Enforcement Action

 

Docket or Case Number:    N/A

Court:    N/A

Initiation Date:    12/22/2016  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Rohan A. Virginkar, Trial Attorney, Fraud Section, Criminal Division
  • John-Alex Romano, Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    U.S. Securities and Exchange Commission , Federal Bureau of Investigation , Department of Justice- Criminal Division’s Office of International Affairs , Mexican Attorney General’s Office (Procuradura General de la República)

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Teva Pharmaceutical Industries Ltd. ("Teva") is an Israeli pharmaceutical corporation and the largest generic drug manufacturer in the world. Teva’s American Depositary Receipts traded on the Nasdaq National Market from October 1987 until May 2012, when Teva transferred the listing of its American Depositary Receipts to the New York Stock Exchange.

From 2006 to 2012 , Teva paid bribes to a high-ranking government official in Russia ("Russian Official") intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, to the Russian government. In 2009, the Russian government announced a new strategy for the Russian Federation's domestic pharmaceutical industry which established a preference for domestic products. In response, Teva partnered with a distribution company ("Russian Distributor") owned by Russian Official to repackage and distribute Copaxone in Russia. In part as a result of Teva’s relationship with Russian Distributor, Teva's Copaxone sales in Russia increased over time and Copaxone’s market share grew. In exchange, Teva offered discounts to Russian Distributor that were larger on average than discounts given to other distributors Teva used in Russia.

From 2001 to 2011, Teva paid a prominent Ukrainian government official (“Ukrainian Official” ) more than $200,000 in exchange for his improper political influence in the process of registering and promoting various Teva drugs in Ukraine. ln or around August 2001, Teva engaged Ukrainian Official as a third-party "registration consultant'' and entered into consulting agreements to pay Ukrainian Official a monthly "consultancy fee.'' In addition to the monthly payments, Teva provided Ukrainian Official with cash bonuses, travel expenses and other things of value. The consulting agreement between Teva and Ukrainian Official was renewed annually, on the same terms, until in or around late 2011. Teva stopped paying Ukrainian Official at the end of 2009, at which point Teva's Ukrainian subsidiary took over payments.

In 2011 and 2012, Teva's Mexican subsidiaries made illegal payments through a distributor to doctors employed at government hospitals to influence their Copaxone prescription decisions. Although Teva had earlier discovered credible evidence of improper payments by Teva's Mexican subsidiaries to government officials in Mexico, the company failed to implement internal accounting controls sufficient to meet the risks posed by Teva’s business in Mexico.

In total, Teva realized more than $214,596,170 in profits from business obtained as a result of illegal payments to foreign officials in Russia, Ukraine, and Mexico.

On December 22, 2016, the DOJ filed a criminal information charging Teva with one count of conspiracy to violate the anti­bribery provisions of the FCPA and one count of failing to implement adequate internal controls. That same day, Teva entered a deferred prosecution agreement (DPA) and agreed to pay a total criminal penalty of $283,177,348. Teva also agreed to continue to cooperate with the department’s investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for a term of three years.

Separately, Teva's Russian subsidiary signed a plea agreement in which it has agreed to plead guilty to a one­count criminal information charging the company with conspiring to violate the anti­bribery provisions of the FCPA.

In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Teva. The company consented to a final judgment under which it agreed to pay approximately $236 million in disgorgement to the SEC, including prejudgment interest. The combined total amount of U.S. criminal and regulatory penalties to be paid by Teva is nearly $520 million.

