Bristol-Myers Squibb fined $14M on charges of bribing Chinese hospitals

October 06 00:26 2015

Pharmaceutical manufacturer Bristol-Myers Squibb has agreed to pay more than $14 million in fines to settle charges that its joint venture in China paid cash and other benefits to state-owned hospitals in exchange for prescription sales, the Securities and Exchange Commission announced Monday. After its investigation, the SEC found that the New York-based company violated the Foreign Corrupt Practices Act in its dealings with Chinese hospitals and doctors and “reaped more than $11 million in profits from its misconduct.”

Bristol-Myers Squibb neither admitted nor denied the findings, the SEC said. In a statement, Bristol-Myers Squibb said: “We have resolved this matter with the United States Securities and Exchange Commission, and are committed to the highest standards of business integrity, vigilance and ethics across our organization.” Shares fell 1% late Monday morning to $61.59.

Chinese sales representatives at BMS China, the Chinese joint venture that is majority-owned by Bristol-Myers, paid bribes — including cash, jewelry, meals, travel, entertainment, sponsorships and other gifts — to health care providers between 2009 and 2014 to generate more sales. And Bristol-Myers Squibb “failed to respond effectively to red flags” indicating such practices, the SEC said. “Bristol-Myers Squibb’s failure to institute an effective internal controls system and to respond promptly to indications of significant compliance gaps at its Chinese joint venture enabled a widespread practice of providing corrupt inducements in exchange for prescription sales to continue for years,” said Kara Brockmeyer, Chief of the Enforcement Division’s FCPA Unit.

BMS China recorded the spending as legitimate business expenses, which were then consolidated into the financial records of Bristol-Myers Squibb. aSeveral BMS China employees who were fired by the company made claims that faked invoices, receipts and purchase orders were widely used to bribe health care providers. But Bristol-Myers Squibb did not investigate their claims, the SEC said.