GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK) sent tremors through the pharmaceutical sector today when the company announced a comprehensive restructuring in the marketing and promotion of their drugs. The pharmaceutical industry has been under fire for some time now regarding a number of questionable marketing practices, such as paying doctors and other health professionals to attend medical conferences or speak or paying for travel, entertainment or the like.

GlaxoSmithKline GSK

Under the new policy, GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK) will no longer pay doctors to promote its drugs or attend medical conferences, and will also no longer compensate its drug sales representatives based on the number of prescriptions generated. AstraZeneca plc (ADR) (NYSE:AZN) stopped making payments to doctors to travel to international meetings in 2011, but no other big pharma has made the sweeping changes GSK is instituting.

GlaxoSmithKline statement

In a statement released today, GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK) Chief Executive Andrew Witty said that the company’s actions were designed to protect the interests of patients.

“We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest,” he said.

GSK leading industry

Analysts suggest GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK)’s decision may cause other pharmaceutical companies to follow suit, as no one wants to be the unenviable position of trying to explain why you are less ethical than your competition.

According to Fiona Godlee, editor of the British Medical Journal, “Where GSK leads we must hope that other companies will follow. But there is a long way to go if we are to truly to extricate medicine from commercial influence. Doctors and their societies have been too ready to compromise themselves.”

Ulterior economic motivation

Analysts point out, however, that GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK)’s decision to no longer focus mainly on marketing to doctors is not entirely altruistic, particularly given all of the bad press on the subject they’ve had over the last year. Given that most decisions about which drugs to use are made by health insurance companies and government agencies, the model of direct marketing to doctors was clearly already in decline. One could argue they just saw the handwriting on the wall and decided it’d be a smart PR move to “voluntarily” take the high road.