GlaxoSmithKline plc (NYSE:GSK) announced on Monday that it is probing an accusation concerning the use of offensive tactics used by its staff for marketing of Botox in China. However, no proof of any bribery or corruption has surfaced yet.
An allegation was put before the British firm GSK that its staff has persuaded doctors, by giving cash and other benefits, to recommend the use of Botox treatment. GSK sells Botox in China, under an agreement with the patent holder Allergan.
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Staff Discussed Tactics in Emails
The Wall Street Journal was the first source to report the allegations put to GlaxoSmithKline plc (NYSE:GSK). The company is already under investigation in China for “economic crimes.”
Internal company documents and emails revealed that GSK staff was given the freedom to discuss marketing strategies for Botox through their personal emails, claims the report. According to WSJ, 48 doctors were shortlisted to whom the staff planned to give a percentage of cash value of the prescription or educational credits according to the number of prescriptions.
The name of the strategy was influenced by Russian World War II sniper Vasily Zaytsev and called “Vasily”.
GlaxoSmithKline in Denial Mode
A spokesperson for GlaxoSmithKline plc (NYSE:GSK) said that the allegation is believed to be generating from the same source which accused GSK of corruption in China, but nothing was found in that investigation and the allegation was baseless.
“Nevertheless, we are investigating these new claims. However, our inquiries to date have found no evidence of bribery or corruption in relation to our sales and marketing of therapeutic Botox in China,” the spokesman said.
He added that GlaxoSmithKline plc (NYSE:GSK) has strict compliance procedures and that the company is proud to have such high standards. The spokesperson said that the allegation regarding the Vasily program has been probed, and it was found that there was nothing unpleasant in the proposal, and as well as the so-called Vasily program was never implemented.
Chinese Authorities also Investigating Merck
Apart from GlaxoSmithKline plc (NYSE:GSK), other foreign companies like Merck are also undergoing investigation by China’s top economic planning agency on cost and pricing issues in the wake of price fixing scandals.
Foreign companies have attached much importance to China because of its increasing market in order to counterbalance declining sales in western markets, where drugs are losing their patent protection.