By Aleksandar Vasovic and Ben Hirschler
BELGRADE | Wed Feb 29, 2012 3:13am IST
(Reuters - According to a signal from the electronic tag around his ankle, Nenad Borojevic last left his apartment building at 6.25 p.m. on January 10. It was the festive season in Serbia; the capital was enjoying the lull between Orthodox Christmas and New Year.
Police said Borojevic, a doctor, headed to Kosutnjak park, a popular wooded area in Belgrade dotted with restaurants and criss-crossed by jogging paths.
Borojevic had been one of Serbia's most eminent doctors, a director of the Institute for Oncology and Radiology. Now he was due in court in five days to face charges brought by the public prosecutor that he had taken bribes from international drug companies as incentives to use their products. The electronic tag was a condition of his 500,000 euro ($660,000 bail.
The next day, around noon, a passer-by found Borojevic hanging from a tree on a nylon rope five millimeters thick. Police found a suicide note in the mailbox of his wife, from whom he was separated. It had been sent from a local post office. "I couldn't take it anymore," it said.
Borojevic's story, some of which emerges here for the first time, is a particularly gruesome example of what even people in the global drugs business concede is a growing problem: bribery and corruption in emerging markets. The 51-year-old cancer specialist was one of a group of 10 Serbia-based doctors and drug company officials charged in 2010 with taking, or offering, more than 500,000 euros in bribes to persuade the medics to use specific products. The doctors are alleged to have personally gained from the choice of medicines used; the drug company representatives with illegally offering the incentives.
In recent years, Big Pharma has forked out billions of dollars to settle scandals involving improper promotion of medicines in the United States. Now bribes paid to foreign doctors and other state employees are shaping up as the next major legal liability threat for the industry. A Reuters examination of U.S. Securities and Exchange Commission (SEC filings by the world's top 10 drug companies has found that eight of them recently warned of potential costs related to charges of corruption in overseas markets.
One factor driving the trend is a search for new business. Companies whose profit margins have been squeezed in the developed world are increasingly turning to thinly regulated emerging markets for growth. At the same time, U.S. and European governments are toughening up on bribes paid by companies overseas. The U.S. Foreign Corrupt Practices Act and Britain's new Bribery Act, which came into force last July, are both targeting drugs companies for special scrutiny, providing new impetus for the industry to clean up its act.
"There's clearly a legal risk from violating laws with the current drive into emerging markets, so mis-selling cases in these markets could become a significant legal threat for the industry," said Chris Stirling, European sector leader for pharmaceuticals at KPMG in London. "The business practices in these countries are very different from the sort you find in Western Europe and the United States."
Borojevic's suicide - police have ruled out foul play - means certain aspects of his case, which is being investigated at a national level, may never be known. The trial of the other men and women in the group is continuing. All the defendants have pleaded not guilty, though one of the six drug company representatives involved agreed a plea bargain and another turned witness for the prosecution.
Emerging markets to drive pharma growth: link.reuters.com/ryw76s
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OPERATION CRAB
The probe of Borojevic, which police called Operation Crab, started with a tip-off in March 2007, according to a police source involved in the investigation.
At a later point, police received information from a former mistress of one of the accused, the investigator said, declining to name her. "After they broke up, she came to us and recited everything - names, places, contacts, how they operated, how much everyone received and from whom, when and where," said the investigator. "She even gave us some concrete evidence which helped us a great deal."
Some of Serbia's tabloid media said the informant was a former Serbian model, Katarina Rebraca, who herself, in a separate case, had in April 2010 faced charges of embezzling funds at a breast cancer charity she ran. Borojevic, the doctor, had been called as a witness for the prosecution against her, although he died before testifying.
Rebraca declined to comment. Her lawyer, Dragan Mrakovic, said: "It is not in the best interest of my client to give any information whatsoever" about the Borojevic case. "This has nothing to do with my client's case, nor does my client have anything to do with the pharmaceutical corruption case."
The informant led police to a rented apartment in Medakovic, a neighborhood of communist-era apartment blocks and family homes in Belgrade. Here a group of doctors and drugs company sales representatives would allegedly meet and hold "raunchy, loud parties with Belgrade babes, three or four times a week," said the police investigator. It was not possible to confirm who had rented the apartment.
In June 2010 police arrested Borojevic: the charges against him and four colleagues included running a criminal conspiracy in cancer drugs from 2007 to 2009. The indictment said that the alleged scheme, whereby drug company representatives gave inducements to the doctors to use their companies' products, had increased sales of a number of generic chemotherapy medicines as well as branded cancer medicines including Roche Holding AG's Avastin and Erbitux, made by Merck KGaA of Germany.
