Well, add another pharmaceutical company to the FCPA healthcare “sweep.”  Frankly, the term “sweep” makes it sound like a coordinated enforcement effort – instead, it is more accurate to think of it as multiple prosecutions against a high-risk industry.

Whatever the enforcement background, Sanofi settled an FCPA case with the SEC for $25 million.  DOJ closed its investigation of Sanofi in March 2018.  The SEC investigation took over 4 years to complete. The FCPA allegations were initially raised by a whistleblower in 2014.

Sanofi agreed to books and records and internal controls violations.  Sanofi paid a $5 million civil penalty, $17.5 million in disgorgement, and $2.7 million in prejudgment interest.

With the assistance of third-party distributors, Sanofi engaged in bribery schemes in three regions: Kazakhstan; Levant (which includes Jordan, Lebanon, Syria and the region of Palestine); and the Gulf (which includes Bahrain, Kuwait, Qatar, Yemen, Oman, and the United Arab Emirates).  The bribery schemes in each region were different.

In Kazakhstan, between 2007 and 2011, Sanofi sales managers and distributors facilitated a bribery scheme to generate funds from which bribes were paid to health care professionals to ensure that Sanofi was awarded tenders.  Sanofi representatives tracked the bribes and funding scheme using internal spreadsheets and used a code “marzipans” to reference bribe payments.

Sanofi’s senior managers in Kazakhstan funded the bribery scheme through discounts and credit notes to several distributors who colluded with senior managers to kick back funds to Sanofi employees in Kazakhstan, which in turn were used to pay Kazakh physicians.  The credit notes were exchanged, in some cases, for cash.

The illicit scheme was funded through several steps – first, the sale price between Sanofi and the distributor for a winning tender included a pre-set discount or credit note from the sale price between the distributor and the public distributor; second, from the discount or credit note, Sanofi and the distributor designated a portion for bribes to Kazakh officials; and third, the distributor then kicked back those funds to Sanofi employees who then delivered the illicit proceeds to Kazakh officials.

Sanofi had no standardized commercial policy for distributor discounts and did not review the discounts provided by local management.  Sanofi’s Kazakhstan office earned profits of $11.5 million from the bribery scheme.

In the Levant region, from 2011 to 2013, Sanofi employees and agents used a variety of schemes to pay physicians to increase Sanofi prescriptions.  They used sponsorships, gifts, donations, product samples, consulting agreements, peer-to-peer meetings, clinical studies and grants.  They focused on top selling Sanofi products in the region.  The schemes were carried out throughout the region and included government and private hospitals.

Sanofi concentrated its bribes on a single physician at a large public hospital in Jordan.  In 2012, the physician requested 24 vials of an expensive cancer treatment drug.  There was no justification for giving the product samples to the physician.  In addition to the samples, Sanofi provided the physician with consulting, speaking and clinical trial fees over a period of years despite the absence of any documentation confirming he had in fact provided any services.  In one case, the physician asked Sanofi to pay an unrelated individual for the physician fees, and Sanofi did so.

Sanofi earned approximately $4.2 million in profits from its illegal conduct in the Levant region.

In the Gulf area, Sanofi bribed officials from 2012 to 2015 at public hospitals and clinics to increase prescriptions of Sanofi products.  Sanofi submitted false travel and entertainment reimbursement claims, received payments for these claims and pooled the money and distributed the funds to health care professionals.

Sanofi “conducted” fake round table meetings with health care professionals and created fake receipts with the help of vendors who offered fake receipts.  The medical representatives then submit doctored (no pun intended) receipts for reimbursements.  The sales manager approved the request and the medical representatives were paid, and then turned the money over to the sales manager who pooled the money to create a slush fund to pay physicians for increasing prescriptions of Sanofi medications.

One medical representative estimated that 70 percent of travel and expense reimbursement submissions were part of the scheme, totaling approximately $4 million.  Sanofi’s Internal Audit unit identified the weaknesses in the reimbursement controls but nothing was ever done to remediate the situation.

Sanofi derived profits of approximately $1.755 million from the scheme in the Gulf countries.

To remediate its compliance program, Sanofi terminated 121 employees, including senior local managers, accepted resignations from 14 employees and disciplined 49 employees.  Sanofi improved its controls over health care professional expenditures, enhanced the operations of its local compliance committees, and placed local compliance officers in high-risk markets.