Sales scandals are breaking out around the world for Big Pharma. Novartis ($NVS) acknowledged this week it had terminated some sales execs in India as it probes unethical practices there, and now GlaxoSmithKline ($GSK) admits it is looking into whether its sales folks have been bribing doctors in China.
The GSK folks have allegedly been using the usual bag of tricks--lavish dinners, speaking fees, expense-paid trips--with doctors to pump up sales in China, The Wall Street Journal reports. The newspaper cites documents it received from an anonymous tipster. GSK says it has investigated the same claims but has not turned up any evidence of wrongdoing.
In a statement, GSK today said, ""GSK takes all whistle-blowing complaints seriously and will investigate any allegation. 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. We are disappointed that despite categorical denials the WSJ has decided to run this story and GSK wants to reiterate to its patients, staff and partners in China that these allegations are false."
But to make matters worse for GSK, these disclosures come only days after the company fired its head of R&D operations in China following a company probe into allegations that company investigators had "misrepresented" data on interleukin-7 research published in Nature Medicine. China is an increasingly important market for GSK, which derives about 3% of its revenues from there.
Of course it is never a surprise to hear that a drug company may be using questionable tactics to boost sales. That has become commonplace, with many of the big drugmakers having reached settlements in the U.S. and elsewhere for the same kinds of things being alleged about GSK in China. But the drugmakers don't seem to learn. The GSK allegations come less than a year after GlaxoSmithKline paid a whopping $3 billion to settle a variety of long-standing Justice Department probes in the U.S. that turned primarily on off-label marketing claims. It pleaded guilty to three counts in that case.
But GSK is not alone in having to dig deeper into how international sales teams are taking care of business. This week, Novartis said it was "aware of allegations relating to activities undertaken by a small group of associates in India" that it was investigating, and that its initial finding had already resulted in some people being fired. According to PharmAsia News, the Swiss drugmaker discovered, among other tactics, sales executives padding invoices and then using incentive payments to buy the diabetes drug Galvus from wholesalers so they could hit their sales targets.
The scandal in India comes after U.S. prosecutors sued the drugmaker in April for offering "disguised" kickbacks to pharmacies for switching patients to one of its drugs. The lawsuit claims the scheme led thousands of transplant recipients to start using the Novartis immunosuppressant Myfortic and stop using competitors' products like Roche's ($RHHBY) CellCept.
- here's the Wall Street Journal story (sub. req.)
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