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Novartis investigating $85 mln bribery allegations in Turkey

Novartis investigating $85 mln bribery allegations in Turkey

An anonymous whistleblower has accused Swiss drug maker Novartis of paying bribes in Turkey through a consulting firm to secure business advantages worth an estimated $85 million, according to a Feb. 17 e-mail seen by Reuters.

The alleged benefits, which Novartis confirmed it was investigating, included getting medicines added to lists, or formularies, of drugs approved for prescription in government-run hospitals, and avoiding price cuts in other countries by securing government approval to change the names of two drugs.

The anonymous sender’s 5,000-word email to Novartis Chief Executive Joe Jimenez and Srikant Datar, chairman of its audit and compliance committee, said Novartis had paid Alp Aydın Consultancy the equivalent of $290,000 plus costs during 2013 and 2014, before the Turkish Social Security Institution (SGK) launched an investigation, leading the drug maker to end the association.

Novartis, which said it was committed to the highest standards of ethical business conduct, confirmed Aydın had consulted for it in the past and no longer did so. The pharmaceutical giant also said it was investigating the allegations Aydın had passed on funds to Turkish healthcare officials, and that Novartis Turkey had hired relatives of high-prescribing doctors.

“We take any allegation of inappropriate behavior extremely seriously and investigate all allegations thoroughly. As a matter of policy we don’t comment on such investigations even if the complainant decides to make them public,” said company spokesman Eric Althoff.

Officials at the SGK and Aydin did not immediately respond to requests for comment.

Novartis’ difficulties in Turkey highlight the problems faced by healthcare companies as anti-corruption authorities around the world investigate industry practices.

Last week Novartis agreed to pay more than $25 million to settle a U.S. Securities and Exchange Commission (SEC) case over bribery in China.

China has been a particularly tricky market for Western drug makers. In a high-profile corruption case, GlaxoSmithKline was slapped with a record 3 billion yuan ($460 million) fine by a Chinese court in 2014.

The whistleblower e-mail said Novartis had gained $20 million from Aydın’s ability to have new drugs for multiple sclerosis, chronic lung disease and juvenile arthritis added to hospital formularies.

It also benefited from advantageous pricing decisions and a special import permit for a drug with an expired manufacturing certificate, the email said.

The biggest gain of $50 million, according to the whistleblower’s email, came from Turkish officials allowing Novartis to rename its drugs Ilaris and Gilenya as Ibecta and Fingya. This meant they dropped out of international pricing comparisons, since such cross-referencing is based on commercial names.

Reuters could not independently confirm these benefits or the value attributed to them by the whistleblower.