In the latest sign that global drug makers remain under scrutiny for their dealings with health care providers, South Korean authorities raided Novartis (NVS) offices in search of evidence the company provided bribes to local doctors, according to media reports.
The Seoul Western District Prosecutors’ Office confiscated various documents, including account books, in order to determine whether rebates the drug maker offered physicians may have actually been bribes, Yonhap News Agency wrote.
A Novartis spokesman confirmed that its offices in South Korea were visited by local authorities in relation to an investigation, but declined further comment. “The investigation is ongoing and we cannot comment further at this time,” he wrote us.
The probe appears to be at an early stage, but is likely to be closely watched for signs that global drug makers continue to stumble in their practices in various foreign markets.
The bribery issue gained prominence three years ago thanks to a widely publicized episode in China, where GlaxoSmithKline (GSK) was eventually found guilty by a Chinese court of bribing doctors, hospitals, and other nongovernment personnel and fined more than $490 million.
Some Glaxo employees in China were accused of using travel agencies to issue bogus receipts and channel bribes to government officials, hospitals, and doctors in order to sell more of its drugs at higher prices. Ultimately, five of the company’s managers, including its former top China executive, received suspended jail sentences and about 110 employees were fired.
Glaxo was also probed by authorities in Poland, and the drug maker opened internal investigations elsewhere, including in Jordan and Lebanon.
The scandal in China, however, was watched particularly closely for signs of how the country — which is an increasingly important market in the global pharmaceutical industry — may have tried to boost its own domestic drug makers while simultaneously trying to crack down on corruption.
Moreover, global drug makers have also been on notice that US authorities have been running probes into potential violations of the Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.
Recently, SciClone Pharmaceuticals agreed to pay $12.8 million to settle a US Securities and Exchange Commission investigation into potential violations. In 2012, Eli Lilly agreed to pay more than $29 million to settle charges of bribing foreign government officials to win millions of dollars of business in Russia, Brazil, China, and Poland.
That same year, Pfizer (PFE) paid $15 million to resolve allegations of bribing officials in several countries, including China, Czech Republic, Italy, and Russia. And Bristol-Myers Squibb agreed to pay more than $14 million to settle similar charges. In 2011, Johnson & Johnson paid $70 million to resolve FCPA violations.
In the US, by the way, accelerating concerns about the extent to which drug companies seek to influence medical practice and research spurred the Obama administration to create the Open Payments database, which is publicly accessible and lists payments made by drug companies to doctors.