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Clinical Trials


The recent enforcement action against Novartis (the second time the company has resolved an Foreign Corrupt Practices Act matter) concerned, in part, a clinical trial.

According to the DOJ’s information, the “clinical trial scheme” involved Novartis Greece making “improper payments to HCPs [healthcare professionals] related to an epidemiological study intended to increase sales of certain Novartis-branded prescription drugs.” According to the information, Novartis Greece “falsely recorded these payments … as advertising and promotion expenses in Novartis Greece’s internal accounting records.”

The SEC’s administrative order further found: “Novartis Korea employees in the neuroscience business unit devised a local non-interventional clinical study with 17 pre-selected HCPs to improve relationships with those HCPs. The study was organized in May 2013 through a local medical journal with Novartis Korea providing the list of HCPs to participate and the $100,000 funding necessary to complete the study. Novartis Korea recorded the funding to complete the study as advertising expenses and failed to have the study reviewed and approved by medical affairs as required by internal procedures.”

As highlighted below, prior to the Novartis enforcement action several other FCPA enforcement actions also referenced clinical trials.

Johnston & Johnson (2011)

The $70 million DOJ and SEC enforcement action focused on conduct in Greece, Poland, Romania (the enforcement actions also resolved an investigation of Johnson & Johnson subsidiary companies in the United Nations Oil for Food Program in Iraq). As to Poland, the enforcement action alleged:

“J&J Poland [a wholly owned subsidiary of J&J] made payments and provided things of value to publicly-employed Polish HCPs, in the form of “civil contracts,” travel sponsorships, and donations of cash and equipment, to corruptly influence the decisions of HCPs on tender committees to purchase medical products from J&J Poland.”

As to civil contracts, the enforcement action alleged:

“J&J Poland engaged in professional services contracts with publicly-employed Polish HCPs, known as “civil contracts.” The contracts were purportedly for professional services including lecturing, leading workshops, and conducting clinical trials.”

Eli Lilly (2012)

The $29 million SEC enforcement action concerned conduct in China, Brazil, Poland, and Russia. As to Russia, the SEC complaint included the following allegations:

“From 2005 through 2008, Lilly-Vostok made various proposals to government officials in Russia regarding how Lilly-Vostok could donate to or otherwise support various initiatives that were affiliated with public or private institutions headed by the government officials or otherwise important to the government officials. Examples included their personal participation or the participation of people from their institutions in clinical trials and international and regional conferences and the support of charities and educational events associated with the institutes. At times, these proposals to government officials were made in a communication that also included a request for assistance in getting a product reimbursed or purchased by the government. Generally, Lilly-Vostok personnel believed these proposals were proper because of their relevance to public health issues and many of the proposals were reviewed by counsel. Nonetheless, Lilly-Vostok did not have in place internal controls through which such proposals were vetted to ascertain whether Lilly-Vostok was offering something of value to a government official for a purpose of influencing or inducing him or her to assist Lilly-Vostok in obtaining or retaining business.”

Pfizer / Wyeth (2012)

The $60 million DOJ and SEC enforcement action involved conduct in Russia, Kazakhstan, Croatia, and Bulgaria. The DOJ’s information alleged:

“Pfizer HCP through its employees and agents agreed to make improper payments and provide benefits (including kickbacks, cash payments, gifts, entertainment and support for domestic and international travel) to numerous government officials, including physicians, pharmacologists and senior government officials, who were employed by foreign governments or instrumentalities of foreign governments, including in Bulgaria, Croatia, Kazakhstan, and Russia.  During the relevant time period, Pfizer HCP, through its employees and agents, corruptly authorized the payment, directly or indirectly, of at least $2,000,000 to intermediary companies, government officials, and others, to corruptly induce the prescription and purchase of Pfizer products and to obtain regulatory approvals for Pfizer products.  Pfizer HCP through its employees falsely recorded the improper transactions by booking them in a variety of ways, including as educational or charitable support, “Travel and Entertainment,” “Convention and Trade Meetings and Conferences,” “Distribution Freight,” “Clinical Grants/Clinical Trials,” “Gifts,” and “Professional Services —Non Consultant,” in order to conceal the improper nature of the transactions in the books and records of Pfizer HCP.”

