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| GlaxoSmithKline's corporate headquarters in Brentford, England.--Courtesy of GlaxoSmithKline |
GlaxoSmithKline ($GSK) has now hit a trifecta in bribery investigations: First China, then Iraq, and now Poland. According to the BBC, a former GSK sales rep says the company was trading cash for prescriptions in the country in a wink-wink sort of way, by disguising the script incentives as speaking fees.
And it's not just allegations from an unnamed whistleblower. This rep is identified by name, and public prosecutors in Poland say there's evidence that the payments amounted to bribery. One doctor has already admitted guilt. Glaxo says it has "disciplined" one employee and launched its own investigation.
According to the former rep, Jarek Wisniewski, the pay-for-prescriptions approach was "a simple equation."
"We pay doctors, they give us prescriptions," Wisniewski told the BBC. "We don't pay doctors, we don't see prescriptions for our drugs."
But Glaxo couldn't outright trade payments for prescriptions, Wisniewski said. "So we prepare an agreement for them to give a talk to patients, we pay £100, but we expect more than 100 prescriptions for this drug," he said (as quoted by the BBC), adding, "It's a bribe."
Krzysztof Kopania, a spokesman for the prosecutor in Lodz, Poland, told the news program Panorama that doctors in more than a dozen health centers apparently accepted cash from GSK--in the form of speaking fees for educational programs--and no such programs followed. "[I]t was a camouflaged form of a bribe," Kopania said. "In return for the financial gains the doctors would favor the product proposed by the pharmaceutical company and they prescribed that medicine."
In China, Glaxo is accused of paying almost $490 million in bribes to doctors, funneling the payments through travel agencies. More than a dozen company employees were detained in China in connection with the corruption probe; Glaxo recently replaced its local chief, but maintains that its top executives in the U.K. had no knowledge of the shenanigans. In Iraq, the company faces allegations that it hired government doctors and other healthcare professionals as sales reps, even as they continued to work for the government.
In Poland, Glaxo says, the improper payments appear to be the work of one person. In a statement to the BBC, the drugmaker said its own investigation "found evidence of inappropriate communication in contravention of GSK policy by a single employee. The employee concerned was reprimanded and disciplined as a result."
Apart from that rep's handiwork, the educational program was legit, the company says. Doctors were paid to speak about diagnosis and treatment of respiratory disease--including use of its lung drug Seretide, sold as Advair in the U.S. Respiratory specialists received payments "appropriate to the scope of work" and to their individual expertise, the company said.
The Polish probe is the latest blow to CEO Andrew Witty's attempts to clean up Glaxo's image. The company has overhauled its sales incentives in the U.S. already, and is rolling out the new compensation system worldwide. GSK also says it will phase out speaking fees for doctors, with plans to hire staff physicians to keep drug education in-house.
Not soon enough, at least in Poland. As prosecutors continue their probe, GSK says its investigation continues, and it's "cooperating fully" with Poland's anticorruption authorities.
Meanwhile, the company may face repercussions in the U.S. and the U.K., where local laws are designed to punish companies for corrupt practices overseas. Investors aren't likely to respond positively to the news, either, Panmure Gordon analyst Savyas Neophytou told Reuters: "In isolation, the events in Poland are trivial but evidence is building up of sharp practices in many areas of GSK's organization which will impact sentiment significantly."
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