Merck, SciClone Tapped in Fed Pharma Probe

Includes: MRK, SCLN
by: The Burrill Report

By Michael Fitzhugh

Merck (NYSE:MRK) and SciClone (NASDAQ:SCLN) have become the latest targets of ongoing federal investigations intended to curtail direct and indirect payments to foreign officials by companies with a substantial U.S. presence. The investigations, launched by U.S. Justice Department and the Securities and Exchange Commission, are examining potential violations of the Foreign Corrupt Practices Act, a law prohibiting foreign bribery in business and instituting accounting record-keeping requirements intended to detect and prevent such illegal payments.

Since April, the agencies have contacted AstraZeneca (NYSE:AZN), Baxter (NYSE:BAX), Lilly (NYSE:LLY), and Bristol-Myers Squibb (NYSE:BMY). Merck added its name to the list of companies contacted on August 6, saying it had also received inquiries from the SEC and DOJ regarding its activities in “a number of countries” and that it believes that the inquiry is “part of a broader review of pharmaceutical industry practices in foreign countries.”

Like Merck, Hong-Kong-based SciClone received a letter from the DOJ requesting information regarding Foreign Corrupt Practices Act issues in the pharmaceutical industry generally. SciClone reported that the agency said it had received information about its practices suggesting possible violations.

SciClone says it plans to cooperate with both the DOJ's investigation and an SEC subpoena seeking documents relating to its interactions with regulators and government-owned entities in China, its sales in that country, and certain company disclosures.

In its latest quarterly regulatory filing with the SEC, SciClone warned investors that the investigations could result in “civil and criminal actions seeking, among other things, injunctions against the company and the payment of significant fines and penalties.”

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