On August 30, the SEC announced a $5.5 million settlement with AstraZeneca, the U.K.-based pharmaceutical company, to settle charges under the FCPA’s books and records and internal control provisions due to allegedly improper payments made by the company’s wholly-owned subsidiaries in China and Russia. In its administrative order, the SEC alleged that the Chinese subsidiaries made improper payments to doctors at state-owned healthcare providers to incentivize purchasing and prescribing AstraZeneca pharmaceuticals. The improper payments were funded by fraudulent tax receipts, inflated travel invoices, and fabricated speaker fees. The Chinese subsidiary also allegedly made improper payments to government officials in exchange for reductions or dismissals of proposed financial sanctions against the subsidiary. Similarly, the SEC alleged that AstraZeneca’s Russian subsidiary made improper payments in connection with pharmaceutical sales. Without admitting or denying the SEC’s findings, AstraZeneca agreed to disgorge $4.325 million and pay a $375,000 civil penalty with $822,000 in prejudgment interest.
The SEC’s administrative order indicates that AstraZeneca waived its statute of limitations defenses. This is notable because AstraZeneca’s misconduct allegedly ended in 2010, and the statute of limitations for FCPA offenses is five years.
This settlement represents another in a series of SEC investigations of the pharmaceutical industry. Examples include the March 2016 Novartis settlement and payment of $25 million, and SciClone Pharmaceuticals’ settlement earlier this year for $12.8 million. Other notable pharmaceutical companies with recent FCPA settlements include Bristol-Myers Squibb in 2015 settling for $14 million; Eli Lily in 2012 settling for $29 million; and Johnson & Johnson settling with the SEC and DOJ in 2011 for $70 million.