GlaxoSmithKline on Friday agreed to pay $20 million to settle charges of violating the Foreign Corrupt Practices Act for what authorities called a pay-to-prescribe scheme in China. In doing so, Glaxo becomes the latest global drug maker to face such accusations as part of a long-running probe by US authorities into companies that paid bribes overseas in order to boost sales of their medicines. The settlement is an outgrowth of the bribery scandal that rocked Glaxo and resulted in a $490 million fine two years ago after a Chinese court found the company guilty of bribing doctors, hospital officials, and other non-governmental personnel. The former head of the Glaxo unit in China also pleaded guilty to bribery-related charges and was given a three-year suspended sentence. As part of the scheme, Glaxo employees allegedly funneled kickbacks through trade groups and travel agencies that planned events. Between 2010 and June 2013, Glaxo spent nearly $225 million on planning and travel services. But after reviewing a sample of invoices, authorities found about 44 percent were inflated and approximately 12 percent were for events that did not occur, according to an SEC order. In 2010, Glaxo hired a Chinese company to develop a project to provide clinics with tools to store and administer vaccines that required refrigeration. Instead, the project was used to give laptops and other electronic devices as gifts to clinics that were believed to have the potential to market still other Glaxo drugs. In all, the drug maker spent about $2.3 million doing this. And while Glaxo had policies to limit speaker fees, the SEC said the effort was ineffective. Of $17 million spent on such fees in 2012, about $2.2 million was paid to people whose qualifications as a health care provider could not be verified. Overall, the SEC found that Glaxo “lacked an effective anticorruption compliance program to detect and prevent these schemes.” Since then, Glaxo has vowed to alter its marketing practices and points to changes in compensation for sales reps in the United States as a prominent example. Nonetheless, the drug maker has scrambled over the past two years to conduct internal probes in still other countries where allegations have surfaced of bribes being paid. These include Poland, Yemen, Jordan, Lebanon, and Syria. A Glaxo spokeswoman wrote us to say that both the SEC and the US Department of Justice have now concluded their probes into its activities in China. A source added that there are no outstanding investigations into Foreign Corrupt Practices Act violations in any other country where Glaxo operates. Several other large drug makers have similarly paid fines recently for violating the Foreign Corrupt Practices Act. Last month, AstraZeneca agreed to pay $5.5 million to settle charges of bribing doctors in Russia and China. Over the past year, Novartis agreed to pay $25 million to settle charges of making illegal payments to doctors in China, and Bristol-Myers paid a $14 million fine for the same offense. Source
