The UK’s Serious Fraud Office (“SFO”) has launched a formal criminal investigation into GlaxoSmithKline (GSK) and its “commercial practices”, understood to mean allegations of foreign bribery. David Green CB QC, Director of the SFO, said back in 2012 that only the largest cases, that prevented UK companies from competing for big contracts on a level playing field, would be of interest to him. The current investigation seems to be what the SFO have been waiting for.
GSK is already being investigated in a number of other countries. On 14 May 2014, Chinese police announced that they had charged the former British boss of GSK’s China business and other colleagues with corruption, after an investigation found evidence of an elaborate scheme to bribe doctors and hospitals. Authorities in China had first accused GSK in July 2013 of funnelling up to 3 billion yuan (£285 million) in bribes to encourage doctors to use its medicines.
GSK are also facing a criminal investigation in Poland for allegedly bribing doctors after a former sales representative said that doctors were paid to promote GSK’s asthma drug Seretide and although the payments were disguised as being for educational services (lectures that were never actually given), in his opinion they were really a bribe, with doctors knowing that they have to produce a certain number of prescriptions in return for the payment. Other investigations are thought to be taking place in Iraq, Jordan and Lebanon.
Given the wide territorial scope of the UK Bribery Act 2010, it is not surprising that the SFO has started its own investigation. It is also possible that investigations could be commenced in the US, as it is illegal under the US Foreign Corrupt Practices Act to bribe government employees abroad.
In response to these reports, GSK has insisted it does not have a “systemic issue with unethical behaviour” and says it has a clear system for dealing with violations, which resulted in 48 dismissals and 113 written warnings last year.
In order to improve it anti-bribery compliance, GSK is implementing a new sales model designed to eliminate sharp marketing practices. It aims to become the first in its industry to stop paying outside doctors to promote its products, end payments for medics to attend conferences and delink incentives for sales representatives from individual sales targets. These measures may act as good mitigation and reduce any fine should a successful prosecution follow, however the actual success of these measures and the impact they may have on the current investigations remains to be seen.
