Ex-Sleuths Sue GSK Over Imprisonment In China…


Interesting story from Reuters-

http://www.reuters.com/article/us-gsk-china-lawsuit-idUSKBN13B268

 

Ex-sleuths sue GlaxoSmithKline over imprisonment in China

Two former corporate investigators have sued GlaxoSmithKline, alleging the drugmaker misled them and induced them to investigate an innocent person, resulting in their imprisonment.

The complaint, filed with the U.S. District Court in Philadelphia and made public on Wednesday, was brought by Peter Humphrey, who is British, and his American wife, Yu Yingzeng.

The couple were detained in 2013 and found guilty by a Chinese court in 2014 after being asked by GSK to investigate a whistleblower within the pharmaceuticals group.

They were convicted of illegally obtaining private records of Chinese citizens.

The couple allege GSK misled them by stating that the whistleblower’s allegations of widespread corruption within the company were false. GSK was fined a record 3 billion yuan ($436 million) in 2014 for paying bribes to doctors to use its drugs.

A GSK spokesman said: “We do not believe this case has any merit and will vigorously defend against the allegations.”

These Recent Articles (From November 2016) On GSK’s Bribery Operation In China From The New York Times Make For Interesting Reading…


SHANGHAI — Peter Humphrey was in the bathroom of his Shanghai apartment when the police kicked the door off its hinges and knocked him to the ground. Nearly two dozen officers stormed his home. They confiscated files, laptops and hard drives related to his work as a corporate investigator.

Mr. Humphrey and his wife, Yu Yingzeng, were taken to Building 803, a notoriously bleak criminal investigation center normally reserved for human smugglers, drug traffickers and political activists. Sleep-deprived and hungry, he was transferred later that day to a detention house, placed in a cage and strapped to an iron chair. Outside, three officers sat on a podium and demanded answers.

Mr. Humphrey knew the reason for the harsh interrogation. He and Ms. Yu had been working for GlaxoSmithKline, the British pharmaceutical maker under investigation in China for fraud and bribery.

The Glaxo case, which resulted in record penalties of nearly $500 million and a string of guilty pleas by executives, upended the power dynamic in China, unveiling an increasingly assertive government determined to tighten its grip over multinationals. In the three years since the arrests, the Chinese government, under President Xi Jinping, has unleashed the full force of the country’s authoritarian system, as part of a broader agenda of economic nationalism.

China Rules

Articles in this series examine how multinational corporations doing business in China must adjust to an increasingly assertive state.

  • How China Won the Keys to Disney’s Magic KingdomJune 14, 2016

Driven by the quest for profits, many multinationals pushed the limits in China, lulled into a sense of complacency by lax officials who eagerly welcomed overseas money. Glaxo took it to the extreme, allowing corruption to fester.

Continue reading the main story

When bribery accusations surfaced, the company followed the old playbook, missing the seismic changes reshaping the Chinese market. Rather than fess up, Glaxo tried to play down the issues and discredit its accusers — figuring officials wouldn’t pay attention.

Along the way, there were bribes of iPads, a mysterious sex tape and the corporate investigator, who gave his operations secret code names. The company’s missteps are laid bare in emails, confidential corporate documents and other evidence obtained by The New York Times, as well as in interviews with dozens of executives, regulators and lawyers involved in the case.

The aftershocks of the Glaxo case are still rippling through China. The authorities have unleashed a wave of investigations, putting global companies on the defensive. The government has intensified its scrutiny of Microsoft on antitrust matters this year, demanding more details about its business in China. And just two weeks ago, the authorities detained a group of China-based employees, including several Australian citizens, working for the Australian casino operator Crown Resorts, on suspicion of gambling-related crimes.

Companies are racing to find new strategies and avoid getting locked out of China, the world’s second-largest economy after the United States. Disney and Qualcomm are currying favor with Chinese leaders. Apple redid its taxes in China after getting fined. Some multinationals are training employees in how to deal with raids.

The crackdown has prompted a complete rethinking for Glaxo — and for much of the pharmaceutical industry. To appease the government, drug makers have promised to lower prices and overhaul sales practices.

“For a long time, there’d been this policy of going easy on foreign enterprises,” said Jerome A. Cohen, a longtime legal adviser to Western companies. “The government didn’t want to cause embarrassment or give outsiders the impression that China is plagued with corruption. But they’re not thinking like that anymore.”

The Glaxo case was fueled by missed clues, poor communication and a willful avoidance of the facts. For more than a year, the drug maker brushed aside repeated warnings from a whistle-blower about systemic fraud and corruption in its China operations.

The company’s internal controls were not robust enough to prevent the fraud, or even to find it. Internally, the whistle-blower allegations were dismissed as a “smear campaign,” according to a confidential company report obtained by The Times.

