GlaxoSmithKline (GSK) has been accused of bribing doctors in China in order to boost sales. Chinese government officials say they have uncovered evidence of a bribery scheme involving 700 travel agencies who were used to funnel as much as three billion yuan ($480 million) in payments.
“We found that bribery is a core part of the activities of the company,” Gao Feng, the head of China’s fraud unit, said. “There is always a big boss in criminal organisations and in this case GSK is the big boss.”
Allegations about bribes at GSK first surfaced in January of this year in a series of tips made by an anonymous individual to company officials. The whistleblower alleged that the UK company made payments of $249 to $490 to promote Botox, a toxin used for medical purposes as well as for cosmetic purposes to get rid of wrinkles.
Soon after, the Wall Street Journal says it reviewed documents from as late as April 2013 for an internal GSK project called “Vasily” to pay 48 doctors who promoted Botox with “either a percentage of the cash value of the prescription or educational credits” depending on how many sales they made. GSK officials were encouraged to discuss the scheme on personal email accounts.
“I recommend that everyone else use a private email account because it will be better that way,” Ruiting “Candy” Chen, Glaxo central nervous system marketing manager said in an email translated by the Journal. “Remember you must send to personal email accounts, you accidentally sent to [another sales team member’s] public mail, careful next time!” wrote Any Zheng, Botox regional sales manager.
Chinese media reported on Monday that GSK allegedly made payments to the travel agencies which then transferred the money to doctors via credit cards when they made prescriptions. The travel agencies booked the payments for travel expenses to fake meetings.
GSK says it has suspended all work with the travel agencies. It also says Vasily was never implemented and has denied the charges.
“We take all allegations of bribery and corruption seriously,” a spokesman said in a press statement. “We continuously monitor our businesses to ensure they meet our strict compliance procedures. We have done this in China and found no evidence of bribery or corruption of doctors or government officials. However, if evidence of such activity is provided we will act swiftly on it.”
Chinese officials say that Mark Reilly, the head of GSK operations in China, fled the country on June 27 and has not returned. Several other executives have been arrested.
“The anonymous claims highlight the challenges multinational pharmaceutical companies face in China, one of their most significant and fastest-growing markets, because its health-care system is controlled and owned by the state and it has a tradition of government patronage and gift-giving,” write Christopher Matthews and Jessica Hodgson of the Wall Street Journal.
In reality, the comment by the Journal reporters reflects a bias on their part. GSK has been found guilty of routinely offering U.S. doctors lavish payments for promoting company products, despite the absence of a state health care system.
In July 2012 GSK agreed to pay out $3 billion to settle charges on pushing bupropion and paroxetine (as well as their failure to report safety data about the drug Avandia to the U.S. Food and Drug Administration) — the largest such fine ever paid by a pharmaceutical company.
The U.S. Department of Justice noted that the company gave out “cash payments disguised as consulting fees, expensive meals, weekend boondoggles and lavish entertainment.” For example, doctors who promoted Wellbutrin were taken on “training sessions” to Jamaica. “Dr. Drew,” a TV doctor, was paid $275,000 in two months in 1999 alone to “deliver messages about [Wellbutrin SR] in settings where it did not appear that Dr. Pinsky was speaking for GSK.”
Nor was it the only Western pharmaceutical company accused of paying bribes to doctors to promote its products. In August 2012, in a criminal complaint issued by the U.S. Securities and Exchange Commission, investigators laid out detailed charges against Pfizer for paying bribes in eight countries: Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia.
For example, Pfizer Italy employees provided free cell phones, photocopiers, printers and televisions to doctors, arranged for vacations (such as “weekend in Gallipoli,” “weekend with companion” and “weekend in Rome”) and even made direct cash payments (under the guise of lecture fees and honoraria) in return for promises by doctors to recommend or prescribe Pfizer’s products.
The global pharmaceutical industry has racked up fines of more than $11bn in the past three years for criminal wrongdoing, including withholding safety data and promoting drugs for use beyond their licensed conditions.
In all, 26 companies, including eight of the 10 top players in the global industry, have been found to be acting dishonestly. The scale of the wrongdoing, revealed for the first time, has undermined public and professional trust in the industry and is holding back clinical progress, according to two papers published in today’s New England Journal of Medicine. Leading lawyers have warned that the multibillion-dollar fines are not enough to change the industry’s behaviour.
The 26 firms are under “corporate integrity agreements”, which are imposed in the US when healthcare wrongdoing is detected, and place the companies on notice for good behaviour for up to five years.
The largest fine of $3bn, imposed on the UK-based company GlaxoSmith-Kline in July after it admitted three counts of criminal behaviour in the US courts, was the largest ever. But GSK is not alone – nine other companies have had fines imposed, ranging from $420m on Novartis to $2.3bn on Pfizer since 2009, totalling over $11bn.
Kevin Outterson, a lawyer at Boston University, says that despite the eye watering size of the fines they amount to a small proportion of the companies’ total revenues and may be regarded as a “cost of doing business”. The $3bn fine on GSK represents 10.8 per cent of its revenue while the $1.5bn fine imposed on Abbott Laboratories, for promoting a drug (Depakote) with inadequate evidence of its effectiveness, amounted to 12 per cent.
Mr Outterson said: “Companies might well view such fines as a quite small percentage of their global revenue. If so, little has been done to change the system. The government merely recoups a portion of the financial fruit of firms’ past misdeeds.”
He argues that penalties should be imposed on executives rather than the company as whole. He cites a Boston whistleblower attorney, Robert Thomas who observed that GSK had committed a $1bn crime and “no individual has been held responsible”.
Following GSK’s admission that it had withheld safety data about its best-selling diabetes drug Avandia, the company pledged to make more clinical trial information available. But the pledge has “disturbing exceptions”, according to Mr Outterson, and in any case is made under the corporate integrity agreement, which expires in five years.
Trust in the industry among doctors has fallen so low that they dismiss clinical trials funded by it, even when the trials have been conducted with scientific rigour, according to a second paper in the journal by researchers at Brigham and Women’s Hospital, Boston. This could have serious implications because most medical research is funded by the drug industry and “if physicians are reluctant to trust all such research, it could hinder the translation of … research into practice,” said Aaron Kesselheim, who led the study.
Andrew Witty, the chief executive of GSK, said at the time of the $3bn settlement last July that it had resolved “difficult, long-standing matters” for the company and that there had since been a “fundamental change in procedures” including the removal of staff engaged in misconduct and changes to incentive payments.
The Association of the British Pharmaceutical Industry said practices in the industry had improved and more changes to “build greater levels of trust” would be made. The UK Medicines and Healthcare Products Regulatory Agency said it monitored the conduct of companies and took “appropriate action” when it uncovered malpractice.
Alzheimer’s funding ‘must continue’
Governments, universities and charities should step in to ensure funding is maintained for research into Alzheimer’s disease, following a series of failed drug trials, experts said yesterday.
They were responding to a report in The Independent that the world’s leading drug companies are giving up on the search for a cure, scaling back their neuroscience departments and focusing on symptomatic, rather than disease-modifying, treatments.
A spokesman for the Alzheimer’s Society said: “This is not the time to back away from dementia research. Despite costing the economy more than cancer and heart disease, funding for research into dementia is only a fraction of these conditions. More funding is urgently needed if we are to defeat it.”