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July 7, 2020 Bioscience

SEC: Settled Alexion probe focused on alleged bribes to Turkish, Russian gov’t

PHOTO | Contributed Alexion, AstraZeneca Rare Disease's research facility at 100 College St. in New Haven.
By Natalie Missakian

A federal investigation that Alexion Pharmaceuticals settled for $21.5 million last week found the drugmaker paid bribes to Turkish and Russian government officials to gain favorable regulatory treatment for its blockbuster drug Soliris, according to details released by the SEC.

The New Haven-born biotech settled the case with the U.S. Securities & Exchange Commission last week without admitting to or denying the agency’s claims.

In an order detailing the results of its investigation, the SEC said Alexion violated the books, records and internal accounting controls provisions of the Federal Corrupt Practices Act (FCPA).

According to the document, Alexion Turkey paid a consultant more than $1.3 million between 2010 and 2015, a portion of which was passed on to Turkish government officials, in the form of cash, meals or gifts, to secure favorable treatment for Soliris.

In exchange for the payments, which were recorded as legitimate business expenses, the Alexion subsidiary not only secured approvals for patient prescriptions, but also confidential information and advance feedback from government officials on regulatory submissions, the SEC said. 

Prior to hiring the consultant, Alexion struggled to obtain the necessary approvals needed to start patients on Soliris therapy, according to the order. 

Likewise, Alexion Russia paid government healthcare officials in that country more than $1 million between 2011 and 2015 to gain favorable regulatory treatment and boost the budget allocations and the number of approved prescriptions for Soliris, the SEC said.

The Russian payments were recorded as “honoraria, educational expenses, business meeting expenses, and scientific research,” according to the SEC. 

Meanwhile, the investigation also found that Alexion’s subsidiaries in Brazil and Colombia “created or directed third parties to create inaccurate financial records concerning payments to patient advocacy organizations.”

The SEC faulted Alexion for failing to catch the improper payments, despite knowing the risks of doing business in those countries. 

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

Alexion cooperated with the investigation and said last week that it has enhanced its third-party payment processes and procedures, revamped its healthcare professionals engagement process and improved anti-corruption training for employees.

“We are proud of the actions we’ve taken that have expanded and strengthened our compliance organization,” the company said in a statement. 

The $21.5 million settlement includes a $3.5 million civil penalty, the repayment of about $14.2 million in profit SEC said Alexion obtained illegally, and about $3.8 million in interest.

Read the full SEC order here.


Contact Natalie Missakian at news@newhavenbiz.com

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