For Borojevic, the alleged gains were significant, especially in a country whose GDP per capita the IMF puts at just $6,500 a year. In total, he was accused of receiving a total of 11.2 million dinars ($138,000 in kickbacks from drug companies.
Officials at drugs companies AstraZeneca Plc, Sanofi SA and Actavis confirmed they were served in July and August 2011 with criminal indictments related to allegedly improper payments to physicians including Borojevic at his state-run institute, and said they had filed certain procedural objections. Icelandic pharmaceutical company Actavis gave the most expansive statement: "The allegations include bribery of state officials in order to obtain preferential status when it comes to the sale of oncology products in Serbia," said the company, which moved its headquarters to Zug, Switzerland in 2011.
All declined further comment on the proceedings. Also charged with alleged bribery in the case were representatives of Roche, Merck KGaA and PharmaSwiss - a unit of Canada's Valeant Pharmaceuticals International Inc - all of whom declined to comment.
REPS TAKE THE RAP
In one instance, the police allege, Borojevic and his colleague Zoran Bekic, head of the Institute for Oncology and Radiology's pediatric oncology ward, received 95,000 euros from Goran Orlic, a representative for Actavis. Orlic allegedly paid the men for inside information about its business plans.
The Actavis representative received immunity from prosecution in exchange for his testimony ahead of the trial, the court said in a statement. Actavis said Orlic left the company in 2009. Neither Bekic, the pediatrician, or his lawyer would comment. Orlic could not be reached.
Another of those charged was Merck KGaA's representative, Jasmina Gutovic. She reached a plea bargain with prosecutors and admitted giving bribes, according to the judge who heard her case. While Gutovic was convicted, the court will not say what punishment she received while the rest of the case is being heard. Merck KGaA confirmed she left the company in June 2011 and she could not be reached for comment.
The indictment against Borojevic also states that he and colleagues did a deal with unnamed drug company sales staff to develop "new therapeutic applications" using their companies' drugs, as a way of further boosting sales of the products. In the months before his death, Borojevic was portrayed in Serbian media as a poisoner of children, based on suggestions in the media that he had overprescribed.
Borojevic was released on bail in November 2011. He repeatedly denied all the charges against him, saying he was the victim of a media witch hunt. "Nothing is true from the indictment," he said in a statement in May 2011.
His lawyer, Strahinja Kastratovic, said that the day before Borojevic killed himself, he had learned the apartment he had bought with his estranged wife would be seized by the court. "He said, 'I can't take this anymore, I don't know how to fight this or against whom I'm supposed to be fighting,'" said Kastratovic. He declined to elaborate.
TEMPTATIONS INCREASE
Corruption is rife in Serbia, which is ranked 86th out of 183 countries in Berlin-based Transparency International's corruption perceptions index. The drugs business is particularly exposed to corruption, Transparency International says: pharmaceuticals create vast opportunities for graft across both rich and poor countries. Its 2011 Bribe Payers' Index ranks pharmaceuticals and healthcare 13th out of 19 industries on probity - a lower ranking than defense firms, though above mining and construction.
"There are a number of classic red flags for bribery that indicate the pharma sector is particularly vulnerable," says Robert Barrington, TI's director of external affairs. These include a tradition of gifts and hospitality, a lack of transparency over pricing and the need for regulatory approval in everything.
In many parts of the world lavish gifts such as all-expenses-paid trips to resorts and golf days remain common, even though the industry has reined in such hospitality in the United States.
Temptations may increase as companies move into the developing world. IMS Health, which analyses pharmaceutical industry trends, says 17 key emerging markets will account for around 63 percent of worldwide growth in prescription drug sales between 2010 and 2015.
"It is almost guaranteed that every multinational pharmaceutical company is going to end up with these issues and is going to have to go through a painful experience," says one in-house lawyer at a major U.S. drugmaker. "Frankly, the odds are stacked against companies."
'NOT ETHICAL, BUT UNIVERSAL'
The Serbian charges and claims of corruption extend beyond Borojevic and his colleagues. In his defense, Borojevic always insisted that he could not approve drug purchases alone, but passed on recommendations to the state-run Department of Health Insurance. That itself is the target of other, unrelated corruption charges brought by the public prosecutor against its former head, Svetlana Vukajlovic, who has been in pre-trial detention since September 2011.
