Major pharmaceutical companies or Big Pharma frequently paid for healthcare professionals from around the world to attend congresses, conferences and educational events, the study reports.

However, investigations found these payments were “often inflated or included lavish, non-work-related perks such as shopping trips, sightseeing tours and family travel, leading to their classification as bribes,” the reviewers write.

Some companies provided personal loans to doctors with no repayment expectation or transferred cash directly to their bank accounts. Beyond travel-based incentives, alleged schemes featured weekend retreats to spas, bathhouses and karaoke bars pitched as educational seminars or symposia. Luxury items such as cameras, jewellery and expensive wine were provided alongside smaller perks like shopping vouchers and electronics, the review shows.

“In such cases, sales teams meticulously tracked each healthcare professional’s prescription volume to ensure a return on investment,” the reviewers write.

Some companies set up fraudulent or low-value clinical studies – sometimes labelled as “Phase IV,” “observational” or “epidemiological” studies – to funnel money to healthcare professionals.

Sales representatives also recruited physicians who prescribed certain drugs, paying them “study fees” or for “data collection,” although paperwork was “often incomplete or deliberately misleading,” according to the review.

Novartis Greece, for instance, used an epidemiological study to boost prescription drug sales, not for genuine research, according to US Department of Justice (DOJ). Employees made improper payments between 2009 and 2010 to healthcare providers, recognizing that many believed they were paid to prescribe, not provide clinical data, federal prosecutors said.

Hiring healthcare providers or government officials under titles such as “consultants,” “speakers” or “Key Opinion Leaders” was another common tactic, the researchers note.

“Individuals were paid for little or no actual work while the expenditures were classified as ‘advisory services,’ ‘lecture fees’ or ‘professional consulting,’” the reviewers write.

For instance, Teva, a leading manufacturer of generic pharmaceutical products, engaged a senior Ukrainian government health official as the company’s “registration consultant” between 2011 and 2011, according to the DOJ.

It paid him a monthly fee and provided him with travel and benefits worth $200,000 to influence government approval of Teva products, including insulins and the multiple sclerosis drug Copaxone. Teva and its wholly-owned subsidiary in Russia admitted paying bribes to the official as part of its 2016 deferred prosecution agreement.

Some companies held “medical roundtables” and paid healthcare providers honoraria, sometimes routing funds through third-party journals (labelled as advertising) that were then funnelled to attendees or speakers. Because the events were billed as external meetings, they often bypassed internal compliance or due diligence controls.

“Like other ‘consultancy’ arrangements, these roundtable payments served as covert bribes that were recorded in corporate books as legitimate marketing or professional fees,” the researchers wrote.

Some companies gave excessive discounts or credit notes to distributors, who used the surplus to bribe doctors or government officials, the reviewers write.

These payments, used to boost prescriptions or secure contracts, were falsely recorded as marketing or margin expenses, which concealed the bribe payments.

In Brazil, Eli Lilly’s subsidiary gave excessive distributor discounts, enabling mark-ups that concealed bribes to government officials to purchase Lilly products, the SEC alleged.

One distributor allegedly used $70,000 (6 per cent of sales) to secure $1.2 million in purchases and the Lilly Brazil sales and marketing manager, who requested the discount allegedly aware of the arrangement, according to the SEC.

As part of a broader civil settlement to resolve reported FCPA violations between 1994 and 2009 related to its affiliates, Eli Lilly announced it agreed in 2012 to pay more than $29 million without admitting or denying the allegations. It also agreed to an independent review of its internal controls and FCPA compliance.

“Lilly requires our employees to act with integrity with all external parties and in accordance with all applicable laws and regulations,” said Anne Nobles, Lilly’s chief ethics and compliance officer, in a statement at the time.

“Since ours is a business based on trust, we strive to conduct ourselves in an ethical way that is beyond reproach.”

Pharmaceutical companies also have been accused of bribing public officials directly or through intermediaries to accelerate regulatory approvals, speed up product registrations or secure government contracts, the review shows. Payments were hidden through inflated contract prices, forged consulting agreements or manipulated marketing budgets.

For instance, Eli Lilly’s subsidiary in Russia was accused by the SEC of paying millions of dollars to offshore entities for alleged “marketing services” to drive drug sales among pharmaceutical distributors and government bodies.

About $2 million went to an offshore entity belonging to a government official, while another $5.2 million went to entities owned by someone closely connected to an important member of Russia’s parliament, the SEC alleged. Though the company became aware of violations, the arrangements continued for years, federal investigators said.

The company reached a civil settlement with the SEC as part of the 2012 compliance agreement, without admitting or denying the allegations, and the SEC noted that improvements to its global anti-corruption compliance program since the initial complaint.

“When a parent company learns tell-tale signs of a bribery scheme involving a subsidiary, it must take immediate action to assure that the FCPA is not being violated,” said Antonia Chion, associate director in the SEC enforcement division at the time.

“We strongly caution company officials from averting their eyes from what they do not wish to see.”

Under the United Nations (U.N.) Oil-for-Food Program, later placed under Iraqi control, pharmaceutical companies were required to sell products to Iraq through a U.N.-supervised system intended to provide humanitarian relief. The review identified pharmaceutical companies that inflated contract prices and funnelled the excess as disguised “agent commissions” to Iraqi ministries.

“These payments were falsely recorded as legitimate fees or marketing costs while the companies recovered the padded amounts from the UN escrow fund,” the authors wrote.

Johnson & Johnson’s subsidiaries and pharmaceutical agent was accused in 2011 by the SEC of allegedly paying more than $850,000 in kickbacks demanded by Iraqi ministries to receive contracts and disguising the illicit payments as legitimate commissions, according to the SEC complaint.

