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Foreign Bribery by the Pharmaceutical Industry

Health Letter, December 2017

By Sammy Almashat, M.D., M.P.H.

In 2016, Public Citizen published the latest in a series of three reports documenting the toll of pharmaceutical industry misconduct and crime over the past two and a half decades.[1] The report tallied all pharmaceutical manufacturer criminal and civil settlements with the federal and state governments from 1991 to 2015. In those 25 years, every major pharmaceutical company had been forced to reach at least one settlement for misconduct, with several having engaged in repeated misconduct.

One form of misconduct that has been responsible for an increasing number of settlements over the past decade is bribery of foreign government officials, such as government-employed physicians and health officials in poor countries in Eastern Europe and Asia.[2] Such instances of bribery have been prosecuted by the U.S. government as violations of a U.S. law known as the Foreign Corrupt Practices Act (FCPA). From 2009 through October 2017, eight pharmaceutical companies (Novo Nordisk, Johnson & Johnson [J&J], Pfizer, Eli Lilly, Bristol-Myers Squibb, AstraZeneca, GlaxoSmithKline and Teva) paid a total of approximately $725 million in 11 separate criminal and civil settlements over FCPA violations.[3]


In the 1970s, the U.S. Congress began investigating the alleged bribery of foreign government officials by U.S. oil- and defense-industry corporations in numerous countries around the world, including South Korea, Japan, Saudi Arabia, Honduras, the Netherlands and Italy.[4] In response to these and other instances of corporate wrongdoing, Congress passed the FCPA in 1977 “for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.”[5] The law’s provisions on bribery of foreign officials apply to all U.S. citizens and permanent residents and to companies operating within the U.S. The primary federal agency tasked with enforcing the FCPA is the U.S. Securities and Exchange Commission (SEC).

Pharmaceutical settlements under the FCPA

Pharmaceutical manufacturers have run afoul of the FCPA by bribing either government officials or employees, such as physicians or hospital administrators, of government-funded health care systems.

The first settlement between a pharmaceutical manufacturer and the federal government for alleged violations of the FCPA was reached in 2009. In that settlement, Novo Nordisk acknowledged that between 2001 and 2003 it had paid kickbacks to Iraqi government officials to secure contracts to provide insulin and other pharmaceuticals to the country.[6] The company paid a $9 million fine for the illegal activity. (Notably, however, this corrupt activity was a means to circumvent stifling U.S.- and U.K.-led economic sanctions that had killed hundreds of thousands of Iraqis and that were deemed “genocidal” by two consecutive United Nations humanitarian coordinators of the sanctions, who resigned in protest.[7])

Over the next eight years, seven more pharmaceutical manufacturers would be forced to pay fines for similar bribery, mainly in developing countries:

  • In April 2011, Johnson & Johnson agreed to pay a total of $70 million in two separate settlements with the federal government for, among other things, having paid bribes to “public doctors and hospital administrators in Poland who awarded contracts to J&J, and public doctors in Romania to prescribe J&J pharmaceutical products. J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program.”[8]
  • In August 2012, Pfizer agreed to pay a total of $60 million in fines in two separate settlements with the federal government over “improper payments” to government officials in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia and Serbia to more easily obtain approvals of its drugs from those countries’ regulatory agencies, placement of their drugs on government-funded drug formularies and increased prescriptions.[9] The government further alleged that Pfizer “tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences and advertising.” Pfizer also was alleged to have bribed government-employed doctors in China, Croatia, Indonesia and Pakistan to use, recommend or promote the company’s products.
  • In December 2012, Eli Lilly agreed to pay more than $29 million in a settlement over allegations that it had paid millions of dollars to government officials or to third parties in Russia, Brazil, China and Poland that “were used to funnel money to government officials in order to obtain business” for the company.[10]
  • In October 2015, Bristol-Myers Squibb agreed to pay more than $14 million to settle the government’s charges that it had “made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in exchange for prescription sales” in China.[11] The government further charged that Bristol-Myers Squibb had “sought to secure and increase business by providing health care providers in China with cash, jewelry and other gifts, meals, travel, entertainment, and sponsorships for conferences and meetings” and then “inaccurately recorded the spending as legitimate business expenses in its books and records.”
  • In August 2016, AstraZeneca was forced to pay more than $4 million for alleged bribery of Chinese and Russian health care providers with gifts, payments to attend conferences, travel, and cash, in order to reward or influence their purchase of the company’s drugs.[12] This included, in China, alleged “gifts, entertainment and other expenses to individual physicians, and in other cases, maintenance fees to a particular hospital or medical department.”
  • In September 2016, in perhaps the most high-profile case of foreign bribery by a drug company, GlaxoSmithKline was forced to pay $20 million in a settlement with the SEC for a vast campaign of bribery of Chinese officials to expand sales of the company’s products.[13] The bribery was first uncovered by Chinese officials several years earlier in what was the first of a series of crackdowns on drug company bribery in the country. In June 2013, the Chinese government announced that it had begun an investigation into a suspected bribery ring orchestrated by GlaxoSmithKline’s subsidiary in China.[14] The company’s local subsidiary was eventually found guilty and fined nearly $500 million by the Chinese government for the misconduct.
  • In December 2016, Teva entered into the two largest settlements ever reached with a drug company for violations of the FCPA, when it agreed to pay more than $519 million to settle criminal and civil charges that it had bribed officials in Russia, Ukraine and Mexico.[15] The SEC reported that the bribes were allegedly made “to increase its market share and obtain regulatory and formulary approvals as well as favorable drug purchase and prescription decisions.”

