Sanofi: The Discount Came Back as a Bribe

Sanofi agreed to pay more than $25 million in the Sanofi FCPA case to resolve charges involving distributor kickbacks and payments to increase prescriptions. The Securities and Exchange Commission described money leaving through discounts, medical fees and expense reimbursements, then reaching people who could steer business toward Sanofi. If you know how a distributor credit was approved or why a doctor received a payment, you may recognize the decisions behind those accounting entries.

The Paris-based pharmaceutical company settled the agency’s administrative proceeding on September 4, 2018. The agency’s order against Sanofi concerned the Foreign Corrupt Practices Act’s books and records and internal accounting controls requirements. Its account follows distinct payment schemes in Kazakhstan, the Levant and the Gulf.

Kazakhstan’s Distributor Discounts Came Back in Cash

The Securities and Exchange Commission alleged that Sanofi’s Kazakhstan managers used distributor discounts and credit notes to fund payments for public pharmaceutical tenders between 2007 and 2011. Sanofi’s local business sold through distributors while maintaining its own sales and marketing staff. That arrangement put the tender, the manufacturer’s selling price and the distributor’s margin in different hands.

According to the order, senior managers identified a public tender to a distributor, which bid for the business. After winning, the distributor ordered Sanofi products to fill it. Sanofi’s price included a predetermined discount or credit note against the price the public institution would pay. Sanofi employees and the distributor earmarked part of that difference for officials, and the distributor returned the money to employees who delivered it to the officials.

The order describes typical discounts of 20% to 30%, with a portion used for bribes. Credit notes could reduce what the distributor owed Sanofi and, in some cases, be exchanged for cash. Internal spreadsheets tracked the money returned to employees under the name “marzipans.”

The order said Sanofi had no standardized commercial policy for distributor discounts and did not review those granted by local management. It reported that tender sales increased by over 200%. The agency attributed approximately USD 11,580,099 in profits to the Kazakhstan conduct.

A distributor employee may know where the money went after the credit appeared. We see the absurdity in the agency’s account: the company offered a discount, then employees collected part of it back to pay the people deciding who would supply the medicine.

Levant’s Medical Fees Reached a Tender Decision-Maker

The Securities and Exchange Commission alleged that Sanofi’s Levant business used samples, consulting arrangements, clinical studies and other benefits to increase prescriptions from 2011 to 2013. The order defines that region as Jordan, Lebanon, Syria and Palestine. Its most revealing example concerns a healthcare professional at a large public hospital in Jordan who also served on the hospital’s tender committee.

According to the order, that healthcare professional requested 24 vials of Taxotere as samples in 2012. The cancer treatment was among Sanofi’s most expensive products in the region, and company policy required a medical justification. When the oncology manager asked for one, the sales representative’s response ended with this:

The order said the oncology manager approved the request without Medical Affairs reviewing it or a justification for the medical use. The samples amounted to nearly 20% of the hospital’s purchases. A favor for someone who helped decide the hospital’s tenders: that is the relationship the sample request puts in view.

The same healthcare professional also received speaking, consulting and clinical-trial fees despite missing support for the services, according to the order. The order says Sanofi paid USD 125,997 in clinical-trial fees, yet the healthcare professional never supplied reports of findings or observations. Consulting fees supposedly covered events and training for healthcare professionals in Iraq, but the agency said no supporting documentation for those services was found.

The order also described an unexplained change of payee. The healthcare professional asked for the consulting and clinical-trial fees to be paid by check to an unrelated person, and Sanofi accommodated that request.

The order also described a prominent private-sector pharmacist in Lebanon retained for consulting services over several years through 2013. Evidence of the promised training programs and speaking events was sparse or nonexistent. For someone in medical affairs or finance, the missing work and the unexplained payee are concrete parts of the story.