The SEC’s civil complaint likewise alleged:

“This action arises from violations of the books and records and internal controls provisions of the [FCPA by Pfizer] relating to improper payments made to foreign officials in numerous countries by the employees and agents of Pfizer’s subsidiaries in order to assist Pfizer in obtaining or retaining business.  At various times from at least 2001 through 2007, employees and agents of subsidiaries of Pfizer, conducting business in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia, engaged in transactions for the purpose of improperly influencing foreign officials, including doctors and other healthcare professionals employed by foreign governments. These improper payments were variously made to influence regulatory and formulary approvals, purchase decisions, prescription decisions, and to clear customs. Employees in each of the involved subsidiaries attempted to conceal the true nature of the transactions by improperly recording the transactions on the books and records of the respective subsidiaries. Examples included falsely recording the payments as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences and advertising.  These improper payments were made without the knowledge or approval of officers or employees of Pfizer, but the inaccurate books and records of Pfizer’s subsidiaries were consolidated in the financial reports of Pfizer, and Pfizer failed to devise and maintain an appropriate system of internal accounting controls.”

Biomet (2012)

The $23 million DOJ and SEC enforcement action involved conduct in Brazil, Argentina, and China.

As to China, the DOJ information discusses various internal e-mails including one discussing “consulting fees paid to doctors for conducting clinical trials” and a “proposal for a two week visit for Chinese doctors to the United Kingdom, with the second week being a ‘holiday’ paid for by Chinese Distributor.” According to the information, in 2005 “Director of Internal Audit [based in Warsaw, Indiana] instructed an auditor to classify improper payments being made to doctors in connection with certain clinical trials as ‘entertainment’ and in 2007, the product manager for Biomet China sent an e-mail to [an Associate Regional Manager based in Hong Kong] “discussing ways to evade efforts by the Chinese government to halt corruption in health care by requiring all international companies to declare actual cost for import to the government, noting, ‘obviously, China government doesn’t have ability to forbid the corruption from hospitals & surgeons …’ and proposing four methods for avoiding the regulation, including falsified invoices.”

Sanofi (2018)

The $25 million enforcement action focused on employees and agents of the company’s subsidiaries in Kazakstan and various Middle Eastern countries providing things of value to “foreign officials, including healthcare professionals, in order to improperly influence them and increase sales of Sanofi products.”

In summary fashion, the SEC order stated:

“The funds used for the illicit payments were generated through fake expenses for purportedly legitimate travel and entertainment expense, clinical trial and consulting fees, product samples, round table meeting expenses, distributor discounts, and credit notes to distributors which were improperly recorded as legitimate expenses in Sanofi’s books and records. Throughout this period, Sanofi failed to devise and maintain a sufficient system of internal accounting controls and lacked an effective anti-corruption compliance program with regard to Kazakhstan, Levant [which includes the countries Jordan, Lebanon, Syria, and the region of Palestine), and the Gulf [which includes the countries of Bahrain, Kuwait, Qatar, Yemen, Oman, and the United Arab Emirates].

Deficiencies in the internal accounting controls and compliance program of Sanofi also led to similar improper conduct in connection with sales in other countries in which Sanofi operates.”

As to Levant, the order stated:

“From 2011 to 2013, employees and agents of Sanofi Levant [a Lebanon company which engaged distributors to facilitate the sale and distribution of pharmaceutical products with its own sales and marketing staff to promote Sanofi pharmaceutical products] participated in a series of schemes to pay foreign officials to boost sales of Sanofi products through increased prescriptions. The schemes included sponsorships, gifts, donations, product samples, consulting agreements, peer-to-peer meetings, clinical studies, and grants. The schemes were executed across the various business lines in Levant and included the top selling products of Sanofi in the region. Some of the schemes involved the participation by senior managers of Sanofi Levant. The instances of improper conduct were not isolated and spanned across government agencies as well as private institutions.”


“The same HCP requesting samples of Taxotere in 2012 was also provided with consulting, speaking, and clinical trial fees over a period of years despite the lack of documentation of other support to demonstrate the services had been provided. Sanofi paid to the HCP the equivalent in local currency of USD 28,900 in consulting fees and, USD 5500 in speaking fees. Sanofi also paid to the HCP USD 125,997 in clinical trial fees. The consulting fees were purportedly related to hosting events and training for HCPs in Iraq. No supporting documentation was found for any of the purported consultancy services. While the clinical trial fees were approved by Medical Affairs, the HCP has never provided reports of findings or observations. The HCP, who provided the ostensible speaking, consulting, and clinical trial services to Sanofi, requested that the consulting and clinical trial fees be paid by check to an unrelated individual. Sanofi accommodated the request to pay the unrelated individual without explanation or justification.”

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