No deterrent, lucrative profits mean corruption set to expand

One can conclude two things from these settlements. One is that the bribery of foreign government officials and doctors was systematic and not a series of isolated incidents by rogue employees. The government repeatedly alleged that the companies had not only engaged in widespread bribery, in most cases across multiple countries around the globe, but had also attempted to cover up the wrongdoing after the fact.

The other crucial point is that the punishments meted out by the government were paltry given the severity of the misconduct, as has unfortunately been the case in the vast majority of cases in which the government has caught pharmaceutical companies engaging in illegal activity over the past two and a half decades.[16] The fines levied against the companies for FCPA violations over the past 27 years (1991-2017) were miniscule in comparison with the companies’ profits in a single year (2015), as shown in the following table. Again, it is important to remember that cases resulting in settlements represent only those instances of bribery detected by the U.S. government.

Company Fine for FCPA violations
Net or operating profits
(2015 alone)**
Profits in 2015 alone/
FCPA fines from 1991 to 2017 (ratio)
Novo Nordisk $9 million $5.1 billion[17] 567
Johnson & Johnson $70 million $15.4 billion[18] 220
Pfizer $60 million $7.7 billion[19] 128
Eli Lilly $29 million $2.4 billion[20] 83
Bristol-Myers Squibb $14 million $1.7 billion[21] 121
AstraZeneca $4 million $4.1 billion[22] 1,025
GlaxoSmithKline $20 million $12.6 billion[23] 632
Teva $519 million $4.7 billion[24] 9

* Through October 2017
** Refers to either calendar year or fiscal year 2015

Furthermore, despite the systematic nature of the alleged bribery, the federal government did not charge a single individual within the companies for engaging in, or neglecting to stop, the illegal conduct. The combination of paltry fines and employees’ seeming immunity from prosecution is hardly a deterrent to an industry eagerly expanding its reach into lucrative developing-country markets. The consulting firm McKinsey & Company has estimated that the pharmaceutical industry will double its revenues in the top-20 so-called “emerging markets” (developing countries) over the next 10 years.[25] With so many companies vying for market share in countries that often have lax oversight of bribery and other forms of corruption, it is all but certain that bribery of foreign officials and doctors by drug companies will continue and even proliferate over the next decade.


[1] Public Citizen. Twenty-Five Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2015. March 31, 2016. https://www.citizen.org/our-work/health-and-safety/twenty-five-years-pharmaceutical-industry-criminal-and-civil-penalties-1991-through-2015. Accessed November 20, 2017.

[2] Ceresney A, Director, Division of Enforcement, Securities and Exchange Commission. FCPA, disclosure, and internal controls issues arising in the pharmaceutical industry: Remarks at CBI’s Pharmaceutical Compliance Congress in Washington D.C. March 3, 2015. https://www.sec.gov/news/speech/2015-spch030315ajc.html. Accessed November 9, 2017.

[3] All settlements referenced in this article were found through a systematic search, conducted at various points from 2010 through October 2017, of U.S. Department of Justice and U.S. Securities and Exchange Commission press releases from 1991 through October 2017.

[4] Koehler M. The story of the Foreign Corrupt Practices Act. Ohio St Law J. 2012;73(5):929-1013.

[5] U.S. Department of Justice. Foreign Corrupt Practices Act: An overview. February 3, 2017. https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act. Accessed November 9, 2017.

[6] U.S. Department of Justice. Novo Nordisk agrees to pay $9 million fine in connection with payment of $1.4 million in kickbacks through the United Nations Oil-for-food program. May 11, 2009. https://www.justice.gov/opa/pr/novo-nordisk-agrees-pay-9-million-fine-connection-payment-14-million-kickbacks-through-united. Accessed November 9, 2017.

[7] Public Citizen. Consensus on Iran sanctions cripples Iranian health sector. Health Letter. January 2013. https://www.citizen.org/our-work/health-and-safety/consensus-iran-sanctions-cripples-iranian-health-sector. Accessed November 9, 2017.