Glaxo just wanted to make its problems go away. It offered bribes to regulators. It retaliated against the suspected whistle-blower. It hired Mr. Humphrey and Ms. Yu to dig into the woman’s background, family and government ties, as a way to discredit her. And Glaxo may even have gone after the wrong person, documents and emails obtained by The Times suggest.

Photo

Yu Yingzeng inside a police vehicle in Shanghai in August 2014. She and her husband, Mr. Humphrey, worked together and were arrested together. Credit Aly Song/Reuters

None of it mattered. The allegations were true.

Prosecutors charged the global drug giant with giving kickbacks to doctors and hospital workers who prescribed its medicines. In 2014 Glaxo paid a nearly $500 million fine, at the time the largest ever in China for a multinational. Five senior executives in China pleaded guilty, including the head of Glaxo’s Chinese operations, a British national, in a rare prosecution of a Western executive. With Glaxo embroiled in scandal, sales plummeted in China, the company’s fastest-growing market.

Glaxo has declined multiple requests for comment, referring instead to earlier statements. Glaxo “fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities,” one statement read. “GSK P.L.C. sincerely apologizes to the Chinese patients, doctors and hospitals, and to the Chinese government and the Chinese people.”

Mr. Humphrey and Ms. Yu, both in their late 50s at the time of their arrests, were punished too. The couple spent two years in prison for illegally obtaining government records on individuals.

Mr. Humphrey was crowded into a cell with a dozen other inmates. There were no beds or other furniture, just an open toilet and a neon light overhead. During his incarceration, Mr. Humphrey said, he suffered back pain, a hernia and a prostate problem that was later diagnosed as cancer.

“I was in a state of complete shock and breakdown,” said Mr. Humphrey, who was released along with his wife in July 2015. “I was physically broken down and mentally blown away. I didn’t sleep for 45 days.”

Photo

About seven weeks after Peter Humphrey was arrested in China, he and his wife, Yu Yingzeng, appeared on China Central Television. They spent about two years in prison.

A Whistle-Blower Emerges

An anonymous 5,200-word email in January 2013 to the Glaxo board laid out a detailed map to a fraud in the Chinese operations.

Written in perfect English, the email was organized like a corporate memo. Under the header “Conference Trip Vacations for Doctors,” the whistle-blower wrote that medical professionals received all-expenses-paid trips under the guise of attending international conferences. The company covered the costs of airline tickets and hotel rooms, and handed out cash for meals and sightseeing excursions.

In a section labeled “GSK Falsified Its Books and Records to Conceal Its Illegal Marketing Practices in China,” the email explained how Glaxo was pitching drugs for unapproved uses. As an example, the whistle-blower said the drug Lamictal had been aggressively promoted as a treatment for bipolar disorder, even though it had been approved in China only for epilepsy.

Glaxo “almost killed one patient by illegally marketing its drug Lamictal,” said the email, which was obtained by The Times. “GSK China bought the patient’s silence for $9,000.”

The email was one of nearly two dozen that the whistle-blower sent over the course of 17 months to Chinese regulators, Glaxo executives and the company’s auditor, PricewaterhouseCoopers.

How the Case Unfolded

JANUARY 2013 The whistle-blower sends a 5,200-word email to the Glaxo chairman, senior executives and the company’s outside auditor. The email, like the previous ones to authorities, describes a systemic fraud and bribery scheme. The allegations are dismissed by the company as a “smear campaign.”

See how the fallout unfolded »

When the authorities pressed Glaxo, the company was dismissive. It failed to properly investigate the allegations. It didn’t beef up its internal controls. And it didn’t change its marketing practices.

The decision was calculated. In the decades since China began opening its economy, most multinationals had avoided scrutiny over bribery. China needed overseas companies to help develop its economy, by setting up manufacturing operations and creating jobs. The authorities were reluctant to jeopardize investment, so they took a softer approach to enforcement.

When companies did run into trouble, fines were tiny. The rare cases tended to be colored by politics. Seven years ago, the Chinese authorities detained executives from the global mining giant Rio Tinto on suspicion of stealing state secrets. The charges were eventually downgraded to bribery, and the company avoided punishment.

By the time Glaxo’s fraud bubbled to the surface, China had changed.

Over the last decade, China has emerged as an economic powerhouse, but it took off even more as the rest of the world slowed after the financial crisis. That gave China the upper hand with overseas companies, which were increasingly dependent on profits from the country’s growing consumer base.

The economic might coincided with the Communist Party’s increasingly nationalistic stance. The authorities in China, already undertaking a severe crackdown on Chinese companies, wanted to show that, like American regulators, they could also penalize and sanction global companies.

And it was no secret that big drug makers were violating the law in China.

Years earlier, the consulting firm Deloitte warned about rampant corruption in China’s pharmaceutical market. As Deloitte found, doctors and health care workers were poorly compensated, so they could easily be induced to write more prescriptions with offers of cash, gifts, vacations and other benefits. Big drug makers, eager for growth, willingly obliged.

