Justice Dept warns drug companies on corruption

Reuters Business News
|
Posted: Nov 12, 2009 2:23 PM

WASHINGTON (Reuters) - The U.S. Justice Department plans to focus on prosecuting those in the pharmaceutical industry who try to bribe foreign officials for preferential treatment of their products, a senior official said on Thursday.

The department has been examining fraud and corruption in the healthcare system as part of the overall Obama administration drive to overhaul the system and reduce skyrocketing costs.

The assistant attorney general for the Justice Department's criminal division, Lanny Breuer, issued the warning that the agency would be scrutinizing dealings between companies selling their products overseas and foreign officials.

"In the course of those interactions, the industry must resist short-cuts," Breuer said to a forum on pharmaceutical regulation and compliance. "It must resist the temptation and the invitation to pay off foreign officials for the sake of profit."

He cautioned companies against offering foreign officials things like cash, gifts, charitable donations, travel, meals, entertainment, speaking fees and consultant arrangements.

He also said that the definition of who would be considered was broader than the obvious health ministry and customs officials. It include doctors, pharmacists, even lab technicians

at state-run facilities, Breuer said.

"The depth of government involvement in foreign health systems, combined with fierce industry competition and the closed nature of many public formularies, creates a significant risk that corrupt payments will infect the process," he said.

In one of the biggest U.S. corruption cases, the German engineering conglomerate Siemens AG last year agreed to pay more than $1.3 billion to settle investigations by the United States and Germany about bribes allegedly paid to win contracts.

Breuer said that the department was currently investigating more than 120 corruption cases on a variety of issues.

(Reporting by Jeremy Pelofsky, editing by Gerald E. McCormick)