GSK under investigation after bribery scandal

In the latest twist in the doctor bribery scandal, GlaxoSmithKline is now under investigation for a training programme run by doctors in Poland as recently as 2012, according to BBC Panorama. If bribery is proven, the drug company will be in violation of both the UK Bribery Act and the US Foreign Corrupt Practices Act.

GSK set up an educational programme to help improve diagnostic standards in respiratory disease, but following allegations it conducted an investigation and found evidence of inappropriate communication to promote asthma drug Seretide, according to its statement.

"These sessions were delivered by specialist healthcare professionals who, based on contracts signed with GSK, received payments appropriate to the scope of work as well as their level of knowledge and experience. The provision of sessions under this programme was agreed with the Polish healthcare centres," the statement said.

The Lodz public prosecutor found evidence in documents received by doctors to support claims of corrupt payments in over ten health centres where there was no evidence an educational seminar had taken place.

One doctor has already admitted guilt, been fined and given a suspended sentence. He accepted £100 for a lecture he never gave. Ten other doctors and one of GSK's regional managers have been charged over alleged corruption.

The latest allegations follow a scandal in China where The Chinese Ministry of Public Security claimed that GSK channelled £300 million through travel agencies between 2007 and 2010.

Furthermore, in 2012 GSK paid £1.9 billion in the United States' largest healthcare fraud settlement. This was due to activities dating back to the 1990s, when it promoted two drugs, Paxil and Wellbutrin, for unapproved uses including prescriptions for children, despite the increased incidence of suicide in children and teenagers. Psychiatrists who made those prescriptions were treated to all expenses paid trips to resorts in Bermuda, Jamaica and California. GSK also failed to report safety data about a diabetes drug Avandia to the Food and Drug Administration.

Last December, the company announced it would cease paying doctors to attend medical conferences, in a rather belated overhaul of its marketing practices. It also said it would end direct payments to doctors for promotional talks and stop setting individual targets for its sales reps.

The pharmaceutical industry has tightened up its practices in the last few years as a result of the ABPI code in the UK and the Sunshine Act in the US. Most pharmaceutical companies have now stopped sponsoring healthcare professionals to attend medical seminars.

Rival AstraZeneca cleaned up its practices in 2011 and publicly reports the number of confirmed breaches of external sales and marketing codes, and the nature of any remedial action taken.

The allegation against GSK is that its management was slow to see the writing on the wall for such practices.

Investor view

On the Interactive Investor discussion boards, 'Yorkist' said: "As with last week and Iraq, the monetary consequences may not be large but they show repeated failure of management. Worrying."

Investors still love the dividends, however.

"Good dividend - poor management? Will either change?" said 'Jarfurrank', while 'Jersey Bob' added: "Great yield, quarterly dividends with regular increases. Better than any annuity for retires like myself."

The shares dropped 1.35% to 1,531p.