China Mulling Huge Fines for Drug Companies
PHILADELPHIA, Sept. 5, 2013 (PHILADELPHIA INQUIRER) - Businesses are always looking for best practices to copy. Sometimes, governments do the same.
The Chinese government reportedly is considering emulating the U.S. government, whose investigations have resulted in billion-dollar penalties to pharmaceutical companies for malfeasance related to drug marketing.
"We should learn from the practice of other countries in imposing astronomical fines," China's Ministry of Public Security said on its website Wednesday, according to the South China Morning Post in Hong Kong.
London-based GlaxoSmithKline, which has several facilities in and around Philadelphia, is in the eye of the storm over how foreign drug companies operate in the world's most populous country.
But GSK also is in the U.S. record books, at least for now, with the largest fine to result from investigations by the Justice Department and the Health and Human Services Department's Office of Inspector General.
In July 2012, GSK agreed to plead guilty to three criminal charges and pay $3 billion to settle allegations related to marketing practices and failure to alert the U.S. Food and Drug Administration about safety concerns spinning out of a clinical trial of the diabetes drug Avandia. (The previous record penalty was $2.3 billion that Pfizer paid in 2009.)
At the time, GSK officials quickly noted that the U.S. allegations mostly related to events occurring before chief executive officer Andrew Witty took over in 2008.
As for China, Witty said recently that the allegations were "shameful," if true, and not indicative of approved sales procedures. GSK officials in China reportedly used a travel agency to pay off providers with cash or trips around the globe.
In the weeks since the Chinese investigation of GSK became public, other drug companies have had employees questioned, and some have said they used some of the same travel agencies.
On Tuesday, China's official Xinhua news agency quoted a GSK China executive as saying leaders in London pushed them to meet such high sales targets that they had no choice but to use illegal tactics.
"We remain deeply concerned by the allegations of fraudulent behavior and ethical misconduct in our China business," GSK spokeswoman Mary Anne Rhyne said in a statement. "The reports published [Tuesday] relate to the ongoing investigation being conducted by the Chinese authorities. The issues identified would be a clear breach of our corporate values, and we have zero tolerance for any behavior of this nature.
"As we said previously, we are fully cooperating with the investigation, and we completely share the desire of the Chinese authorities to root out corruption wherever it exists. We will take all necessary actions as this investigation progresses."
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Posted: September 2013