British pharmaceutical
British pharmaceutical giant GlaxoSmithKline (GSK) has been accused by Chinese police of a massive bribery network run with travel agencies that were used to funnel $450 million to doctors, hospitals, and officials since 2007.
An anonymous tipster sent emails and documents to a newspaper, which showed sales staff bribing doctors with speaking fees and lavish gifts like Rolex watches if they prescribed GSK's products. GSK currently spends $82 million a year paying doctors to speak at or attend conferences. GSK is even accused of organizing fake conferences to account for the money.
The investigation against GSK was announced last week and four senior GSK executives are being held for "serious economic crimes" and the head of GSK's operations in China recently left the country. His departure coincided with a number of investigations of the company's offices.
Five months after the Chinese investigation, GSK announced that it will stop paying doctors for promoting its drugs and stop having targets for its marketing staff -- a first for an industry battling scandals over its sales practices, and a challenge for other pharmaceutical companies to follow suit. Britain's biggest drugmaker also said it is addressing conflicts of interest that could put commercial interests ahead of the best outcome for patients.
In the United States, the industry's biggest market by far, many companies have run into conflicts over improper sales tactics and GSK reached a record $3-billion settlement with the U.S. government last year over charges that it provided misleading information on certain drugs.
"I think other companies will follow suit, but one of the biggest problems is that the industry persists in regulating itself," he said. "The only way to properly control promotion is strong and enforced regulation by the state."
The decision to stop payments to doctors for speaking about medicines during meetings with other prescribers marks a big shift for a global industry that has always relied heavily on the influence of experts in promoting products.
(Adapted from: http://www.businessinsider.com/chinese-accuse-glaxosmithkline-of-bribery-network-2013-7 on July 15, 2013 and http://www.businessinsider.com/gsk-stops-paying-doctors-2013-12#ixzz2w6tpyOf4 Dec 17, 2013)
Questions:
Q1. Using two of the CSR Approaches discussed in the course, explain how ethics has to persist in the pharmaceuticals industry. Be sure to give examples from the case to illustrate your point.
Q2. Discuss at least two important concerns related to unethical practices in GSK. If you were to apply the Principles of CSR, what could be the most appropriate principle that can be discussed?
Q3. Draw strategic recommendations on how the two concerns in question 2 can be addressed.