GSK China guilty of bribery

The Changsha Intermediate People’s Court in Hunan Province, China, has ruled that GlaxoSmithKline China Investment Co. Ltd (GSKCI) has, according to Chinese law, offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel.

The verdict follows investigations initiated by China’s Ministry of Public Security in June 2013.

GSKCI will pay a fine of £297 million (3 billion RMB) to the Chinese Government, which will be funded through existing cash resources.

GSK stressed that it had co-operated fully with the authorities and had taken steps to rectify the issues identified. These included: fundamentally changing the incentive programme for its salesforces (decoupling sales targets from compensation), reducing and changing engagement with healthcare professionals and closer monitoring of invoicing and payments.

GSK CEO, Sir Andrew Witty said: “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people. We will continue to expand access to innovative medicines and vaccines to improve their health and well-being. We will also continue to invest directly in the country to support the government’s health care reform agenda and long-term plans for economic growth.”

In a statement of apology published on its website, the company said: “GSK plc fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities. Furthermore, GSK plc sincerely apologises to the Chinese patients, doctors and hospitals, and to the Chinese Government and the Chinese people. GSK plc deeply regrets the damage caused. GSK plc also apologises for the harm caused to individuals who were illegally investigated by GSKCI.

“The illegal activities of GSKCI are a clear breach of GSK plc’s governance and compliance procedures and are wholly contrary to the values and standards we expect from our employees. It is deeply disappointing that these issues were not identified and addressed. GSK plc has reflected deeply and learned from its mistakes, has taken steps to comprehensively rectify the issues identified at the operations of GSKCI, and must work hard to regain the trust of the Chinese people.

“Today, GSK plc makes a further commitment to the Chinese government and people that GSKCI will take tangible actions to establish itself as a model for reform in China’s healthcare industry: by continuing to invest in China and supporting China’s scientific development; and by further development of innovative new medicines and vaccines for diseases prevalent in China. GSKCI will also increase access to its products in both city and rural areas of China through greater expansion of production and through price flexibility.

“This long-term development strategy of GSK plc will promote the future health and well-being of the Chinese people, and positively contribute to China’s economic and social development,” it concluded.

Back in 2013, when these allegations first came to light, GSK had refuted the claims, saying it had ‘found no evidence of bribery or corruption of doctors or government officials’. However, since then the company has been plagued by news reports of corrupt practices in more countries, including Poland, Iraq, Jordan and Lebanon, as well as facing investigations by financial authorities in the UK and US, under their anti-corruption laws.

China faces an estimated $1 trillion healthcare bill by 2020 so is taking a firm line on corruption and high priced drugs.

Links

GSK’s China crisis just won’t go away

GSK faces criminal charges of bribery in Poland

 

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