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Another Glaxo Scandal In China: Bribing Docs To Prescribe Meds?

For the second time this month, GlaxoSmithKline is embroiled in scandal in China. In this instance, the drugmaker is investigating allegations that its sales staff there was involved in bribing doctors to prescribe drugs, sometimes on an off-label basis, between 2004 and 2009, according to The Wall Street Journal.

Glaxo sales reps allegedly provided doctors with speaking fees, cash, dinners and paid trips in return for prescribing various drugs. The allegations, the paper writes, were made by an anonymous tipster, who sent emails to the Glaxo board, senior execs and compliance officers earlier this year.

One example: sales reps there urged doctors to prescribe the Lamictal epilepsy drug to patients with bipolar disorder, which is an unauthorized use and one patient became seriously ill, writes the paper, which reviewed some of the documents. Glaxo acknowledged an adverse event occurred, but maintained it was not due to off-label marketing.

“Over the last four months, we have used significant resources to thoroughly investigate each and every claim from this single, anonymous source and have found no evidence of corruption or bribery in our China business,” a Glaxo spokesman tells the paper.

He adds Glaxo sometimes pays health care officials to participate in sponsored events and reimburses them for attending scientific conferences, but insists the payments are not improper, the paper notes, and reminds us that Glaxo is among several drugmakers being probed by US officials for paying bribes to foreign officials, which would violate the Foreign Corrupt Practices Act.

Separately, Glaxo last week determined that a scientific paper that was published in Nature Medicine contained fabricated data and dismissed Jingwu Zang, one of the listed authors, who was a senior vp and head of R&D in Shanghai, China, and seeking a retraction. Three other employees were placed on administrative leave pending a final review and a fifth has resigned.

The scandals have erupted less than a year after Glaxo agreed to plead guilty and pay $3 billion to resolve criminal and civil charges in connection with off-label promotion of several drugs, failing to report safety data and reporting false prices. At the time, Glaxo ceo Andrew Witty vowed that “we have learnt from the mistakes we made” and would run a more compliant and transparent operation.

Federal officials have aggressively pursued the pharmaceutical industry for violating the FCPA and fined several drugmakers. Last year, Eli Lilly (LLY) paid a $29 billion fine and Pfizer (PFE) paid a $60 million fine; two years ago, Johnson & Johnson (JNJ) paid a $70 million fine. And Teva Pharmaceutical and Bristol-Myers Squibb last year acknowledged receiving subpoenas relating to probes into illegal foreign payments.

To what extent the payments to doctors in China may figure in the federal probe remains to be seen. Glaxo, which regularly gave cash to sales reps, tells the paper that advance expenses are paid to employees because credit card payments are not always possible in some locations, but audits are regularly conducted and there is no evidence that bribes were paid.

However, the paper notes the Justice Department and Securities and Exchange Commission last year issued a guidance that companies should not advance funds or pay for reimbursement in cash. The paper reviewed documents showing Glaxo distributed a memo in late 2010 saying cash would no longer be paid directly to doctors as speaking fees. Glaxo (GSK) insists these were not used as incentives for prescribing. Around the same time, about 20 employees in Shanghai were dismissed for filing inappropriate expense claims, but the anonymous source claims they were involved in bribery.


bribe pic thx to donhankins on flickr

Posted: June 2013