European Drugmakers Deal with Misconduct
Two European drugmakers have had to deal with charges of misconduct in the US or from US authorities over the past week. A US-based research scientist with Glaxo Smith Kline pleaded guilty to allegations she sold company trade secrets to a Chinese pharmaceutical company, and Sanofi settled out of court with the US justice Department (DOJ), paying more than $25 million to resolve charges its subsidiaries in Kazakhstan and the Middle East paid bribes.
Yu Xue and two of her associates were accused of creating a company called Renopharma in Nanjing, China, to research and develop anti-cancer drugs, with Xue allegedly receiving financial support and subsidies from the Chinese government while she was employed by GSK to develop high-priced biopharmaceuticals.
Xue, who was charged with sending “a substantial number” of GSK’s scientific documents to Renopharma, “used her position at GSK to steal valuable trade secrets to benefit a company bankrolled by the Chinese government,” said US Attorney William McSwain. “This sort of economic warfare presents a danger to our economic security, jeopardizes America’s position as a global leader in innovation, and will not be tolerated.”
When a corporation spends billions of dollars developing products and processes, the theft of valuable intellectual property is a clear threat, added FBI special agent Michael T. Harpster. ”When stolen trade secrets stand to benefit a foreign economic rival, it’s a threat to our country as well.”
Sanofi settles Middle East allegations
The DOJ and the US Securities and Exchange Commission (SEC) have been investigating Sanofi subsidiaries in the Middle East on suspicion that they violated the US Foreign Corrupt Practices Act over the period 2005 to 2016.
Authorities said the French drugmaker had engaged in bribery schemes in Kazakhstan, Jordan, Lebanon, Bahrain, Kuwait, Qatar, Yemen, Oman, the United Arab Emirates and the Palestinian territories, which included payments in exchange for prescriptions.
Without admitting fault, Sanofi agreed to pay $17.5 million in disgorgement, $2.7 million in prejudgment interest and a civil penalty of $5 million and also enter a two-year self-reporting program to update the SEC on the effectiveness of its enhanced internal controls and anti-bribery and corruption compliance program.
The SEC said the company had fully cooperated with the investigation and the “strengthened compliance.”
Sanofi has faced bribery allegations in the past.
In 2013, a German court convicted several of its former employees on such charges and ordered the company to pay €28 million ($39 million) in penalties. Other drugmakers, including Novartis, have also been implicated in high-profile bribery scandals in recent years. The DOJ is currently investigating additional cases.
Charles Cain, FCPA unit chief in the SEC’s Enforcement Division, said pharma bribes remain “a significant problem despite numerous prior enforcement actions,” and that “more work needs to be done to address this industry risk.”