[8] U.S. Securities and Exchange Commission. SEC charges Johnson & Johnson with foreign bribery. April 7, 2011. https://www.sec.gov/news/press/2011/2011-87.htm. Accessed November 9, 2017.

[9] U.S. Securities and Exchange Commission. SEC charges Pfizer with FCPA violations. August 7, 2012. https://www.sec.gov/news/press-release/2012-2012-152htm#.UuFITKtOmUk. Accessed November 9, 2017.

[10] U.S. Securities and Exchange Commission. SEC charges Eli Lilly and Company with FCPA violations. December 20, 2012. https://www.sec.gov/news/press-release/2012-2012-273htm#.UuKxaqtOmUk. Accessed November 9, 2017.

[11] U.S. Securities and Exchange Commission. SEC charges Bristol-Myers Squibb with FCPA violations. October 5, 2015. https://www.sec.gov/news/pressrelease/2015-229.html. Accessed November 9, 2017.

[12] U.S. Securities and Exchange Commission. Order instituting cease-and-desist proceedings pursuant to Section 21C of the Securities and Exchange Act of 1934, making findings, and imposing a cease-and-desist order. In the Matter of AstraZeneca PLC. August 30, 2016. https://www.sec.gov/litigation/admin/2016/34-78730.pdf. Accessed November 27, 2017.

[13] Lynch SN. GlaxoSmithKline to pay $20 million to settle U.S. foreign bribery case. Reuters. September 30, 2016. http://www.reuters.com/article/us-sec-glaxosmithkline-corruption/glaxosmithkline-to-pay-20-million-to-settle-u-s-foreign-bribery-case-idUSKCN1202F3. Accessed November 9, 2017.

[14] Plumridge H, Burkitt L. GlaxoSmithKline found guilty of bribery in China. The Wall Street Journal. September 19, 2014. http://www.wsj.com/articles/glaxosmithkline-found-guilty-of-bribery-in-china-1411114817. Accessed November 9, 2017.

[15] U.S. Securities and Exchange Commission. Teva Pharmaceutical paying $519 million to settle FCPA charges. December 22, 2016. https://www.sec.gov/news/pressrelease/2016-277.html. Accessed November 9, 2017.

[16] Public Citizen. Twenty-Five Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2015. March 31, 2016. https://www.citizen.org/our-work/health-and-safety/twenty-five-years-pharmaceutical-industry-criminal-and-civil-penalties-1991-through-2015. Accessed November 20, 2017.

[17] Nasdaq GlobeNewswire. Novo Nordisk increased operating profit by 43% in 2015 to DKK 49.4 billion. February 3, 2016. https://globenewswire.com/news-release/2016/02/03/807114/0/en/Novo-Nordisk-increased-operating-profit-by-43-in-2015-to-DKK-49-4-billion.html. Accessed November 9, 2017.

[18] Johnson and Johnson. Johnson & Johnson reports 2015 fourth-quarter results. January 26, 2016. http://www.investor.jnj.com/releasedetail.cfm?releaseid=951652. Accessed November 9, 2017.

[19] Pfizer. News and Media. Pfizer reports fourth-quarter and full-year 2015 results. February 2, 2016. http://press.pfizer.com/press-release/pfizer-reports-fourth-quarter-and-full-year-2015-results. Accessed November 9, 2017.

[20] Lilly. Lilly reports fourth-quarter and full-year 2015 results. January 28, 2016. https://investor.lilly.com/releasedetail.cfm?ReleaseID=952122. Accessed November 9, 2017.

[21] Bristol-Myers Squibb. Press release: Bristol-Myers Squibb reports fourth quarter and full year 2015 financial results. January 28, 2016. https://news.bms.com/press-release/financial-news/bristol-myers-squibb-reports-fourth-quarter-and-full-year-2015-financia. Accessed November 9, 2017.

[22] AstraZeneca. Full-year and Q4 2015 Results. February 4, 2016. https://www.astrazeneca.com/content/dam/az/PDF/Fourth_quarter_and_Full_Year_results_2015_press_release.pdf. Accessed November 27, 2017.

[23] GlaxoSmithKline. Annual Report 2016. https://www.gsk.com/media/2718/gsk-annual-report-2016.pdf. Accessed November 9, 2017.

[24] Seeking Alpha. Teva Pharmaceuticals: Key facts and trends of 2015-2016. February 14, 2016. https://seekingalpha.com/article/3894926-teva-pharmaceuticals-key-facts-trends-2015minus-2016. Accessed November 9, 2017.

[25] Agarwal A, Dreszer J, Mina J. What’s next for pharma in emerging markets? McKinsey & Company. June 2017. https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/whats-next-for-pharma-in-emerging-markets. Accessed November 9, 2017.