J&J voluntarily disclosed some of the violations by its employees and conducted an internal investigation, according to the SEC.

Without admitting or denying the allegations, the company agreed to pay $70 million to settle the case and parallel criminal charges by the DOJ, including separate allegations of bribes to doctors in Greece, Poland, and Romania, the SEC reported.

Novo Nordisk, a leading supplier of insulin at the time of the program, acknowledged responsibility for its agent paying roughly $1.4 million in improper payments to the former Iraqi government by inflating the price of contracts before submission to the UN for approval, then inaccurately recording them as “commissions.”

The company agreed to pay a $9 million penalty in connection with the scheme as part of a deferred prosecution agreement, DOJ records show. It also settled related allegations with the SEC, without admission or denial.

Other techniques were widely used by intermediaries to create fraudulent invoices for non-existent services such as “advertising,” “storage,” “consulting” or “marketing,” the analysis found.

“In some cases, vague descriptions such as ‘distribution freight’ were used to funnel funds to officials or doctors without raising immediate red flags,” the reviewers wrote.

Pharmaceutical companies also allegedly disguised bribes as charitable donations or contributions to philanthropic foundations connected to public officials. Internal emails and documentation explicitly referred to these payments as quid pro quo arrangements for regulatory approvals or favourable reimbursement decisions, the reviewers say.

For example, Eli Lilly’s subsidiary in Poland was accused of transferring $39,000 to a high-ranking health official’s small charitable foundation in return for the official’s support for placing Lilly drugs on the government reimbursement list, the SEC alleged in a 2012 complaint. The payments were falsely characterized for computer purchases and conferences, which never took place, according to the complaint.

Without admitting or denying the SEC’s allegations, the company agreed to a final judgment permanently enjoining it from violating the FCPA as part of a wider settlement, SEC records show. It also agreed to pay more than $29 million in financial penalties and related payments.

Foreign bribery by pharmaceutical companies persists, the researchers say, because the risk of detection is low, and the expected cost of being caught — the amount of a bribe and the risk of penalties from one — is often low relative to increased revenues.

For example, Johnson & Johnson’s agreement to pay $70 million in financial penalties, without admitting or denying the SEC’s allegations, occurred the same year it reported earning $65 billion in sales – and years after the SEC alleged bribery schemes by its subsidiaries in four countries began.

In 2023, the DOJ and SEC resolved 14 FCPA actions across all industries with total sanctions of approximately $571 million – a significant decrease from the prior year when 10 actions yielded more than $1.68 billion in corporate penalties, according to the most recent data compiled by the multinational law firm A&O Shearman in its annual report.

As discounts for cooperation and compliance rose, the average penalty dropped to nearly $44 million in 2023, down from an average of $168 million in 2022 and a peak of $686 million in 2020.

“In short, pharmaceutical companies as rational profit maximisers (irrespective of legality) will compare the potential gains from bribery against the expected cost of being caught and punished,” the researchers wrote.

“Lengthy delays between scheme initiation and their detection and prosecution, coupled with the potential to contest charges, reduce the effective expected cost of corrupt practices. As a result, high financial penalties do not necessarily translate into meaningful deterrence against corruption.”

The same calculation may be true domestically, suggests a research letter published earlier in March in JAMA Network Open. Researchers found that pharmaceutical manufacturers fined by the US government for illegal kickbacks paid penalties equal to just 2.2 per cent  of their sales earned from selling drugs that were implicated in violations over the past 25 years.

The total penalties were about $10.2 billion, while US revenue during that same period totalled roughly $459 billion, they say.

Alleged schemes typically involved paying doctors to prescribe federally reimbursed drugs, the researchers say, and criminal prosecution under the US Anti-Kickback Statute was uncommon.

“Moreover, all cases were resolved through negotiated settlements, likely due to resource constraints and uncertainty of judicial judgment, which also makes settlement more predictable for manufacturers. Thus, our findings suggest that AKS settlements may be economically tolerable for some pharmaceutical manufacturers and function as a cost of doing business,” the new study concludes.

The median time from alleged misconduct to settlement was 3.8 years.

OECD reports on which last month’s expansive review is based include only pharmaceutical bribery schemes made public through official investigations. Enforcement also varies widely across countries, creating what the researchers describe as “a ‘dark figure’ of corruption that is never formally documented.”

And intricate financial arrangements, incomplete reporting, a fragmented health system “outmatched” by the global reach of pharmaceutical firms, and limited public disclosures often obscure misconduct, they say.

Added to that, after temporarily suspending enforcement of the Foreign Corrupt Practices Act last year, the Trump Administration has signalled potential changes to enforcement priorities, including a substantially smaller team at the DOJ and a shift in priorities to national security threats.

What is needed, Kohler and her colleagues argue, are more proactive monitoring and audit mechanisms, including enhanced due diligence and tighter oversight of distributors, local agents and third parties, as well as mandatory transparency in intermediary relationships, such as public disclosure of service fees and clinical trial data.

The authors also urge structural reforms, including:

Expanding independent financing for clinical trials.

Improving transparency through data analytics, artificial intelligence (AI) risk detection and automated financial tracking.

Mandating disclosure of industry payments to healthcare providers.

Reducing regulators’ reliance on industry financing.

Strengthening whistle-blower protections.

“These findings underscore the systemic nature of bribery in the pharmaceutical sector,” they wrote, “and call for stronger oversight and accountability to protect public trust and equitable medicine access.”

• A Tell Media report / By Pamela Ferdinand – Former Massachusetts Institute of Technology Knight Science Journalism fellow who covers the commercial determinants of public health.