Detection and prevention of corruption in the life sciences sector: the most common corruption schemes and mitigation measures at a glance

Gaia Accetta
Portolano Cavallo, Milan
gaccetta@portolano.it

Ilaria Curti
Portolano Cavallo, Milan
icurti@portolano.it

Elisa Stefanini
Portolano Cavallo, Milan
estefanini@portolano.it

Introduction: corruption in the life sciences sector

The life sciences industry plays a pivotal role in scientific innovation, with the goal of enhancing human health, while contributing to economic growth and social development. Nevertheless, the presence of substantial financial resources, intricate regulatory frameworks, different stakeholders, information asymmetries and globalised supply chains render this industry particularly vulnerable to corruptive practices.

Transparency International defines corruption as ‘the abuse of entrusted power for private gain’.^[1] It can take different forms and involve many different actors, including governmental officials, business partners, companies’ directors and employees, agents, consultants and distributors. Furthermore, corruption can affect the whole supply chain, from research and development (R&D) and market access to global distribution.

According to the World Health Organization (WHO), corruption claimed 7.3 per cent of all health spending worldwide in 2023.^[2] Furthermore, the European Commission’s report published in 2024 estimated that corruption costs the EU up to €990bn per year,^[3] €56bn of which is related to corruption in the healthcare industry. Indeed, the healthcare sector ranks in sixth place for corruption at the EU level, after public procurement, the political sector, construction, infrastructure and sport. Finally, Transparency International found that around one in four people said that they have paid a bribe for accessing public services in the last 12 months.

Corruption investigations in the life sciences sector have spanned across several countries over the years. A recent example is the so-called Vacuna-gate scandal, from vacuna the Spanish word for vaccine, related to a corruption case in Perù, involving 487 people, including political elites, scientists and public health authorities, who secretly received ‘courtesy’ experimental doses of a vaccine being used in an ongoing Covid-19 trial. 

Another criminal investigation, which started a few years ago against a prominent pharmaceutical company, that allegedly corrupted several governmental officials and thousands of healthcare practitioners (HCPs) in Greece in order to obtain preferential treatment on the market, represents a further example of the pervasiveness of corruption in the life sciences industry. According to the deferred prosecution agreement reached with the United States Department of Justice Criminal Division’s Fraud Section and the US Attorney’s Office for the District of New Jersey, the company admitted to having engaged in a scheme to bribe employees of public hospitals and clinics in Greece to increase the sale of its pharmaceutical products. Specifically, the bribes consisted of travel to international medical congresses and improper payments to healthcare providers in connection with an epidemiological study in exchange for prescriptions.

An overview of the most common bribery schemes

Corruption in the life sciences sector is not just about kickbacks, gifts or hospitality perks given to HCPs anymore, aimed at influencing prescription practices, but has evolved over the years, with sophisticated schemes being developed that are difficult to detect. Indeed, some of the most common examples of corruption in the life sciences sector are described below.

Conferences and training

Disseminating knowledge, training and education are certainly among the traditional activities involving companies in the life sciences sector. Pharmaceutical and medical devices companies sponsor and organise conferences, events and training worldwide, inviting doctors as participants or speakers. Nevertheless, invitations to conferences can be misused as vehicles for unethical practices aimed at influencing doctors, so that they to prioritise or promote specific medicines and/or medical devices over others.

In various countries, including Italy, prosecutors have investigated cases involving life sciences companies for having concealed trips and vacations given to doctors under the pretext of conferences (often with the help of professional congress organisers) in exchange for prescriptions. 

Pre-clinical and clinical trials

Pre-clinical and clinical trials are settings where life sciences companies interact with hospitals that are government owned or controlled and doctors who are publicly employed, as well as with third parties, such as contract research organisations (CROs). This means that any financial interactions in regard to such sites and investigators may be exposed to corruption.

In addition, companies have steadily been increasing the number of clinical trials conducted abroad to save on costs, involving different regulatory landscapes that require a specific risk assessment. Misunderstandings of local laws and the reliance on local third parties can create space for corruption.

In regard to clinical trials, bribery can be detected in the form of disguised payments or consultancy agreements with investigators, used as an incentive to inappropriately increase patient enrolment or influence the results of the study. 

Procurement

The procurement of pharmaceuticals and medical device products within public health systems involves substantial financial resources and complex procedures.

Corruption in procurement can take various forms and occurs at different decision points in the process. During the pre-bidding phase, bribes can be used to influence the selection and awarding mechanism (eg, by manipulating the bid) to ensure that only certain companies are considered eligible.  During the post-bid phase, fraudulently amending agreements or meddling with the quantities ordered or prices that are being paid could be red flags that corruption has impacted the procurement process.

Marketing and sales

Transparency International’s^[4] Access to Medicine Index found that of the almost 100 separate settlements or enforcement decisions related to legal or regulatory requirements, 89 per cent concerned marketing, bribery and corruption.

Indeed, in this context, criminal investigations have found that various bribery mechanisms in favour of HCPs have been used to influence prescription patterns. For instance, in a few investigations by the US Securities and Exchange Commission, different pay-to-prescribe schemes have been identified: bank accounts opened in favour of doctors, fake receipts to secure reimbursements for fictitious expenses to generate money that salespeople can then use to bribe HCPs, and improper travel and entertainment and shopping excursion expenses recorded as legitimate expenses, such as employee expenses, speaker fees and marketing costs.

What measures can companies take to mitigate the risk of corruption?

Companies should take proactive steps to mitigate potential corruption risks by implementing proper compliance measures, including the following:

Compliance culture (procedures, awareness, monitoring)

Companies must ensure strict compliance with local and international anti-bribery laws and regulations, including those concerning transnational corruption.

Strong leadership and a clear commitment to anti-corruption are key to establishing credible and effective compliance tools.

Adopting anti-bribery policies and dos and don’ts for clinical studies, marketing practices and interactions with HCPs is also essential to drive correct and transparent behaviours.

Periodic and dedicated anti-corruption training for employees should clarify when their roles put them at risk of encountering corruption and explain how they should behave and what the personal consequences are if policies and procedures are not followed.

Regular audits on activities at risk of corruption are necessary to test employees’ anti-corruption compliance understanding, detect deviant conduct and in order to enhance preventative controls.

Robust third-party due diligence and contracts

Rigorous due diligence on business partners, agents, distributors, CROs, trial sites and individual investigators, etc, is important to mitigate corruption risks. Due diligence may vary depending on an assessment of the local and personal corruption risk indicators.

In addition, agreements with third parties should properly identify the related scope and the terms and conditions of such arrangements, as well as provide a clear structure and justification for payments and commissions paid that need to be in line with the fair market value.

Anti-corruption compliance clauses should include the termination of contracts in the case of a breach and audit clauses should allow companies to monitor third-party activities.

Effective whistleblowing policies and channels

Whistleblower protection programmes should be established to allow employees to report unethical behaviour without fear of retaliation. Indeed, proper whistleblowing systems are useful to detect potential cases of corruption early and effectively handle them and put in place remedial measures. In addition, well-established whistleblowing mechanisms help to highlight the company’s robust corporate governance and meet regulatory expectations around the globe.

Notes