Posted 29 August 2016
By Zachary Brennan
Novartis subsidiary Alcon Laboratories has agreed to pay more than $16 million to settle allegations of manufacturing drugs and medical devices in the US and then shipping them to Iran, Syria and Sudan despite US trade embargoes that prohibit such sales.
According to the settlement agreement with the US Department of Commerce, Texas-based Alcon Labs and Switzerland-based Alcon Pharmaceuticals sent at least 100 shipments of devices and medical equipment worth more than $8 million between 2008 and 2011 to Iran via Switzerland.
Between 2008 and 2012, Alcon also sent more than $70,000 worth of medical devices and equipment to Syria without a license, as well as more than 400 unlicensed sales and exports to Sudan.
Douglas Hassebrock, director of the Department of Commerce’s Bureau of Industry and Security’s Office of Export Enforcement, noted that Alcon “was aware of the prohibitions on trade activities under the long-standing and well-known US embargo against Iran.”
A European freight forwarder in 2010 even notified Alcon that its warehouse in Switzerland was shipping items to Iran without the required US government authorization, though Alcon continued to export US-origin devices and equipment to fulfill sales orders.
Melissa Proctor, a lawyer with Polsinelli, wrote on Monday that there are several key takeaways from this enforcement case for US firms: “First, it is critical for U.S. companies to implement formal trade compliance programs—the lack of such policies and procedures can be treated as an aggravating factor in export enforcement action by the U.S. government. U.S. companies should also have formal compliance training processes and issue escalation processes to enable personnel to take swift action and make the necessary internal inquiries when ‘red flag’ information is received—such processes here would have enabled Alcon to ask questions, escalate the company’s freight forwarder’s refusal to ship goods to Iran, Sudan, and Syria, and perform additional due diligence about the overall legality and licensing requirements for its proposed shipments.
“Finally, when export violations are discovered, companies can receive significant mitigating treatment from the U.S. government agencies where they promptly cease the violative conduct, take appropriate remedial actions, and cooperate fully in the export investigation,” Proctor wrote.
According to Sanction Law, this is the second time the US Department of Treasury has said device firms are liable for apparent sanctions violations relating to the export of medical products. In late June, Hyperbranch Medical Technology settled allegations of exporting medical products to Iran.
The Novartis subsidiary did not respond to a request for comment.
Order relating to Alcon Pharmaceuticals