GlaxoSmithKline, AstraZeneca at Center of Iraq Bribe Probe in BritainJan 2, 2008 | Parker Waichman LLP
GlaxoSmthKline, the maker of Avandia, and AstraZeneca, another large drug maker, are being investigated in Britain for allegedly bribing the regime of Saddam Hussein in Iraq. The revelation of the UK bribe probe is bad news for both companies, but it especially ominous for Glaxo. Glaxo has been sullied by the safety scandal surrounding its diabetes drug Avandia, and sales of the drug have fallen, causing considerable damage to Glaxo’s bottom line.
Glaxo is still trying to recover from its Avandia problems, and hardly needs the bad publicity of a bribery probe. Avandia has been a subject of debate since May 21, when an analysis of 42 clinical trails published by the Cleveland Clinic showed that patients taking the drug had a 43-percent higher risk of having a heart attack. Since the Cleveland Clinic study was published, a great deal of controversy has swirled around Avandia. In June, Congress held hearings to discuss Avandia and the Food & Drug Administration's (FDA) handling of its safety issues. At those hearings, it was revealed that Glaxo had informed the FDA of a study it had conducted that produced results similar to the Cleveland Clinic study. However, both the agency and the manufacturer felt that more investigation was needed before conclusions could be made about Avandia’s possible safety issues. As a result, the Avandia heart attack risk was not publicized until May 2007. A black box warning about heart problems was finally added to the Avandia label in November, but since the scandal broke, Avandia sales have fallen considerably, and several large insurers have stopped paying for the drug.
According to the Wall Street Journal, The UK's Serious Fraud Office began its probe in February, when it started looking into possible breaches of the United Nations' oil-for-food program. The program was designed to allow the government of Iraq, which was facing international sanctions, to sell oil to meet humanitarian needs. The investigation was triggered by an audit for the U.N. of the program in 2005 by Paul Volcker, former chairman of the US Federal Reserve. Glaxo and AstraZeneca have been asked to give documents to the Serious Fraud Office as part of the probe.
Glaxo and AstraZeneca said they were cooperating fully with the inquiry, but denied wrongdoing. Glaxo said in a statement that it went to “great lengths impose anticorruption measures when dealing with intermediaries in Iraq at a time when the environment was extremely volatile and difficult." For its part, AstraZeneca said it had sent a consignment of medicines to Iraq under the oil-for-food program but denied "any allegation of unethical behavior on our part in our trading relationships with Iraq." It said all drugs were sent with proper U.N. and U.K. documentation.