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US turns spotlight on GSK bribery allegations

Department of Justice to investigate whether pharma giant contravened foreign corruption act

GSK GlaxoSmithKline house

The allegations of bribery haunting GlaxoSmithKline (GSK) in China have attracted the attention of the US Department of Justice (DoJ), which has launched its own investigation into the affair.

Reuters reports that the DoJ wants to ascertain whether GSK contravened the US Foreign Corrupt Practices Act (FCPA) in China, a piece of legislation that makes it possible for the US to prosecute national businesses that indulge in corrupt practices abroad.

The latest reports coming out of China have suggested that the alleged $490m bribery scandal was carried out with the knowledge of GSK China's senior management, although this is disputed by the pharma giant.

Although GSK is a UK corporation it is listed on the New York Stock Exchange (NYSE) and so could be vulnerable to penalties if found guilty of wrongdoing under the FCPA. It has been under scrutiny for sales practices in other countries for at least three years, reports the news agency.

Pfizer was fined $60m under the FCPA for bribing doctors and healthcare officials in 11 countries in August 2012, including China, while earlier that year Lilly settled a similar case involving alleged misconduct in Brazil, China, Poland and Russia for $29m.

Meanwhile, Teva was also drawn into the investigations into overseas marketing practices by the DoJ and Securities & Exchange Commission (SEC) last year, amid claims it offered inducements to government officials in Latin America.

In 2011 Johnson & Johnson paid around $80m to settle charges that the company paid inducements to doctors in Europe to prescribe certain medical devices and pharmaceutical products, while other pharma companies reported to be under investigation include Merck & Co, AstraZeneca, and Bristol-Myers Squibb.

GSK spokesman David Mawdsley told Reuters that "since the investigation in China began, we have proactively reached out to relevant regulators. This includes the DoJ, and we have been in an ongoing dialogue with them."

Meanwhile, claims that GSK is thinking of exiting the Chinese market as a result of the allegations have been dismissed by the company, which notes that it has invested more than $500m in the Chinese market and created thousands of jobs.

Article by
Phil Taylor

11th September 2013

From: Sales, Regulatory

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