Nationality of Foreign Officials: Brazil, Colombia, Japan, Russian Federation, Turkey
Summary of Allegations:
In its filings with the U.S. Securities and Exchange Commission ("SEC"), Alexion disclosed that the company is under investigation by the US authorities in relation to Alexion’s grant-making activities and compliance with the Foreign Corrupt Practices Act ("FCPA"). The authorities sought information related to Alexion’s activities and policies and procedures worldwide, particularly in Japan, Brazil, Turkey, and Russia.
Since 2009, Alexion Ilaç Ticaret Limited Sirketi (“Alexion Turkey”) started selling its primary product Soliris in Turkey but had difficulty obtaining government required approvals on prescription by health care providers under the Ministry of Health.
Between 2010 and 2015, Alexion Turkey hired a consultant with close connections to top officials in the Ministry of Health to secure approvals and favorable treatments for Soliris. Alexion Turkey utilized a third-party vendor to pay the consultant totaling US$1.3 million, and the consultant passed a portion to the government officials.
As a result, Alexion Turkey received approvals on prescription and insider information on regulatory matters and thereby enriched at least US$6.6 million.
Alexion Turkey mischaracterized the bribes as legitimate reimbursements. An Alexion employee even asked to record relevant entries in pencil for easy tampering.
The alleged expenses were vague without documentation or explanation of services performed. Alexion Turkey lacked adequate anti-bribery compliance training and did not maintain a sufficient internal control system to discern the nature of falsified books and records.
Between 2011 and 2015, Alexion Pharma OOO (“Alexion Russia”) unjustly enriched over US$7.5 million by providing over US$1 million bribes to state-owned HCPS to secure funding from the Russian government. Under the healthcare system in Russia, Alexion Russia needed to sell Soliris via a specific process then obtained reimbursement from the regional healthcare budget.
To secure healthcare budget allocation to Soliris for further sales, Alexion Russia provided illicit payments multiple state-owned HCPs, especially those believed to have decision-making authorities in healthcare budget, medical standards, and Soliris-related government application review. As a result, Alexion Russia received healthcare budgets for Soliris and other favorable decisions from the government.
Alexion Russia mischaracterized the illicit payments as legitimate honoraria, expenses of education, business, and scientific research; and its internal control system failed to detect false documentation.
Brazil and Colombia
Between 2013 and 2015, employees of Alexion Pharma Brazil (“Alexion Brazil”) and Alexion Pharma Colombia SAS (“Alexion Colombia”) directed and orchestrated with third parties to submit false expense claims to get reimbursement from the company.
An Alexion Brazil employee provided a falsified invoice to reimburse a third party that paid for his personal entertainment expenses.
A manager of Alexion Colombia made false reimbursement claims and circumvented the global approval process by asking a third party to forge an invoice of legal support services to gain local approval.
Employees of Alexion Brazil and Colombia failed to keep adequate records of relevant transactions and payments. Some employees in Alexion Brazil even destroyed related documentations.
Approximate Alleged Payments to Foreign Officials: US$1.3 million to Turkish government officials; over US$1 million to Russian government officials;
Business Advantage Allegedly Obtained: Alexion Turkey and Russia secured approvals on prescription, relevant budget allocations, and favorable government decisions.
Agencies: Brazil: Unspecified
According to Alexion’s SEC filing on 7 May 2020, Brazilian authorities seized information from its local offices back in May 2017 amid a probe into Alexion’s local operations. No further information regarding the probe is available at the moment.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Declination
Year Resolved: 2020
On 8 May 2015, Alexion received a subpoena in connection with an investigation by the Enforcement Division of the SEC requesting information related to Alexion's grant-making activities and compliance with the FCPA. While the subpoena seeks information related to Alexion's activities and policies and procedures worldwide, it noted Japan, Brazil, Turkey and Russia in particular. In addition, the SEC sought information related to Alexion's recalls of specific lots of Soliris and related securities disclosures.
In October 2015, Alexion received a request from the U.S. Department of Justice ("DOJ") for the voluntary production of documents and other information pertaining to Alexion's compliance with the FCPA. In an email statement addressed to the Wall Street Journal in October 2015, Alexion stated that they are fully cooperating with the investigation and the company has long been committed to operating at the highest level of business ethics worldwide and has a robust global compliance programs.
On 7 May 2020, Alexion stated that the DOJ has concluded the investigation without recommending further action. In addition, it has reached an agreement in principle with the SEC expecting to pay approximately US $25 million to resolve relevant allegations.
On 2 July 2020, Alexion Pharmaceuticals Inc. reached a settlement with the U.S. Securities and Exchange Commission to resolve charges under the recordkeeping and internal controls provisions of the Foreign Corrupt Practices Act (“FCPA”).
Under the terms of the SEC’s cease-and-desist order, Alexion will pay a total of approximately US$21.5 million, including disgorgement of US$14,210,194, prejudgment interest of US$3,766,337, and a civil penalty of US$3,500,000.