Country(ies) involved:    Mexico, Russia, Ukraine

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $283,177,348 / $221,232,303 = 128.00 %

Number of Related Enforcement Actions (Including This Enforcement Action):    3

Country(ies) involved:    Mexico, Russia, Ukraine

Total $ Bribery Payments:    N/A

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $221,232,303

Total $ Monetary Sanctions:    $519,279,572

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $519,279,572 / $221,232,303 = (234.72 %)

Name:    Teva Pharmaceutical Industries Limited

Place of Incorporation:    Israel

HQ Country(ies):    Israel

Entity Type:    Public Company

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371) ; Internal Controls, Primary, Knowing Violation (15 U.S.C. § 78m(b)(5)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B)) ; Internal Controls, Primary, Issuer [Willful] (15 U.S.C. § 78m (b)(2)(B); 15 U.S.C. § 78ff(a))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer (Employee) ; Person (Books & Records, Internal Controls) ; Conspirator

Period of Bribery:   2001 - 2012

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $221,232,303

Country(ies) involved:    Mexico, Russia, Ukraine

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Official; Ukrainian Ministry of Health
  • Name N/A, Physicians; Mexican state-owned or state-managed hospitals and healthcare facilities
  • Name N/A, Healthcare Providers; Mexican state-owned or state-managed hospitals and healthcare facilities
  • Name N/A, Official; Russian Federation

Defendant-Related Entities Involved in the Misconduct:    Multiple Teva Mexico Subsidiaries - Subsidiary ; Teva LLC - Subsidiary ; Teva Ukraine LLC - Subsidiary

Third-Party Intermediary:   

  • Mexican Company , Agent/Consultant/Broker
  • Russian Company , Agent/Consultant/Broker

Type of Bribe:   Money, Travel/Lodging

Cash, Wire or Check:    Wire Transfer, Cash (bills/coins/etc.)

Purpose of Bribe:    Facilitate and promote sales, Obtain/retain business

TRANSACTION OVERVIEW
Illegal Payment to the Russian Federation

Period of Bribery:   2006 – 2012

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $204,167,303

Country(ies) involved:    Russia

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Official; Russian Federation;

Defendant-Related Entities Involved in the Misconduct:    Teva LLC - Subsidiary

Third Party Intermediary:    Russian Company - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    N/A

Purpose of Bribe:    Facilitate and promote sales, Obtain/retain business

TRANSACTION OVERVIEW
Illegal Payments to Ukraine

Period of Bribery:   2001 – 2011

Total Bribery Payments:    $200,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Ukraine

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Official; Ukrainian Ministry of Health;

Defendant-Related Entities Involved in the Misconduct:    Teva Ukraine LLC - Subsidiary

Third Party Intermediary:    N/A

Type of Bribe:   Travel/Lodging, Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Facilitate and promote sales, Obtain/retain business

TRANSACTION OVERVIEW
Illegal Payments to Mexico

Period of Bribery:  

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Mexico

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Physicians; Mexican state-owned or state-managed hospitals and healthcare facilities;
  • Name N/A, Healthcare Providers; Mexican state-owned or state-managed hospitals and healthcare facilities;

Defendant-Related Entities Involved in the Misconduct:    Multiple Teva Mexico Subsidiaries - Subsidiary

Third Party Intermediary:    Mexican Company - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Cash (bills/coins/etc.)

Purpose of Bribe:    Facilitate and promote sales, Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Teva Pharmaceutical Industries Limited

Subsidiary:  Teva LLC

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    Yes
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Teva Ukraine LLC

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    Yes
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Sicor de Mexico, S.A.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Lemery S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Lemery Desarrollo y Control S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Immobiliaria Lemery S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Vitrium Division Farmaceutica, S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Teva Pharmaceutical Mexico S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Ivax Pharmaceuticals Mexico, S.A. de C.V.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

Re: Teva Pharmaceutical Industries Limited

  • Inadequate internal controls or auditing
  • Inadequate safeguards concerning use of third parties

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Teva Pharmaceutical Industries Limited    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Teva Pharmaceutical Industries Limited

Total Monetary Sanctions for the Action:    $283,177,348

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    12/22/2016

Teva Pharmaceutical Industries Limited

—  Total Monetary Sanctions for Defendant:    $519,279,172

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    Yes

    Note: This sanction may have been imposed jointly and severally on multiple defendants, or it may resolve claims against more than one defendant in this proceeding or related proceedings. You should review the case summaries and resolution documents for all related cases to better understand how sanctions were levied against the defendants.

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