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GSK draws line under Chinese scandal with $20m SEC settlement

Brings corruption investigation to an end with commitment to ongoing remediation reports
GSK

Two years after being fined $487m by the Chinese authorities over a bribery and corruption scandal, GlaxoSmithKline has paid $20m to bring a US federal investigation into the matter to rest.

GSK's reputation was severely dented in the wake of the scandal, which centred on claims that the company paid almost $490m in kickbacks to drug prescribers using a network of around 700 middlemen, including travel agencies and consultancy firms.

The ensuing investigation led to the layoff of staff deemed to have contravened its governance and compliance procedures and suspended jail sentences for senior managers.

In a report, the Securities & Exchange Commission (SEC) said the UK-based drugmaker "from at least 2010 to 2013 … engaged in various transactions and schemes to provide things of value to foreign officials, including healthcare professionals, in order to improperly influence them and increase sales of GSK products in China".

"The corrupt payments took varied forms, including gifts, improper travel and entertainment with no or little educational purpose, shopping excursions, family and home visits, and cash," it continues. The SEC also said it found that GSK's own control measures on payments to speakers at conferences were inadequate.

Limits on the amount of fees paid were not always enforced, and in some cases it was not possible to identify the speaker. All told, around $2.2m out of a total of $17m paid out during the period examined by the SEC was to people "whose qualifications as a health care practitioner could not be verified".

GSK has taken a number of steps since the scandal emerged to prevent this type of activity, including the elimination of most payments to doctors, doing away with speaker fees, and changing the way its sales force is paid "to eliminate incentive pay based on the number of prescriptions generated".

In addition to the settlement payment, GSK has committed to making regular reports on the progress of its remediation efforts over a two-year period. It says it agreed to the settlement without admitting or denying the allegations made.

Article by
Phil Taylor

3rd October 2016

From: Sales

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