Alexion Pharmaceuticals: Patient Approvals and Expenses in Pencil

The Alexion Pharmaceuticals FCPA case produced a $3,500,000 civil penalty in a July 2, 2020 SEC settlement over alleged payments for drug approvals and false expense records. The agency described a Turkish manager who wanted a consultant’s expense descriptions written in pencil and a Colombian invoice that changed who could approve a payment. An erasable description and a relabeled invoice: ordinary paperwork carried the alleged scheme.

Alexion developed and sold drugs for rare and ultra-rare diseases, including Soliris. The Securities and Exchange Commission’s order concerned payments and records at its wholly owned subsidiaries in Turkey, Russia, Brazil and Colombia. The parent settled allegations that its books hid the payments and its controls failed to stop them.

Turkey’s Patient Approvals and the Consultant’s Expenses

In Turkey, selling Soliris depended on approvals for individual patients. Under the named patient sales program described in the order, Ministry of Health commissions reviewed applications to begin treatment, separate approvals authorized payment, and recurring approvals allowed treatment to continue. A prescription therefore depended on decisions about both care and government money.

The agency alleged that Alexion initially struggled to obtain those approvals. After a senior ministry official suggested that payments to officials might secure more approvals, Alexion Turkey hired a consultant partly for connections to senior ministry officials. From 2010 to 2015, the subsidiary paid the consultant more than $1.3 million in fees and purported expense reimbursements. The agency put Alexion’s gains from the alleged Turkish conduct at over $6.6 million.

According to the order, the consultant passed part of that money to officials through cash, meals and gifts. The alleged benefits included patient prescription approvals, confidential information and advance feedback on regulatory submissions. Alexion Turkey recorded the improper payments as legitimate expenses.

The paperwork allegedly added another business between the subsidiary and the consultant. Two managers asked a vendor to pay the consultant and submit falsified invoices for reimbursement. The agency then described a manager’s instruction about how the consultant’s expenses should appear:

Here, the alleged instruction made that explanation erasable. An accounts payable employee could see an expense claim, while the person arranging the payment knew which official it was intended to benefit. Connecting those views is the work behind a payment-trail investigation.

The order alleged that many claimed expenses had little or no explanation and most lacked independent supporting documents. Some submissions nevertheless identified government officials by their first names. The company allegedly accepted vague expense categories even when the accompanying notes pointed to an official beneficiary.

The consultant was only part of the alleged arrangement. The agency said that from 2012 to 2015, managers paid more than $100,000 to or at the request of health care providers serving on ministry commissions, recording the payments as honoraria and grants. These providers controlled prescription approvals and influenced treatment guidelines and reimbursement criteria. The order described one provider whose payments began after the provider acquired authority to approve or deny Soliris prescriptions.

Russia’s Budgets and the Value of a Doctor’s Official Role

In Russia, Soliris sales depended on regional healthcare budgets as well as prescription approvals. The order explained that the drug was reimbursed through regional spending, requiring regions to allocate money for it. Doctors working in state institutions could also hold advisory roles influencing those allocations and the drug’s regulatory treatment.

The SEC alleged that Alexion Russia paid those providers more than $1 million from 2011 to 2015. The payments included funds intended to influence budget allocations, increase approved prescriptions and secure favorable regulatory treatment. The subsidiary allegedly recorded them as honoraria, education, business meetings and scientific research. The agency put Alexion’s gains from the alleged Russian conduct at over $7.5 million.

The order described one physician who chaired a committee recommending how a region should allocate rare-disease funds and helped develop diagnostic and treatment standards. According to the agency, Alexion Russia made payments partly to influence that work, and the physician gave the company draft diagnostic standards to comment on and revise before submission to the Ministry of Health. The alleged benefit reached the rules governing treatment, beyond an individual prescription.