An example from another Balkan country, Greece, underlines how ingrained such practices can be. Earlier this month, London-based Smith & Nephew Plc, Europe's biggest maker of artificial knees and hips, agreed to pay $22 million to settle SEC allegations that it bribed doctors in Greece to use its products. Among documents the SEC released as part of the dossier was a note jotted down in 1999 by an unnamed in-house lawyer for the company.
"Pay surgeon to use prod(uct ," it read. "Not legal or ethic; but universal."
In that case, the company's Greek distributor sent an email to the firm's U.S.-based head of international sales seeking to maintain access to one of the slush funds used to pay doctors to buy S&N products: "I absolutely need this fund to promote my sales with surgeons, at a time when competition offers substantially higher rates," he wrote. The fund's "only reason for being is the need for cash incentives, a real pain in the neck but an unavoidable fact of Greek life."
S&N CEO Olivier Bohuon, who took office in 2011, long after the alleged bribery occurred, said the company had moved on but the episode showed the need to remain vigilant.
Over the past year eight of the world's top 10 drugmakers - Pfizer Inc, Novartis AG, Merck & Co Inc, Sanofi, AstraZeneca, GlaxoSmithKline Plc, Johnson & Johnson and Eli Lilly & Co - have all warned that they may face liabilities related to charges of corruption in numerous overseas markets.
Investigations into potential wrongdoing by pharmaceutical firms cover activities in countries including Argentina, Brazil, Canada, China, Germany, Italy, Poland, Russia and Saudi Arabia, according to company filings. They also involve possible improper conduct of clinical trials, which are increasingly being run in lower-cost Asian or East European countries.
(For a report, see link.reuters.com/kyp76s .
'JUST SAY NO'
One reason such cases are surfacing now is the renewed vigor with which U.S. officials have enforced its foreign corruption law since November 2009. That's when U.S. assistant attorney-general Lanny Breuer told a pharmaceutical conference: "We will be intensely focused on rooting out foreign bribery in your industry."
The 1977 Foreign Corrupt Practices Act makes it illegal for U.S. companies and foreign firms whose stock is traded in the United States to bribe government officials in foreign countries. Officials at the U.S. SEC and Department of Justice (DOJ declined to say if they planned to follow the Serbian probe with their own investigations.
Some drug firms have already started to come clean. In the first case of its kind, Johnson & Johnson settled for $78 million with U.S. and British authorities in April last year, after disclosing voluntarily to U.S. authorities back in 2007 that it had made payments to doctors in Poland, Romania and Greece who chose to use J&J medicines and surgical implants.
Pfizer, which in 2004 became the first pharmaceutical company to volunteer information about past wrongdoings to the DOJ and the SEC, is likely to be the next big firm to settle. The world's biggest drugmaker, it reached an agreement in principle with U.S. authorities towards the end of last year and is set to finalize a deal during the first half of 2012, according to people familiar with the discussions.
Under U.S. and British law, the onus is on a corporation to report improper behavior by either its own staff or outside contractors. In some cases, this has already meant radical change. AstraZeneca, for example, said last May it was ending all payments to doctors attending international scientific and medical congresses.
"I know that this is not easy," Chief Executive David Brennan told a conference at the time. "I know from my own experience as a sales representative, you will encounter people who will ask for gifts, or other inducements. And they will threaten to take their business elsewhere, if you don't acquiesce. But we have made it clear that our sales force have to say no."
(Aleksandar Vasovic reported from Belgrade, Ben Hirschler from London; Edited by Sara Ledwith and Simon Robinson
(For PDF: link.reuters.com/xaz76s
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The rise of antibiotic-resistant bacteria has got
many experts predicting a future in which currently tractable diseases, like tuberculosis, became untreatable again. The popularity of modern antibiotics, ironically, is what is leading to their downfall: antibiotics in consumer products, like soaps, as well as the excessive use of antibiotics by people who have no bacterial infections, help select for strains of bacteria that don’t respond to drugs. Factory-farmed livestock, which receive tremendous doses of antibiotics in their feed, are also a likely breeding ground for resistant bacteria that could potentially infect humans.
Proponents of factory farming have
scoffed at such claims [pdf], but now, scientists have
provided definitive evidence that this happens: through genetic analysis, they found that a strain of
MRSA, already resistant to one family of drugs, had hopped from people to farmed pigs, acquired resistance to another antibiotic being fed to the pigs, and then leapt back into humans, taking its new resistance with it. That strain, called MRSA ST398 or CC398, is now causing
1 out of 4 cases of MRSA in some regions of the Netherlands [pdf], where it arose, and it has also been found across ...
