Tina Smith

United States Senator for Minnesota

U.S. Sen. Tina Smith Presses Swiss Pharmaceutical Giant Novartis to Ensure Improper Company Actions Aren’t Pushing Up U.S. Prescription Drug Prices

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Senator Seeks Evidence that Drug Maker has Reported

Payments to Former Trump Lawyer Michael Cohen

 

WASHINGTON D.C. [08/23/18]— Today, U.S. Sen. Tina Smith (D-Minn.) pushed for answers from Swiss pharmaceutical giant Novartis on improper financial and lobbying efforts – including a $1.2 million dollar payment to President Trump’s former lawyer Michael Cohen - that could be contributing to high prescription drug prices for people in Minnesota and across the country.

In May, Novartis confirmed that it erred when it paid Cohen through a shell company to help influence Trump Administration health care policy. Those payments came after Novartis had already agreed in 2016 to comply with a U.S. Securities and Exchange Commission (SEC) order to establish anti-corruption measures, including reporting to the SEC any “questionable or corrupt payments” made to influence U.S. policymakers.  As part of the 2016 SEC agreement, Novartis paid a $20 million fine for past improper payments made to influence policies in China and other countries in violation of the Foreign Corrupt Practices Act.

In a letter to Novartis CEO Vasant Narasimhan Thursday, Smith pressed for evidence that the company is complying with the 2016 SEC settlement agreement and that it had reported its payments to Cohen as the company had pledged to do.

“The Senate Committee on Health, Education, Labor, and Pensions recently held hearings to examine the skyrocketing price of prescription drugs,” Sen. Smith wrote to Narasimhan. “As a member of that committee, I am interested in how the pharmaceutical industry's lobbying practices and disregard for anticorruption laws may contribute to high drug prices. Therefore, I ask that you provide information regarding your company's adherence to standards governing the company's lobbying practices and anti-corruption measures.,” 

Sen. Smith asked Narasimhan that Novartis provide her with the information by September 7.

You can read full text of the letter by clicking here or by reading below:

August 23, 2018
Vasant Narasimhan, M.D.
Chief Executive Officer
Lichtstrasse 35
4056 Basel
Switzerland

Dear Dr. Narasimhan;

The Senate Committee on Health, Education, Labor, and Pensions recently held hearings to examine the skyrocketing price of prescription drugs. As a member of that committee, I am interested in how the pharmaceutical industry's lobbying practices and disregard for anticorruption laws may contribute to high drug prices. Therefore, I ask that you provide information regarding your company's adherence to standards governing the company's lobbying practices and anti-corruption measures.

As you know, Michael Cohen, President Donald Trump's personal lawyer, recently pleaded guilty to eight criminal charges, including counts relating to illegal campaign contributions. In May, your company confirmed that it paid nearly $ 1.2 million to Cohen, through a shell corporation. Essential Consultants, purportedly for insights into the Trump administration s views on health care. The contract, which your former Group General Counsel later conceded was "an error," coupled with Novartis's past violations of U.S. and foreign anticorruption laws, raises significant questions about what steps must be taken to address improper influence by pharmaceutical companies like yours.

As noted above, the Cohen payments are not the first time Novartis has made potentially suspect payments to influence policymakers. In 2016, the Securities and Exchange Commission ("Commission") investigated improper payments made by Novartis in China, and determined that Novartis had failed to establish an effective anti-corruption compliance program to detect and prevent such pay-for-play schemes. As a result of the investigation, Novartis agreed to pay more than $20 million in fines and implement anti-corruption compliance measures, including reporting to the Commission any "questionable or corrupt payments."3 Most concerning, the payments Novartis made to Cohen, via Essential Consultants, were initiated after the company agreed to implement these anti-corruption measures.

In order to better understand industry practices and your compliance with the Commission's settlement, I ask that you provide the following documents:

  • The initial report and any follow up reports submitted by Novartis to the Commission pursuant to the Commission's March 23, 2016 order (File No. 3-17177), and
  • Any other correspondence or reports submitted by Novartis to the Commission regarding payments to President Trump's former personal attorney Michael Cohen as required by the Commission's 2016 order.

I request your response by September 7, 2018. Please have your staff contact Beth Wikler or Tim Everett of my staff at (202) 224-5641 with any questions. Thank you for your assistance.

Sincerely,

Tina Smith

United States Senator

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1 Prashant S. Rao and Katie Thomas, "Novartis's Top Lawyer is Out Amid Furor Over Payments to Michael Cohen," The New York Times (May 16,20] 8) (online at:https://www.nytimes.com/2018/05/16/business/novartistrump-michael-cohen.html)

2 U.S. Securities and Exchange Commission, "Novartis Charged With FCPA violations," (March 23, 2016) (online at: https://www.sec.gov/litigation/admin/2016/34-77431-s.pdf)

3 Brent J. Fields, "United States of America Before the Securities and Exchange Commission in the Matter of Novartis AG," SEC (March 23, 2016) (online at: https://www.sec.gov/litigation/admin/201 6/34-77431 .pdf)

4 U.S. Securities and Exchange Commission, "Novartis Charged With FCPA violations," (March 23,2016) (online at: https://www.sec.gov/litigation/admin/2016/34-77431-s.pdf); "Essential Consultants - Novartis Statement," Novwtjs (May 9, 2018) (online at: https://www.novartis.com/essential-consultants) 1

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