GSK Corruption Scandal: A Shady Network of Bribery Unveiled

GSK Corruption Scandal: A Shady Network of Bribery Unveiled
Aug 06, 2013 By

Editor’s note: This article was translated and edited from Ifeng, and looks into the workings of the bribery that occurred in GlaxoSmithKline China following the recent revelations about corrupt practices within the company. The article follows the insights of two key people – one a salesman and the other a pharmaceutical representative – as they confess how bribes were carried out and how profit was increased, all at the expense of the sick. The two GSK employees reveal an intriguing underworld of intricate techniques that were used in order to manipulate doctors into buying and prescribing certain GSK drugs.

Holding fake academic conferences where bribes under the guise of “lecture fees” are given to doctors; selling drugs whereby a fixed percentage of the money made is given to doctors; creating fake finance accounts…these are some of the revelations that have been exposed following the GlaxoSmithKline China corruption scandal. As the investigations go on, layer upon layer of bribes and foul play are being uncovered. When looking at the sales of drugs to doctors, GSK salesman Li Ming (alias) believes that there are no such things as doctors who can’t get the job done, only salespeople who don’t try hard enough to sell whatever drugs may be needed. During a recent trial in Zhengzhou, Li and pharmaceutical representative Wang Hui (alias) told of how they bribed hospitals in what is a fascinating insider story into the world of shady pharmaceutical sales.   

Key factors affecting sales

“Are you familiar with your client? What kind of prescriptions does he usually require? How old is his child? Does he want to study abroad one day? Are the family planning to redecorate their house…” Li Ming said in order to become a GSK salesperson you have to undergo half a month’s training whereby you are taught how to be close with your clients. The main focus of the training process is how to establish a long-lasting relationship with clients. GSK salespeople are even required to have a deep understanding of their customers’ personal lives and routines; all of which is learnt in order to develop an understanding of what products can be easily sold according to the customers’ needs.

Li stated that there were three factors that directly affect the sale of medical goods. The first is how familiar doctors were with the product. The second is the relationship between the pharmaceutical representatives and the clients. Finally, the third is resources; meaning the amount of time they are willing to invest in their clients. Wang Hui explained that around 7% of total monthly income from sales is spent on ensuring that relationships between salespeople and customers are kept healthy. She explained that from the 700,000+ RMB figure that she made for GSK in 2012, between 7-10% of it was saved as reserve funds for bribing her clients. “Some doctors aren’t too keen on direct money transactions; though do wish to improve their reputation both in and outside of their circle. It’s then that we can provide them with the opportunity to give lectures at academic conferences.” Wang explained that she had to come up with various tricks in order to suit the doctors’ needs and entice them to cooperate.  

Tricks of the trade

Reportedly, international drug companies have for a long time now been doing more than eating and drinking with their clients in order to cement customer relationships. Other methods include the aforementioned lecture fees and providing various catering. Although on the surface these tricks of the trade appear legal, they are in fact illegal methods of paying clients. According to company policy, salespeople are only allowed to reimburse expenditures used in two areas: fees for lecturers and meals. As long as they can manage to place any other methods of bribery under the umbrella of these two categories however, they won’t really have anything to worry about.

Wang Hui explained that even if doctors were invited to give lectures and didn’t turn up, the company would still transfer the reimbursement fees to their accounts. If doctors were invited to go abroad for “meetings”, amounts of tens of thousands of RMB would be reimbursed as it would fall under the “lecture” category. If doctors were invited to spas or for massages or other such leisure and entertainment activities (which easily cost over 10,000 RMB), then they would also be filed under the “lecture” category, and would be reimbursed accordingly. Wang also arranged for holiday trips for the whole hospital department, and took care of fees for social get-togethers which were also masked as “lectures”.

Particular attention was also paid to ensure that the targets were bribed successfully. Wang explained that first you had to gain a solid understanding of the situation regarding the drugs which were being prescribed at the various hospitals or pharmacies. In order do this monthly fees of hundreds of RMB were paid to various middlemen so that the relevant information could be obtained. Wang and her colleagues needed to know which types of drugs needed to be sent to which departments, and who they should contact accordingly. After the directors of the various departments agreed to buy the GSK drugs, the next step was bribing each and every doctor. The bribes then given to the doctors were passed as “clinical fees”. Wang recalled that for one particular type of asthma drug named “Seretide”, 15-20 RMB was paid back to the doctors for each prescription they made.     

Manipulating prescriptions

After completing her initial orientation with GSK China back in 2011, Wang Hui got to know Yu Fu (alias), who was the Director of the respiratory department of a major hospital. It was not long after their meeting that Yu became one of Wang’s A-list clients. GSK would often provide employees such as Wang with lists of so-called “A-list clients”, which would usually be doctors who gave out high volumes of prescriptions and dealt with high numbers of outpatients. These specific doctors would almost always be either deputy directors or directors of certain departments.

First, Wang would give the doctors gifts such as gas station cards, shopping cards and massage vouchers. After the relationship between the representatives and the doctors was solidified, the representatives would then ask for the doctors to give them their bank account numbers where bribes were then transferred into. The bribes were then paid from the reimbursements received from the company for various academic lectures and travel expenses. Wang said, “Prescriptions should stem from clinical necessity and should be handed out according to what the patients need or want. However, we were able to change the types of prescriptions the doctors were giving.” One doctor stated that commission and relations with the pharmaceutical representatives were all factors in deciding what type of drugs doctors would prescribe. Yu Fu went on to say that drugs which were expensive but did little to heal patients were popular with doctors, as it meant that there was a greater chance of higher commissions.     

GSK finance departments all in on the act 

Wang Hui explained that on the surface, GSK China does now allow such commissions to be given out. When they start work at the company, the representatives must sign an agreement that details the rules and regulations of sales – one of which is the forbidding of giving commission. There are of course many ways around this however. Regarding bribes, fake bills are created by those in charge of reviewing company expenditure which will cover up the bribes and commissions. “When I took charge of reporting these expenditure bills during annual meetings, around 50% of them were phony.” Wang went on to confirm that the company bosses were well aware of what was going on.

“The finance department would go through the account books and teach us how to redo them so they appeared ‘legitimate’. Before HQ sent over people to examine our finances, we would be told to postpone the reporting of our expenses until the coast was clear. During one meeting, the finance department even told everyone explicitly to make the fake reports as real-looking as possible,” told Wang. Salesman Li Ming thinks that GSK’s claims that they weren’t aware that these bribes were taking place under the table are complete nonsense. “At every monthly meeting, senior executives would even help salespeople to come up with ideas to lock onto customers or analyze any potential gaps which could be filled where more money could be made.”

Final word

For a well-known international company like GSK, the fact that they are clearly aware of such illegitimate behavior and even encourage it is enough to make people really think. It was learned recently that GlaxoSmithKline’s headquarters in the UK sent a letter to the Chinese police not long ago expressing their wishes to cooperate with the investigations. The letter stated that auditing investigations were to be carried out at all GSK offices around the world, and that department heads, high-level lawyers as well as consultants would be sent to Shanghai to help with the case. The company will also appoint a new team of leaders and a general manager to spearhead operations in China. The current Head of GSK China, Mark Reilly, will also return to China in the near future to cooperate with the investigations. The Chinese police have expressed positivity towards GSK’s attitude to dealing with the investigations, and will provide all the necessary help regarding the company’s audit investigations.     

Source: Ifeng

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Keywords: GSK China bribery GlaxoSmithKline China corruption scandal GSK China corruption scandal


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