Drug maker GlaxoSmithKline has been fined $492 million for bribing doctors and health officials in China. The Chinese court also sentenced the company’s former China manager, Briton Mark Reilly, and four Chinese co-defendants to prison. These sentences have been postponed, however, because ‘the defendants confessed’. The fine is the largest such penalty ever imposed by a Chinese court and stems from an allegation that almost half a billion dollars was channelled through a travel agency for use by GSK sales people.

Reilly was accused by police of operating a “massive bribery network.” He allegedly ordered GSK sales teams to pay doctors, hospital officials and health institutions to use GSK’s drugs.

Glaxo has already stated it will pay the fine. It has also stated that it will review its incentive schemes and reduce its involvement with healthcare professionals.

“We have and will continue to learn from this,” said CEO Sir Andrew Witty in an official statement. Glaxo has previously stated that the actions, which apparently started in 2009, took place without its knowledge.

We have previously reported that a private investigator, Briton Peter Humphrey had been jailed in China. Hired by GSK, he was accused of illegally trafficking personal data. GSK said Humphrey was hired to look into a security breach, not bribery. But apparently Humphrey had reported that the bribery allegations were true.

However, GSK announced in June 2013 that a four-month investigation of bribery allegations had found no wrong doing.

GSK paid the largest ever fine of $3 billion for similar offences in the USA and still faces similar charges in other countries such as Poland and Jordan.

Other drug companies now face similar scandals in China.

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Pfizer settles to avoid bribery court case

Next time the Americans complain about a British firm bribing foreign officials, remember this:

American Pharmaceutical giant Pfizer has agreed to pay a $60 million fine to settle charges filed against the company alleging illegal bribery. According to CNN Money, both Pfizer and Wyeth, the latter of which has since merged with Pfizer, paid off foreign officials in Europe and Asia to speed up drug approvals, and give preference to Pfizer drugs in their countries’ public health programs, which in turn generated billions of dollars for the world’s largest drug company.

“Corrupt pay-offs to foreign officials in order to secure lucrative contracts creates an inherently uneven marketplace and puts honest companies at a disadvantage,” said James McJunking of the FBI’s Washington, D.C., field office in a statement concerning the case.

According to the U.S. Securities and Exchange Commission (SEC) (http://www.sec.gov/), which will receive a $45 million cut of the settlement, Pfizer was in direct violation of the Foreign Corrupt Practices Act (FCPA) when it illegally boosted its profits by bribing doctors and public health officials in Bulgaria, China, Croatia, the Czech Republic, Italy, Kazakhstan, Russia, and Serbia. Pfizer officials allegedly rewarded doctors in these countries with cash and vacations to prescribe more Pfizer drugs.

In China, for instance, Pfizer officials rewarded government physicians who prescribed large amounts of the company’s medications by inviting them to meetings and conferences with “extensive entertainment activities,” according to the SEC.

In Croatia, government doctors were given a portion of the proceeds from Pfizer’s sales of drugs to the doctors’ own institutions, said the agency.

In Bulgaria, local Pfizer representatives spent $28,000 to invite government doctors on “incentive trips” to Greece, as a reward for the physicians who were the biggest prescribers of Pfizer’s products, Pfizer admitted according to the Justice Department filing. They also paid $17,000 to send doctors to medical conferences, again in exchange for commitments to prescribe Pfizer drugs.

Apparently, knowing that it could get caught, Pfizer attempted to hide these illicit transactions by burying them in accounting records as business expenses – bribes were entered into the books in such a way as to make them appear as travel expenses, training costs, freight charges, and entertainment.

According to Bloomberg (http://investing.businessweek.com/research/stocks/earnings/earnings.asp?ticker=PFE) 2012 revenue for Pfizer was $59 billion. $60 million is chickenfeed.





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