$519 Million FCPA Payment By Teva Pharmaceuticals—Largest Ever FCPA Payment By Pharmaceutical Company—Follows Large FCPA Plea Agreement With Obedrecht And Braskem

Summary

On December 22, 2016, the world's largest manufacturer of generic pharmaceuticals, Teva Pharmaceuticals ("Teva"), agreed to pay $519 million in FCPA-related criminal penalties, disgorgement, and interest. The Israeli company Teva entered into a deferred prosecution agreement with the U.S. Department of Justice ("DOJ") to settle allegations that it had bribed government officials in Russia, Ukraine, and Mexico. Teva's settlement is the fourth-largest Foreign Corrupt Practices Act ("FCPA") settlement ever, and the largest-ever by a pharmaceutical company. The $519 million payment imposed on Teva is significantly higher than the next-highest FCPA-related payment imposed on a pharmaceutical company, $70 million imposed in 2011.

The Teva settlement came on the heels of Odebrecht and Braskem's global $3.5 billion settlement with authorities in the United States, Brazil, and Switzerland, announced the day before, on December 21, 2016. The Brazilian-based construction company Odebrecht pleaded guilty to a conspiracy to violate the FCPA, with the fine to be determined in the future at sentencing on April 17, 2017. Braskem, Odebrecht's petrochemical unit, also pleaded guilty.

Teva: Bribes to Government Officials and Inadequate Internal Controls

The Teva agreement detailed the company's payment of bribes to government officials in Russia, Ukraine, and Mexico, and the company's lack of internal controls to prevent bribery.

In Russia, Teva executives and employees bribed a high-ranking government official in order to increase sales of Teva's multiple sclerosis drug Copaxone, one of Teva's most profitable products. The Russian government official influenced the Russian Ministry of Health's annual drug purchase auctions to increase Copaxone sales. In return, Teva employed the Russian government official's drug repackaging and distribution company. From 2010 until at least 2012, he earned approximately $65 million through inflated profit margins to his company.

In Ukraine, Teva also bribed a senior Ukrainian Ministry of Health official to influence Ukraine's approval of Teva's drug registrations, including those of Copaxone and insulins. These drug registrations were necessary to market and sell products within Ukraine. From 2001 to 2011, Teva employed the official as a "registration consultant," paying him a monthly fee along with other items of value, including travel, totaling approximately $200,000.

In Mexico, Teva's Mexican subsidiary bribed...

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