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GlaxoSmithKline Will No Longer Pay Doctors to Promote Drugs

Dec 17, 2013

United Kingdom-based drug maker, GlaxoSmithKline Plc, announced that it plans to cease direct payments to physicians by early 2016, according to an array of media reports.

The move was made as the Chinese government accuses the drug maker of bribing physicians and one year after GlaxoSmithKline admitted to marketing offenses in the United States, according to Bloomberg Sustainability. The drug maker indicated that it will stop making direct payments to physicians for giving speeches and for attending medical meetings. The changes are expected to be made by early 2016.

Glaxo also indicated that it would introduce a new compensation program for its sales representatives who work with healthcare professionals who prescribe or influence the writing of prescriptions, according to Bloomberg Sustainability. Going forward, according to Glaxo, it will not be compensating physicians to speak about its drugs or the diseases its drugs treat; it will stop paying for attendance at medical conferences; and its sales representatives’ pay will be tied to the quality of the reps’ service to physicians, as well as to their technical knowledge and Glaxo’s overall performance, according to The Wall Street Journal.

“In terms of gathering goodwill and repairing image, it’s definitely a step in the right direction, and I would expect other large pharma companies to start looking at this policy as well,” said Sudip Hazra, an analyst in Kepler Cheuvreux’s environmental, social, and governance research team in Paris, France, according to Bloomberg Sustainability. Hazra noted that Glaxo’s new policy is “a good long-term measure to protect the company” in the face of corruption probes in “emerging markets.

Chinese authorities allege that Glaxo bribed hospitals, physicians, and officials and, according to the Bloomberg Sustainability report, some Glaxo senior executives may have worked outside of the firm’s processes and controls to defraud Glaxo and the Chinese health-care system, said Chief Executive Officer Andrew Witty this summer. “It is imperative that we continue to actively challenge our business model at every level to ensure we are responding to the needs of patients and meeting the wider expectations of society,” Witty just said in statement.

Meanwhile, last year, Glaxo agreed to pay $3 billion and plead guilty to criminal charges over illegal promotion and withholding safety data on some medications in what is considered to be the largest health care fraud settlement in United States history, according to the Justice Department The Wall Street Journal reported. According to Glaxo, the changes are not tied to the China probe.

Financial relationships between industry and health care have long led to significant controversy. Critics argue that these relationships lead to conflicts of interest that may unduly impact research findings and prescribing practices, among others. These practices may also lead to situations in which patients are no longer the primary focus in health care decisions. Up until recent months, when a shift is beginning to be seen, device and drug makers have marketed their products using promotional strategies that encourage so-called “consultative” relationships with physicians under which those doctors are bought back and paid to use industry’s products and promote them to their colleagues.

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