GlaxoSmithKline confronts new bribery allegations, this time in Iraq

Bribery allegations against GlaxoSmithKline ($GSK) are no longer confined to China. New claims have forced the pharma giant to open investigations on a second front, with the company now looking into possible corruption in Iraq, the company said Sunday.

According to emails reviewed by The Wall Street Journal, a whistleblower familiar with Glaxo's Middle East operations reported alleged bribery of physicians--including hiring 16 government-employed doctors and pharmacists in Iraq as paid GSK sales reps while they continued to work for the government.

With Glaxo employing fewer than 60 people in Iraq, the British pharma giant said the allegations relate to a small group of individuals in the country. But the company is on the hunt for improper conduct nonetheless, with investigations ongoing, GSK said in a statement. The whistleblower reports arrived late last year, with another round earlier this year.

"We have zero tolerance for unethical or illegal behavior," it said.

It's a mantra Glaxo has repeated several times since last summer, when Chinese officials accused GSK China of an extensive bribery scheme. Government investigators said Glaxo used travel agencies to funnel $489 million in bribes to Chinese doctors and healthcare professionals.

Some of the Iraqi allegations are reminiscent of those in China. According to the whistleblower, Glaxo paid expenses for government-employed Iraqi doctors to act as medical representatives at international conferences. The company also offered doctors the opportunity to earn high speaking fees if they promoted and prescribed more of Glaxo's drugs, he said.

In the emails seen by the Journal, Glaxo told the whistleblower it was taking the allegations seriously, collecting and analyzing data in "several countries and business units" in the region. A statement seen by the WSJ also said the company had reinforced governance requirements in Iraq, including those that cover payments to doctors and travel agencies. GSK has temporarily halted all interaction between itself and government officials in the region "to ensure any activity is in compliance with our policies and procedures," it said.

Glaxo is still facing the fallout in China after officials there labeled it the "godfather" in the alleged bribery scheme. Troubles at the U.K. drugmaker sparked a series of whistleblower allegations against its Big Pharma peers, spooking doctors and sales reps and denting companies' top lines. Now, China sales have recovered for all but Glaxo, which could still face additional penalties in the U.S. and the U.K.

Meanwhile, the company is working to get its sales and marketing practices squeaky clean in China and elsewhere, recently announcing a series of reforms that will change sales compensation for reps all over the world and nix speaking fees for outside doctors. "We believe these changes will eliminate any perception of conflict of interest and ensure incentives for our employees are aligned with the best interests of patients," Glaxo said.

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