Chinese Pharmaceutical Company Agrees to $12.8 Million Fine

According to the U.S. Securities and Exchange Commission (SEC), this February, SciClone Pharmaceuticals Inc. agreed to pay $12.8 million to settle the investigation into potential violations of the Foreign Corrupt Practices Act. Allegations stretch back to at least 2007, and include multiple instances of bribery in exchange for sales made to Chinese clients. Under the terms of the agreement, SciClone does not admit or deny any wrongdoing.

The details included in the SEC’s press release of February 4, 2016 point to numerous instances of SciClone’s offering lavish gifts, trips, and entertainment and then booking such expenses as legitimate business dealings. For instance, in April of 2010, SPIL (a wholly owned subsidiary of SciClone) sponsored Chinese health care professionals to attend a seminar in Japan pertaining to its principal drug, Zadaxin. Only half a day appeared to be devoted to educational activities; the rest of the 6-day trip involved visiting Mt. Fuji and other tourist locations. The SEC detailed numerous instances of travel and outings hosted by SPIL and designed to lure state health care employees to purchase the company’s pharmaceuticals and devices.

Included in the terms of the agreement are provisions that SciClone make a number of changes to improve its internal accounting controls and prevent the recurrence of any similar violations. SciClone has agreed to hire a compliance officer and create an internal audit department and compliance department; undertake a comprehensive review of the policies and procedures pertaining to employee travel; reduce the number of third party suppliers who provide travel and event planning services, and provide anti- corruption training to its own employees as well as to vendors.

SciClone is best known for its Hepatitis B treatment Zadaxin; its shares rose 16% to $9.47 following the news of the settlement agreement.

Suzanne DeCuir, Global Trade Expertise