That overlap between medical authority and purchasing power is central to pharmaceutical bribery. The Securities and Exchange Commission enforcement director’s 2015 remarks, FCPA, Disclosure, and Internal Controls Issues Arising in the Pharmaceutical Industry, explained that representatives regularly deal with doctors, pharmacists and administrators at foreign public hospitals who can decide what the institution buys. The remarks also identified distributor margins as a source of cash for bribes that companies could record as ordinary expenses.

The Gulf’s Meetings Never Happened, but the Reimbursements Did

The Securities and Exchange Commission’s Gulf account described a fund built from fabricated meeting expenses and used to pay private healthcare professionals to increase prescriptions. Sanofi’s Gulf business covered Bahrain, Kuwait, Qatar, Yemen, Oman and the United Arab Emirates. The order traced the scheme to sales managers and medical representatives in its Primary Care business unit.

According to the order, vendors supplied fake receipts for round-table meetings. Sales managers instructed representatives to submit doctored receipts for events that never occurred, approved the reimbursement claims and received the money back from the representatives. The proceeds were pooled, and managers tracked both the money coming in and the payments going out to healthcare professionals.

One medical representative estimated that 70% of the unit’s travel and entertainment submissions related to the scheme. Separately, the order said Sanofi Gulf spent approximately USD 4 million on round-table meetings from 2012 to 2015, only a portion of which went into the scheme. An employee’s account of how those reimbursements worked explains something the expense category alone cannot.

The order described a 2015 internal audit that found missing attendance lists and hospitality-cost records for outsourced distributor promotions. It also described cash payments and missing attendance documentation and approvals for Sanofi’s own round tables.

The managers approving the expenses were, in the agency’s account, the same people directing the false submissions. Their approval supplied the paperwork needed to release the money. The employee who knew the meeting never happened could explain why that apparently complete expense claim told a false story.

How Sanofi’s Payments Reached the Books

The Securities and Exchange Commission charged Sanofi with false books and records and inadequate internal accounting controls. The order alleged that improper payments were recorded as legitimate selling and marketing expenses, then consolidated into Sanofi’s financial statements. The agency also charged that Sanofi lacked sufficient accounting controls to detect and prevent improper payments to foreign officials.

Those accounting and controls charges connect the local payment to the company’s reported business. The expense label explains what the accounts told readers. The approval trail explains how the payment got through.

A similar cash route appears in Fresenius Medical Care. In its criminal non-prosecution agreement, the company admitted conduct involving checks converted into cash for government doctors, with entries described as project marketing expenses or collection commissions. The parallel is the conversion of an apparently ordinary business payment into cash for a healthcare decision-maker.

The 2022 Journal of Forensic and Investigative Accounting paper Fresenius Medical Care: A Case Study on the FCPA identifies the employees cashing those checks as distributor staff who handed the money back to their general manager. It explains why policies and flagged transactions can coexist with continuing payments:

The Sanofi order shows a specific version of that problem: managers allegedly directed false expense submissions and approved them. For us, the employee who saw the cash returned or the services go unperformed supplies the connection an approval stamp can obscure.

What Sanofi Agreed to Pay

The Securities and Exchange Commission ordered Sanofi to return USD 17,531,666 in profits and imposed a $5 million civil penalty. The agency credited Sanofi’s cooperation in setting that penalty. We see the imbalance: the penalty was smaller than the profits the agency attributed to Kazakhstan alone.

Whistleblower Rewards Depend on the Case

Sanofi resolved an SEC enforcement action, and the SEC whistleblower award program can pay eligible whistleblowers an aggregate 10% to 30% of qualifying money collected in enforcement actions. The False Claims Act is a separate law: a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our whistleblower experts work with you on which program fits the payments and records you know.

You Know What the Payment Bought

If you saw distributor credits returned as cash, fees paid without medical work or reimbursements for meetings that never happened, talk with our whistleblower experts about the payment trail you know. We build the case with you and bring in pharmaceutical FCPA whistleblower lawyers who understand public tenders, doctor payments and the accounts behind them. We remain your partners as the case develops, keeping your knowledge of the business at its center.