Alexion settles FCPA action for $21 million

Jul 08, 2020
SEC allegations include work of subsidiaries in Turkey and Russia

Boston-based Alexion Pharmaceuticals has agreed to pay a total of more than $21 million to settle SEC allegations that it violated the FCPA via subsidiaries in Turkey and Russia.

Specifically, the SEC says in its related administrative order that between 2010 and 2015 Alexion’s subsidiary in Turkey made payments to foreign officials so as to influence them to provide favorable regulatory treatment for the company’s main drug, Soliris, and to approve Soliris prescriptions for individual patients. 

According to the SEC, Alexion’s subsidiary in Russia between 2011 and 2015 made payments to foreign officials to influence the allocation of regional healthcare budgets for Soliris, increase the number of approved Soliris prescriptions and provide favorable influence of regulatory treatment received by the drug. The payments were made by various means such as via a third-party consultant, honoraria and grants, the SEC says.

The subsidiaries in Turkey and Russia kept false books and records in connection with the alleged improper payments, according to the agency. Alexion had insufficient internal accounting controls to detect and prevent these payments and to provide reasonable assurances that the transactions at issue were recorded accurately in the subsidiaries’ books and records, which were rolled into the parent company’s books and records, the SEC says.

The payments continued until 2015 because of Alexion’s inadequate internal accounting controls and the lack of an effective anti-corruption compliance program at the company – and led to Alexion being ‘unjustly enriched’ by more than $14 million, according to the filing.

Alexion’s internal accounting controls also led to the failure of its subsidiaries in Brazil and Colombia to maintain accurate books and records regarding third-party payments, the SEC alleges. It says that from 2013 to 2015, certain employees at those units created or directed third parties to create inaccurate financial records regarding payments to third parties, including patient advocacy organizations.

Alexion settled without admitting or denying wrongdoing. Its payments arising from the order comprise roughly $14.2 million in disgorgement, around $3.8 million in pre-judgment interest and a $3.5 million penalty.

Terms of the agreement took into account remedial acts undertaken by Alexion and its co-operation with SEC officials, according to the order. It says the company’s co-operation included providing regular briefings on the facts developed in the internal investigation and forensic accounting review Alexion undertook, and identifying and providing translations of key documents.

The SEC adds that Alexion’s remediation efforts included:

  • Strengthening and expanding its global compliance organization
  • Enhancing policies and procedures regarding payments to third parties, including creating a centralized system to track and monitor third-party payments
  • Overhauling its healthcare provider engagement process and oversight
  • Improving its internal audit function
  • Conducting compliance market reviews
  • Improving anti-corruption training.

‘Alexion’s internal accounting controls failed to detect and prevent payments to foreign government officials by its subsidiaries,’ Melissa Hodgman, an associate director in the SEC’s enforcement division, says in a statement. ‘Companies in frequent contact with foreign officials need to ensure their internal controls appropriately address such risks.’

In a statement, Alexion notes that the US Department of Justice had previously closed its inquiry into the matter. The statement adds: ‘Alexion is pleased to have reached a resolution and to have such a strong and effective compliance culture and program in place today. We are proud of the actions we’ve taken that have expanded and strengthened our compliance organization…

‘We are proud of the culture and leadership established at Alexion, and we look forward to a promising future, which is built on our continuing commitment to compliance and acting with integrity while also delivering on our mission of transforming the lives of people with rare and devastating diseases.’

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