Sunday, April 10, 2011

Unethical Device Sales Activities Exposed - Corporate Goals 1, Patient Safety 0

The healthcare giant was charged by the US Securities and Exchange Commission with violating the Foreign Corrupt Practices Act by bribing public doctors in several European countries - and paying kickbacks to Iraq - to illegally obtain business. The FCPA forbids US companies from bribing foreign government officials (read here).
Specifically, various Johnson & Johnson (JNJ) units paid bribes to public doctors in Greece who chose J&J surgical implants; public doctors and hospital administrators in Poland who awarded contracts to J&J, and public doctors in Romania to prescribe J&J meds. The subsidiaries - including DePuy and Janssen Pharmaceutica - also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program, according to the SEC complaint (pdf).
To settle charges, J&J agreed to pay $48.6 million in disgorgement and prejudgment interest, and another $21.4 to settle parallel criminal charges that were announced by the US Department of Justice. Meanwhile, J&J is also paying $8 million to resolve an investigation by the United Kingdom Serious Fraud Office into its DePuy unit (see this).
Why did the docs agree? The doctors and administrators working for public entities in Greece, Poland, and Romania, who ordered or prescribed J&J products, were rewarded with cash and inappropriate travel, among other goodies. And J&J subsidiaries, employees and agents used slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man to carry out the bribery.
The charges are not a huge surprise, however. Last summer, the feds announced they have begun paying closer attention to interactions between the pharmaceutical industry and foreign governments (background). And several months ago, at least five big drugmakers received letters as the federal government seeks to uncover any violations of the FCPA.
Four years ago, by the way, the healthcare giant made a “voluntary disclosure” to US authorities about improper payments, which were made by unspecified foreign subsidiaries in connection with the sale of medical devices in a pair of unnamed countries. And the worldwide chairman of medical devices and diagnostics retired (read this). In this disclosure, the SEC noted that J&J also conducted an internal probe, according to an SEC statement.

"The Justice Department “will be intensely focused on rooting out foreign bribery in your industry. That will mean investigation and, if warranted, prosecution of corporations, to be sure, but also it will involve investigation and prosecution of senior executives,” Breuer told the crowd, adding that individuals will be held accountable, according to The Legal Times.
“I don’t care if you’re a physician and I don’t care if you’re the clerical worker. It has to do with what you do. But if you do it, your MD degree is not going to be a shield,” Breuer said. Overall, he said, the Justice Department is pursuing more than 120 FCPA investigations in cooperation with the FBI and the Securities and Exchange Commission.
And Tony West, an assistant attorney general and chief of the department’s Civil Division, noted that he recently told the Senate Judiciary Committee that enforcement will not be limited to companies."

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