but the resolution agreement doesn’t reference any such activity.

The much smaller Alcon settlement – $8.9 million – relates to charges that it bribed hospital and clinic staff to increase sales of artificial replacement lenses for the treatment of conditions like cataracts, and once again concealed the scam with falsified records.

“Novartis AG’s subsidiaries profited from bribes that induced medical professionals, hospitals, and clinics to prescribe Novartis-branded pharmaceuticals and use Alcon surgical products, and they falsified their books and records to conceal those bribes,” said Assistant Attorney General Brian  Benczkowski of the DoJ’s Criminal Division. 

“The resolutions announced today reflect the paramount importance of effective compliance programmes and the department’s commitment to holding companies accountable when they fall short.”

Meanwhile, the SEC portion of the settlement covers the activities in Greece and Vietnam, and also extends to the company’s conduct in South Korea.

Novartis executives were indicted in South Korea a few years ago for providing at least $2 million in kickbacks to doctors to boost prescribing of drugs such as its high blood pressure drug Diovan (valsartan) and Exforge (valsartan/amlodipine). The company said it is “in the final stages” of resolving the issues with local authorities in South Korea.

Previously, Novartis settled allegations of kickbacks involving specialty pharmacy prescribing of two of its drugs in the US in 2015 for $390 million, and in the following year paid $25 million to settle US charges that it bribed officials in China in breach of the FCPA.

It has also been accused of corruption in Turkey, but said in a statement that with the new agreements “all outstanding FCPA investigations into Novartis are now closed.”

“We are pleased that all outstanding FCPA investigations into the company are now closed,” said Shannon Thyme Klinger, Novartis’ group general counsel.

“We have implemented and continue to implement initiatives to ensure we operate with the same high ethical values wherever we do business, and we remain focused on building trust with society,” she added.

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