That overlap between medical work and public purchasing power is central to pharmaceutical bribery. In pharmaceutical-industry remarks delivered in 2015, the Securities and Exchange Commission’s enforcement director described drug representatives’ regular contact with public-hospital doctors, pharmacists and administrators who decide what institutions buy. The remarks identified recurring allegations involving prescription buying, access to approved-drug lists and payments disguised as charitable contributions. Alexion’s Russian allegations show why an employee needs to understand the recipient’s government responsibilities alongside the service named on an invoice.

Patient Advocacy Payments in Brazil and Colombia

The Brazil and Colombia allegations concerned inaccurate financial records, including records of payments to patient advocacy organizations. The agency described employees creating false records or directing third parties to create them from 2013 to 2015. The examples turn on who benefited from a payment and how an invoice moved it through the company’s approval process.

In Brazil, the SEC alleged that a manager caused a patient advocacy organization to cover personal alcohol and travel expenses and submit a fictitious invoice for reimbursement by Alexion Brazil. Grant requests sent to Alexion’s global grant review committee also allegedly misstated how the money would be spent.

In Colombia, the agency alleged that a senior manager directed a patient advocacy organization to submit an invoice falsely describing a payment as legal support. That description allowed local approval instead of the global grant review required by company policy. In the agency’s account, the label chose its own reviewer.

The order also alleged missing underlying documents at both subsidiaries and the destruction of relevant documents by certain Brazilian employees. Together, these allegations put the grant request, invoice, approval route and supporting documents into the same account of a payment. Knowing why an invoice was recategorized explains a decision the ledger leaves out.

How the Subsidiaries’ Entries Reached the Parent

Alexion’s subsidiary accounts fed into the parent’s financial statements. The agency alleged that inaccurate local entries became part of Alexion’s books and that its controls failed to detect and prevent improper payments. The settled order addressed the parent’s books, records and accounting controls, with the subsidiaries’ transactions supplying the underlying story.

The Turkish documentation failures and the Colombian approval bypass show different ways that review could fail. In the first, the order described payments accepted with inadequate explanations and support. In the second, a false service description allegedly moved a payment away from the review it required. We would want to understand both the information a reviewer received and what the people arranging the payment knew.

When Medical Spending Carries a Sales Condition

The Novartis Hellas case supplies a close comparison between an expense’s medical description and its commercial purpose. In its 2020 order concerning parent company Novartis AG, the SEC alleged that Greek employees ranked doctors by prescribing preferences and volume, treated benefits as investments, and reduced or ended support when prescription returns fell short. The order also described employees’ awareness that some doctors regarded study payments as rewards for prescriptions. The doctor’s sales ranking supplied a meaning that the study-payment record could miss.

Fresenius Medical Care supplies a different comparison: changing the payment route after compliance intervened. Its SEC order alleged that a prohibition on using a Serbian agent was circumvented through a transport vendor that paid publicly employed doctors. A 2022 study in the Journal of Forensic and Investigative Accounting, Fresenius Medical Care: A Case Study on the FCPA, drew the broader lesson:

Across these cases, the useful connection is between the medical or commercial decision, the person receiving the benefit, and the record used to authorize it. A sales employee may know the expected prescriptions, a grants employee the intended recipient, and a finance employee the changed payment description.

The SEC Settlement and Whistleblower Rewards

The civil penalty was smaller than the $14,210,194 in gains the agency ordered Alexion to return. We see the problem with that bargain: the larger obligation was giving back money the agency said it should never have earned.

Eligible whistleblowers can receive a combined 10% to 30% of qualifying money collected through the SEC whistleblower program. A whistleblower case under the separate False Claims Act can pay 15% to 30% of what the government recovers. We work with you to identify the program that fits the conduct you know.

You Know Why the Payment Was Approved

If you saw a consultant’s expenses rewritten, a grant turned into a service invoice, or a doctor’s support tied to prescribing, tell our whistleblower experts what the payment was meant to buy. We connect your knowledge of the business with the decisions and records that can support your case, and bring in pharmaceutical FCPA whistleblower lawyers who understand cross-border payment arrangements. You have a partner from the first conversation through the pursuit of a recovery.