According to the website of China’s Ministry of Public Security, executives of GlaxoSmithKline’s operations in China confessed to charges of bribery and tax law violations. The Ministry detailed more than $489 million worth of bribes to government officials, medical associations, hospitals, and doctors to boost sales and prices. China’s official newspaper, the People’s Daily, and the Xinhua news agency both reported that Glaxo collaborated with more than 700 travel agencies and consultancies over a six year span to bribe doctors and lawyers with cash and even sexual favors. The travel agencies would invent meetings that required travel, but use the money to bribe doctors to prescribe Glaxo drugs. Each doctor was given a credit card from the company and bribes were transferred to the cards the day after the drugs were prescribed. GlaxoSmithKline executives also allegedly falsified tax forms in order to facilitate the payment of bribes.
GlaxoSmithKline is also under fire for allegations that their Chinese operations had used improper tactics to market Botox cosmetic treatment in China, allegedly planning to reward doctors with either a percentage of the cash value of the prescription, or educational credits, for prescribing the treatment. Recently, the company’s Chinese office fired its head of research and development after discovering that a study by some of its Chinese scientists contained misrepresentations of data. The company is also among a number of foreign and domestic drug manufacturers being investigated by China’s top economic planning agency on cost and pricing issues.
Glaxo is no stranger to assertions of wrongdoing. In 2003, Glaxo paid a fine for overcharging Medicaid for the nasal-allergy spray Flonase. In 2012 the company entered into a $3 billion settlement agreement with the United States Department of Justice – said to be the largest settlement for health care fraud in U.S. history. This was part of a guilty plea for illegally failing to report safety data showing an increased risk of myocardial infarction from the diabetes drug Avandia. Glaxo has settled a number of civil lawsuits based on the allegations of suppressing safety information concerning Avandia.