The Price of Admission: 10 Medical Companies Suspected of Paying Bribes in Foreign Countries

(MoneyWatch)  AstraZeneca (AZN), Baxter International (BAX), Eli Lilly (LLY) and Bristol-Myers Squibb (BMY) are suspected of paying bribes to do business in foreign countries, suggesting that kickbacks are standard operating procedure for big pharmaceutical companies.

At least 10 companies are under investigation by the SEC or the Department of Justice for violations of the Foreign Corrupt Practices Act. Here's a breakdown of who's on the hot seat:

• AstraZeneca: Admits it is cooperating with the probe.
• BMS: Admits its business in Germany has been under investigation since 2004 (see page 30).
• Eli Lilly: Admits its business in Poland has been under investigation by the SEC since 2003.
• Baxter: Did not disclose in its most recent 10-Q or 10-K filings with the SEC that it is under investigation in at least one of the following countries, according to MainJustice.com: Brazil, China, Germany, Greece, Italy, Poland, Russia and Saudi Arabia.
• Pfizer (PFE): Close to settling FCPA allegations. It was accused of trying to bribe its way out of a healthcare reform law in the Philippines.
• Johnson & Johnson (JNJ): Has been under investigation in China and Greece. A former J&J exec has been convicted in a British court of paying bribes to promote medical devices. It may be about settle the remainder of the investigation.
• Biomet (BMET): Admits it has been under investigation by the SEC since 2007 (see page 20).
• Zimmer (ZMH): disclosed to the DOJ in 2007 that "certain third-party, independent distributors of our products in two South American countries made certain payments that may have potential FCPA implications" (see age 15).
• Smith & Nephew (SNN): has disclosed it is part of the same probe looking into medical device marketers in foreign countries.
• Medtronic (MDT): Since the DOJ and SEC started their 2007 investigation, both agencies have made "additional requests" for information on Medtronic's foreign dealings (see page 84).

Why is it so common for major companies to be paying baksheesh abroad? MainJustice blames it on socialized medicine:

To a large extent, health care in the countries of interest is state-run, and ... doctors' salaries are typically lower in national programs, creating more demand for sweeteners and kickbacks.

"When you have millions and billions [of dollars in play], someone is getting some kickbacks somewhere. It's low-hanging fruit, and that's all there is to it," said a defense lawyer who is representing one of the companies.

So single-payer healthcare causes bribes? That seems a rather convenient excuse that lifts responsibility from the companies who actually pay the backhanders. Especially as kickbacks are even more common here in the U.S., where the free market is supposed to reward doctors enough to not want them.

Related:

• J&J's Other Headache: Foreign Bribery Probe Targets Shanghai Unit
• Did Pfizer Violate Foreign Corrupt Practices Act in Philippine "Bribe" Flap?
• J&J's Rude Education: So There Is a Difference Between Doctor Bribery and "Professional Education"

Image by Flickr user neubie, CC.