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February 29, 2012 If I get sick or injured, I want to know that the antibiotics that I need to take are going to work. Unfortunately, with all the antibiotics that industrial agriculture feeds to livestock, today's antibiotics are at risk of becoming ineffective. Take action today to keep antibiotics working in the future! According to the U.S. Food & Drug Administration (FDA , 80 percent of antibiotics in the U.S. are sold for use in livestock production. Often, antibiotics are fed to entire flocks or herds of animals to prevent illnesses they may never acquire or have little risk of contracting. The overuse of antibiotics encourages the development of antibiotic-resistant bacteria. This is a global threat to human health and must be stopped.Bacteria, like everything else in nature, mutate naturally and do so in such a way to continue their own existence. Not all bacteria are destroyed by antibiotics, and the surviving bacteria then multiply, creating a new strain that the antibiotics cannot kill. We're seeing more and more types of antibiotic-resistant bacteria , but we can help stop this. The FDA is seeking comments on the use of one specific type of antibiotic in livestock. The deadline for comments is Tuesday. Will you submit a comment today? Send an email to the FDA today to stop the overuse of antibiotics: http://action.foodandwaterwatch.org/p/dia/action/public/?action_KEY=9495 Thanks for taking action,  Meredith Begin Education & Outreach Organizer Food & Water Watch mbegin(at fwwatch(dot org | |||||||||||||
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One can only hope that Sean Penn returns to acting duties post haste (
Diplomacy, interrupted, 24 February . The past 30 years of Anglo-Argentine-Falkland relationships are vastly more complicated that Mr Penn might imagine, and his very short introduction to US-UK-Latin American relations during the cold war sounds like it has been extracted from the James Bond film, Quantum of Solace.
While the dispatch of the Duke of Cambridge to the Falklands in the runup to the 30th anniversary of the 1982 conflict was an unfortunate piece of timing, it is nonetheless indicative of a broader truism that the British government has a responsibility to ensure that the Falkland Islands are defended and managed in terms of foreign and security affairs. In the past three decades, apart from the welcome departure of a brutal military regime in Argentina, the most dramatic change has come in the shape of the Falkland Islands community itself, which has effectively transformed itself into a democratic society with a noteworthy portfolio of activities. The Falklands are not a colony in any sense – they are a British overseas territory. Having visited (and researched the islands on many occasions, I was struck by how vigorously the islanders promote their right to self-determination without being dictated to by Argentina, Britain or even Sean Penn.
One aspect often lost is that this disagreement over the Falklands is not just about the Falklands per se. At stake is a series of other disputes involving South Georgia and the Antarctic Peninsula region. Interestingly, universities and science minister David Willetts was recently in the Antarctic and the Falklands, and I am told there is a striking photo of him standing next to a series of British flags in British Antarctic Territory. For some Argentines at least, removing the British presence from the Falklands is part of a wider strategy to remove Britain from the wider South Atlantic and Antarctic. This is something that needs to be borne in mind when we discuss the Falklands question.
Professor Klaus Dodds
Author of
Pink Ice: Britain and the South Atlantic Empire
• Is it just me or is anyone else getting fed up with what Sean Penn thinks? But at least I must thank him for making me pay attention to what he says. It is worth noting that British sovereignty over the Falkland Islands was re-established in 1833, and in that year the government in the US instigated the Choctaw Trail of Tears, where between 1800 and 1830 the Choctaw nation was forced to cede over 100,000 sq km of their land, according to Wikipedia.
Obviously that is only one example of what happened, as the then US government took whatever it wanted and moved, starved and killed anyone who stood in its way. The indigenous native Americans have more rights to live on their own land than modern-day Argentina has to the Falklands. Perhaps Mr Penn would be willing to give his own property back to whichever tribe occupied the land prior to 1830, and be equally vocal about native American rights as he is about dubious Argentinian claims over the Falkland Islands.
Mike Darby
Shebbear, Devon
• The declaration by 17 leading Argentine intellectuals challenging President Christina Fernandez de Kirchner's demands for sovereignty of the Falkland Islands is a view shared by many people in Argentina at all levels of society despite public criticism of their declaration.
As the BBC Latin America correspondent from 1979 to 1983, I broadcast globally from Buenos Aires the first news of the invasion and I have visited both Argentina and the Falklands many times since, most recently in February this year.
