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Glaxo under UK fraud office scanner
Probe follows bribe claims

London, May 28: The British drug maker GlaxoSmithKline said yesterday that the Serious Fraud Office of Britain had opened a formal criminal investigation into its “commercial practices”.

Neither GlaxoSmithKline nor the fraud office provided further details about what practices were being investigated.

“GSK is committed to operating its business to the highest ethical standards and will continue to cooperate fully with the S.F.O.,” the company said in a statement.

Britain and the US have strict laws prohibiting payments to government officials in order to gain an advantage over other competitors.

The fraud office is investigating Glaxo’s business activities in “multiple jurisdictions,” according to a person familiar with the investigation who was not authorised to speak publicly.

The Chinese authorities have been investigating the drug maker’s business practices related to payments to doctors and other health care professionals since last year and questions have been raised in recent months about the company’s practices in Iraq and Poland.

Earlier this month, the Chinese authorities accused Mark Reilly, the former head of Glaxo’s operations in China, of ordering employees to bribe doctors and other hospital staff to use the drug maker’s products, resulting in more than $150 million in illegal revenue. Two other Chinese-born Glaxo executives were also charged in the matter.

Reilly, a Briton, stepped down as Glaxo’s top executive in China last year when the Chinese authorities opened the investigation into the potential corruption.

“Certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law,” Glaxo said in July, after meeting with the Chinese authorities. “We have zero tolerance for any behaviour of this nature.”

Major European and American drug makers have opened research centres and hired sales agents in China in recent years to bolster their presence in what many think will soon be the world’s second-largest pharmaceutical market, behind the United States and ahead of Japan.

But as foreign drug makers have rushed to gain market share, Beijing has increasingly pressed multinational companies on their pricing strategies.

The Chinese authorities have said that Glaxo compensated doctors for travel to conferences and lectures that never took place. They have also accused Glaxo of inflating drug prices in China.

In December, Glaxo announced that it was changing its worldwide compensation system for sales staff who work with health care professionals. The drug maker also said that it would stop paying doctors to promote its products.

“Under the new system, bonuses for sales professionals will no longer be based on individual achievement of sales targets,” the company said at the time. “Instead, all customer facing employees will be evaluated according to their technical knowledge, quality of service, and adherence to the company values of transparency, integrity, respect and patient-focus.”

In April, Glaxo announced that it was investigating claims of improper conduct related to its business in Iraq.

The company’s statement followed a report in The Wall Street Journal that said Glaxo had been warned that it might be violating British and American anti-bribery laws by hiring government-paid physicians to promote its products in Iraq and paying for them to attend international conferences.

Last month, the BBC’s “Panorama” programme reported that Glaxo was facing a criminal investigation in Poland relating to bribery accusations. The programme said 11 doctors and one Glaxo manager had been charged with corruption offences between 2010 and 2012.

Glaxo has said that it found evidence of “inappropriate communication” in violation of its policies by a single employee in connection with a programme in Poland involving diagnostic standards and medical training in the treatment of respiratory disease.

The programme was run by doctors and health care professionals in Poland from 2010 to 2013. Doctors, who acted as instructors, were paid for delivering training sessions, Glaxo said in a news release at the time.

“The employee concerned was reprimanded and disciplined in 2011,” Glaxo said last month. “We continue to investigate these matters and are co-operating fully” with the Central Anti-Corruption Bureau of Poland, the drug maker added.

 
 
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