Drug company penalties for paying kickbacks to doctors failed to dent bottom lines, analysis finds

STAT News – Tuesday, March 24, 2026
By Ed Silverman

Pharmaceutical companies that were penalized for kickbacks paid only 2.2% of their U.S. revenue generated by selling drugs that were the focus of the alleged violations during the past quarter century, according to a new analysis.

Between 2000 and 2025, 64 cases were identified in which a drugmaker reached a civil or criminal settlement with the U.S. government for paying kickbacks to physicians to boost prescribing of their medicines or that caused federal government health care programs, such as Medicare or Medicaid, to overpay for medicines.

Of those, complete information regarding the circumstances as well as sales data was available for 46 cases. The analysis, which was published in JAMA Network Open, found that these yielded nearly $10.25 billion in penalties, while the U.S. revenue generated by the medicines that were at the center of those settlements totaled $458.6 billion.

The researchers suggested that such penalties are seen by pharmaceutical companies as a cost of doing business, because the improper business practices yield sufficient sales to dwarf the expense of reaching a deal with federal authorities. And they suggested this thinking appears entrenched since such instances have occurred for so many years.

“The issue is whether the penalties were effective in dissuading companies from continuing bad behavior and how much resulted in a hit to profit or revenue,” said Reshma Ramachandran, a co-author, who is an assistant professor of medicine at Yale University, where she co-directs the Collaboration for Regulatory Rigor, Integrity, and Transparency.

“There were several repeat offenders and many signed corporate integrity agreements [in which companies agree not to strict compliance measures]. But there was not much change, …” she added. “Clearly, there’s a calculation by companies to still engage in these behaviors because the penalties don’t mean much. … They are a drop in the bucket.”

As an example, Teva Pharmaceutical agreed two years ago to pay $425 million to resolve kickback allegations concerning copayments for the multiple sclerosis drug Copaxone from December 2006 through January 2017. During that time, the total revenue for the drug, adjusted for inflation, was $37 billion.

The findings underscore ongoing concern over pharmaceutical industry business practices. As the analysis noted, various companies were cited over the years for paying kickbacks to physicians in order to boost prescribing of key medicines or their actions induced Medicare and Medicaid to overpay reimbursements.

The violations prompted the U.S. government in 2014 to launch a database, known as OpenPayments, that requires drugmakers to disclose payments over worries that the industry would have outsized and inappropriate influence over medical research and practice.

For its part, the pharmaceutical industry was placed on the defensive and responded to the scrutiny by adopting voluntary codes to guide marketing practices. The PhRMA, the industry trade group that issued the code, declined to comment about the new analysis.

The researchers noted that, while most cases were settled between 2000 and 2020, a few have occurred more recently. Besides the Teva case, Gilead Sciences last year settled a case with the U.S. government over kickbacks to doctors for $202 million. And in 2022, Biogen agreed to pay $900 million to over allegations of paying kickbacks to doctors.

Ramachandran explained that settlements often lag behind the alleged practices and that investigations, which sometimes can take years, are usually not known until settlements are announced. As a result, she contended that it is unclear whether drug companies have, by and large, refrained from engaging in such behavior or whether more cases will emerge.

Another analysis published two years ago found that industry payments to doctors remained pervasive. From 2013 to 2022, more than 85 million payments with a total value of $12.1 billion were made by industry to 57% of 1.4 million physicians. Ramachandran maintained this is evidence that little has changed because penalties have not hurt sales.

In general, health care fraud is a perennial concern. In the fiscal year ended Sept. 30, 2025, the U.S. government reported more than $5.7 billion in settlements and judgements pertaining to the False Claims Act, a law that allows whistleblowers to sue companies that overbill the government. This law is often used to pursue drugmakers that overcharge Medicare or Medicaid.

Last July, the Trump administration suggested additional scrutiny is planned. The Department of Health and Human Services and the Department of Justice created a working group to explore violations of the False Claims Act. One issue on the agenda: kickbacks paid to doctors. But one co-author of the new analysis is skeptical.

“This administration has made a big hullabaloo about fraud, but if they were really serious they would think about settlements that are not doing the job,” said Christopher Morten, an associate professor of law at New York University, who heads the Science, Health and Information Clinic.

“I think the DOJ has underinvested in enforcement for a long time,” he said. “And I’m concerned they’re not going to go after the pharmaceutical industry for other reasons, such as the deals made behind the scenes for TrumpRx. I’m concerned there will be some selection bias when it comes to the kinds of health care entities they go after.”

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