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news.Bristol-Myers Squibb (BMS) will pay $14.6m to settle charges from US regulators that its Chinese joint venture (JV) gave cash and other benefits to government health care providers to increase drug sales.
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SEC alleged that the company’s JV violated the Foreign Corrupt Practices Act (FCPA) and reaped over $11m in profits from this violation.
According to the SEC’s order instituting settled administrative proceedings, the company lacked effective internal controls over interactions with health care providers at BMS China.
The company’s joint venture sales personnel offered health care providers in China with cash, jewellery and other gifts, meals, travel, entertainment, and sponsorships for conferences and meetings between 2009 and 2014.
The agency noted that BMS China has inaccurately recorded the cash and gifts as legitimate business expenses in its books.
The SEC’s order showed that the company failed to respond effectively to red flags indicating that sales personnel provided bribes and other benefits to generate sales from health care providers in China.
The company allegedly did not investigate claims by certain terminated employees of the JV and was slow to remediate gaps in internal controls over interactions with health care providers and monitor potential inappropriate payments to them that were identified repeatedly in annual internal audits of BMS China between 2009 and 2013.
SEC Enforcement Division’s FCPA Unit chief Kara Brockmeyer 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."
The $14.6m fine, which BMS has agreed to pay includes $11.4m in profits plus prejudgment interest of $500,000 and a civil penalty of $2.75m.
Additionally, BMS has agreed to report to the SEC for a two-year period on the status of its remediation and implementation of FCPA and anti-corruption compliance measures.