WSJ: GlaxoSmithKline Probes Botox Marketing In China

(RTTNews) - UK-based drug maker GlaxoSmithKline plc (GSK, GSK.L) is investigating allegations that the company's sales personnel in China bribed doctors with cash and other perks for prescribing Botox and tried to cover their tracks by using private email, the Wall Street Journal reported Sunday.

Glaxo had signed an agreement with Botox patent-holder Allergan Inc. (AGN) in 2005 to market the drug in China. According to the WSJ report Glaxo's sales staff in China was apparently instructed by local managers to use their personal email addresses to discuss marketing strategies related to Botox. In the personal emails, sales staff discussed rewarding doctors for prescribing Botox with cash payments, credits that could be used to meet medical-education requirements and other rewards.

The Glaxo sales staff reportedly discussed a marketing strategy for Botox that targeted 48 doctors and planned to reward them with either a percentage of the cash value of the prescription or educational credits, based on the number of prescriptions made by the doctors. The strategy was called "Vasily," borrowing its name from Vasily Zaytsev, a noted Russian sniper during World War II.

According to the WSJ report, the size of the planned payments to doctors ranged between $245 and $490. However, Glaxo reportedly probed the Vasily program and found that the program was never implemented.

In addition to the Vasily program, Botox sales staff also reportedly discussed making small cash payments to doctors, between $65 and $160, for transportation and dining costs at conferences and completing reports about prescriptions.

The WSJ had earlier reported that an anonymous whistle-blower had provided information to Glaxo about allegations that between 2004 and 2010, the company's sales staff in China provided doctors with speaking fees, cash payments, dinners and all-expenses-paid-trips in return for prescribing the company's drug products. The allegations prompted Glaxo to launch an independent probe.

In June this year, Chinese police had reportedly detained some Glaxo employees due to suspected economic crimes described as fraud and bribery. At that time, Glaxo said it would cooperate with the probe, but said the nature of the probe was not clear to the company.

The company said in its 2012 annual report published this year that is also cooperating with a wider investigation by the U.S. Justice Department and the Securities and Exchange Commission into possible violations by pharmaceutical companies of the U.S. Foreign Corrupt Practices Act.

GSK closed Friday's trading at $51.20, up $0.59 or 1.17 percent on a volume of 1.77 million shares.