An anonymous whistleblower has accused Novartis (NVS) of paying bribes in Turkey by using a consulting firm to boost the use of its medicines, according to Reuters. The alleged bribes reportedly resulted in $85 million in benefits to Novartis.
The firm aided the drug maker by getting medicines added to formularies, or list of medicines that were approved for use in government-run hospitals, according to a 5,000-word email that Reuters reviewed. The consulting firm also helped Novartis avoid price cuts in other countries by winning government approval to change the names of two medicines.
The Alp Aydin Consultancy was paid the equivalent of $290,000 plus costs in 2013 and 2014, but the relationship ended after the Turkish Social Security Institution began an investigation, the news service reported. The email had been sent to Joe Jimenez, the Novartis chief executive, and Srikant Datar, who chairs the audit and compliance committee, according to Reuters.
A Novartis spokesman confirmed that an internal investigation is under way.
“We take any allegation of inappropriate behavior extremely seriously and investigate all allegations thoroughly,” he wrote us in an email. “As a matter of policy, we don’t comment on such investigations even if the complainant decides to make them public.”
This is only the latest instance in which Novartis has confronted charges of paying bribes to boost business.
Earlier this week, the drug maker agreed to pay $25 million to settle charges that it violated the US Foreign Corrupt Practices Act by making illegal payments to health care providers in China. Last month, South Korean authorities raided Novartis’s offices in search of evidence the company provided bribes to local doctors. The company has said it is cooperating with the investigation.
In the United States, Novartis is squabbling with the Department of Justice over documents that allegedly contain details of nearly 80,000 “sham” events that the drug maker used to encourage doctors to prescribe several medicines. The tussle arises from a whistleblower lawsuit filed by a former sales rep. The company argued the government is unfairly expanding its inquiry and is seeking a protective order.
Last fall, meanwhile, Novartis paid a $390 million settlement over charges of inducing specialty pharmacies to boost prescriptions. This case also was the result of a whistleblower lawsuit.
The developments reflect increased scrutiny of global drug makers as they look to expand in so-called emerging markets, which these companies have identified as a potentially large growth area. This is especially true for Asia. Of course, doing business in foreign countries requires staying attuned to local customs, which can vary widely.
Over the past few years, a growing number of companies have been enmeshed in bribery scandals, some of which have resulted in large fines. The most notorious example involved GlaxoSmithKline (GSK) which, three years ago, was found guilty by a Chinese court of bribing doctors, hospitals, and other nongovernment personnel, and was fined more than $490 million. Since then, Glaxo has begun probing bribery allegations in several other countries. Sanofi (SNY) and its Alcon (ALC) eye unit have done the same.
Recently, Bristol-Myers Squibb ended payments to doctors in China shortly after agreeing to pay more than $14 million to resolve charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in the country. In recent years, SciClone Pharmaceuticals, Eli Lilly, and Johnson & Johnson (JNJ) also agreed to settlements for violating the same federal law.
As for Novartis, the drug maker is also investigating allegations that the consultant passed funds to Turkish health care officials, and that its local subsidiary hired relatives of high-prescribing doctors, according to Reuters.
The whistleblower email said Novartis gained $20 million because the consultant was able to have drugs for multiple sclerosis, chronic lung disease, and juvenile arthritis added to hospital formularies. Another $50 million was gained after the consultant convinced Turkish officials to allow Novartis to rename two drugs — Ilaris and Gilenya became Ibecta and Fingya — which meant they were no longer used for international pricing comparisons, Reuters wrote.
Whether US authorities will investigate remains unclear. But the email writer said the allegations, which could not be independently confirmed, would also be passed along to the DOJ and the Securities and Exchange Commission, according to Reuters.