Johnson & Johnson pays $78 million to settle bribery and kickback charges in the U.S. and U.K.

J&J is the first big drug company to settle since the Obama administration began its scrutiny of the industry more than a year ago

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WASHINGTON—Johnson & Johnson will pay $78 million to settle charges in the United States and United Kingdom that it paid bribes and kickbacks to garner business overseas. This gives J&J the distinction, though perhaps not an entirely welcome one, of being the first big pharmaceutical company to settle since the administration of President Barack Obama began its scrutiny of the industry more than a year ago with Foreign Corrupt Practices Act (FCPA) investigations.

According to the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), J&J has agreed to pay a $21.4 million fine to settle DOJ criminal charges and more than $48.6 million in disgorgement and interest to settle SEC allegations. The New Jersey-based pharmaceutical giant also settled a complaint by the U.K.'s Serious Fraud Office and ended up agreeing to pay some $7.9 million plus prosecution costs.

Most of the allegations relate to alleged sham contracts, bribes and kickbacks paid by J&J units to officials and doctors in Greece, Poland Romania and Iraq, dating back to 1998. But the investigation itself marks its genesis in November 2009, when DOJ officials said they would focus on prosecuting those in the pharmaceutical industry who tried to bribe foreign officials for preferential treatment of their products, and this commitment led to a wide-ranging probe of various companies, including J&J, Eli Lilly & Co. and Baxter International Inc.

U.S. authorities praised J&J for its cooperation, its remedial efforts and for helping to identify improper practices in the industry. "We are committed to holding corporations accountable for bribing foreign officials while, at the same time, giving meaningful credit to companies that self-report and cooperate with our investigations," says Mythili Raman, principal deputy assistant attorney general for the DOJ criminal division.

"More than four years ago, we went to the government to report improper payments and have taken full responsibility for these actions," says William C. Weldon, CEO of Johnson & Johnson. "We are deeply disappointed by the unacceptable conduct that led to these violations. We have undertaken significant changes since then to improve our compliance efforts, and we are committed to doing everything we can to ensure this does not occur again."

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