In Argentina, a young, well-educated Argentine businesswoman I met on a Buenos Aires bus was forthright in her view: "You [the British] won the war. You keep the islands!" Her attitude was echoed by a middle-aged entrepreneur in the tourist industry in the far south, in Ushuaia, capital of Tierra del Fuego province, which Argentine law and the constitution bizarrely claim to incorporate the Malvinas (Falklands within its territory.
The businessman told me that many young Argentines are just not interested in the sovereignty dispute. He went on to predict that "the Malvinas dispute will no longer be an issue for newer generations within 30 or 40 years".
I am not convinced of that refreshing scenario, but my experience, canvassing the views of Argentines over the past 30 years, is that younger people are far more concerned with getting a good education and a job, how to enjoy their next free evening and what mobile telephone to buy next. I detect a growing realism and scepticism, especially about the historical falsehoods and misinformation used in support of Argentina's claim. Its exaggerated rhetoric, not least its accusation of UK "militarisation" of the South Atlantic, is proving counterproductive.
Its submissions to the United Nations have been demolished by the UK's robust rebuttal with a detailed factual account of events going back centuries validating British sovereignty. The Foreign and Commonwealth Office seems to be embarked on a more active campaign to correct misconceptions. It is a welcome contrast to the pre-1982 policy of abject surrender of British sovereignty, brought to an abrupt end by Galtieri's invasion.
I agree with much of
Jimmy Burns's open letter to Sean Penn (in the Guardian about the Kirchner presidencies. I was in Argentina when the two rigs arrived to work in Falkland Islands waters. The Kirchners repudiated not only the 1995 oil co-operation agreement but also later agreements, including co-operation on fishing and preservation of stocks – so vital to the Falklands' economy and also important to Argentina's. It is ironic that the Argentines are now arguing that any oil or fishing resources are theirs. In Chile, I heard much criticism of Argentine threats to disrupt the regular commercial air services from Punta Arenas to the Falklands.
Despite intensification of Argentina's economic restrictions, on my most recent visit I found the islanders in good heart and in a much healthier economic and democratic environment than I found in Argentina, which is beset with unrest and demonstrations, widespread crime, poverty and child starvation in a land of plentiful food, and shortages of goods, including even those mobile phones beloved by the young. The shortages are caused by a controversial government's import restrictions, damaging to and criticised by neighbouring countries which support its Malvinas policies. One woman told me she was taking the ferry to Uruguay to buy a replacement iron, and others to buy essential medicinal drugs.
The Falkland Islanders are hard-working and self-reliant, as I found them before 1982, but now enjoying unprecedented prosperity from fishing, wildlife tourism and sheep-farming. Their children enjoy a happy, active life in a virtually crime-free society, with one of the most generous government-financed education systems in the world, up to and beyond university placements in the UK. Why would they want to be part of Argentina?
They are as resolute as ever to embrace self-determination, reject Argentine sovereignty, and remain British, demonstrating by their conduct and their hospitality and support for 1982 taskforce veterans their abiding gratitude for the sacrifices made in their liberation, and for their defence ever since.
Harold Briley
Battle, East Sussex
• While we live in a media world where celebrity endorsement makes newspaper copy, the intervention of an American film actor over the Falkland Islands is little more than an irrelevance. For Sean Penn the space donated by the Guardian has allowed him to compound his impertinence; for the president of Argentina, deploying his support has the smack of desperate measures. At the same time the country's diplomatic corps has embarked on a mission to seek sympathy for its claim to the islands – a neocolonial claim already rejected under international case law, and which ignores the wishes of the population enshrined by the enlightened mores of today.
Argentina would be well advised to change its tack entirely. As a PR professional, my advice to Cristina de Kirchner and her successors is this: be nice. Do everything you can to be a good neighbour: ease communications, travel, transport and trade; encourage educational, sporting and cultural exchange; help make the islands thrive by allowing your citizens to be employed there and providing the services needed by new industries, including fisheries and oil exploration, and thereby share the prosperity and growth; stop the envy, the hurt pride, the propaganda. Within a generation or two, as the islanders see you as a help not a hindrance, a friend not a foe, as your economies grow together and your people intermarry and settle, Argentina will acquire influence and increasing participation in the Falklands at both a human and institutional level.
You have tried belligerence. You are still trying confrontation. Try intelligent integration. It's slower, it's less macho, it's not a distraction from domestic political problems. But it will be effective. No one will be left to lie under a windblown headstone. And it will attract international respect.
James Darley
London
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