“The remarkable thing is that China is a more hospitable environment to this type of corruption, because it’s a market where doctors and hospitals are heavily reliant on drug sales,” said Dali Yang, who teaches at the University of Chicago and has studied the industry. “They were like fish swimming in water.”

American investigators had punished several major drug companies for such behavior abroad. In 2012, Eli Lilly agreed to pay $29 million, and Pfizer $45 million, to settle allegations that included employees’ bribing doctors in China. In settling the cases, neither company admitted or denied the allegations.

That summer, Glaxo agreed to pay $3 billion in fines and pleaded guilty to criminal charges in the United States for marketing antidepressants for unapproved uses, failing to report safety data on a diabetes drug and paying kickbacks. The case was built off tips from several whistle-blowers.

After that, Glaxo’s chief executive, Andrew Witty, pledged, “We’re determined this is never going to happen again.”

But it did — in China.

Photo

Prime Minister David Cameron of Britain, right, speaking to Andrew Witty, chief executive of GlaxoSmithKline, during a visit in March 2012 to one of the company’s plants in Ulverston, northern England. Credit James Glossop/Reuters

Redirecting Bribes

In early 2013, Glaxo realized it couldn’t ignore the problems. The authorities were asking questions. The whistle-blower continued to send emails.

So the company tried another common gambit in China: bribing officials.

The company set up a special “crisis management” team in China and began offering money and gifts to regulators.

That strategy had worked in the past. A company, often using a middleman, would try to soothe officials and regulators, offering gifts and favors.

One government agency had received multiple emails from the whistle-blower, and Glaxo targeted multiple branches of the agency, according to state media reports. One executive tried to cozy up to a Shanghai investigator with an iPad and a dinner totaling $1,200, another Glaxo employee said in a statement to the police. When that executive asked for money to bribe the Beijing branch, Mark Reilly, the head of the company’s Chinese operations, gave the “go ahead.”

Another executive with Glaxo’s Chinese operations bribed regulators to focus on “unequal competition,” rather than a more punitive investigation into “commercial bribery.” The goal, that executive admitted in a statement, was to limit any potential fine to about $50,000. It didn’t work.

As pressure mounted, the case took a bizarre turn, setting Glaxo on a collision course with the government.

In March 2013, Glaxo’s chief executive and five other senior executives in the company’s London headquarters received an anonymous email with a media file. In it, a grainy video showed Mr. Reilly, the executive in China, engaged in a sexual act with a young Chinese woman.

The attached email alleged that Mr. Reilly, a British national who had helped manage the company’s China operation for four years, was complicit in a bribery scheme tied to a travel agency called China Comfort Travel, or C.C.T. According to the email, Glaxo funneled money through the travel agency to pay off doctors. The travel agency also supplied Mr. Reilly with women, as a way to secure that business.

“In order to acquire more business, C.C.T. bribed Mark Reilly, the general manager of GSK (China) with sex,” the email said. “Mark Reilly accepted this bribery and made C.C.T. get the maximized benefits in return.”

Glaxo later discovered that the video had been shot clandestinely, in the bedroom of Mr. Reilly’s apartment in Shanghai. Analysts working for the company said it had been edited to disguise the location.

Glaxo executives in London were shocked. They deemed the video a serious breach of privacy, involving a possible break-in at the home of a senior executive in China. Mr. Reilly moved to a more secure residence.

Project Scorpion

Like many global companies, Glaxo has a code of conduct that encourages employees to report fraud or wrongdoing without fear of retaliation by the company. In many countries, including China, the rights of whistle-blowers are protected by law.

Glaxo didn’t seem to care.

By the time the video surfaced, Glaxo already had its suspicions about the identity of the whistle-blower. Months earlier, the company had fired Vivian Shi, a 47-year-old executive handling government affairs in Glaxo’s Shanghai office. The official reason for Ms. Shi’s firing was falsifying travel expenses. In fact, she was dismissed because the company believed she was the whistle-blower, according to confidential corporate documents obtained by The Times.

Ms. Shi did not return multiple calls for comment.

After receiving the video, Glaxo took more aggressive action, seeking to discredit Ms. Shi, who had already left the company.

How the Case Unfolded

MARCH 2013 Top Glaxo executives in London receive another whistle-blower email, this time showing Mark Reilly, the head of the company’s operations in China, engaged in a sexual act in his apartment.

See how the fallout unfolded »

At that point, in the spring of 2013, the company turned to Mr. Humphrey, the investigator. He ran ChinaWhys, a small risk consultancy firm that advised global companies like Dell and Dow Chemical.

His firm was engaged in what he called “discreet investigations,” helping multinationals cope with difficult situations like counterfeiting and embezzlement. Short in stature, with a shock of white hair, Mr. Humphrey portrayed himself as a kind of modern-day Sherlock Holmes.

“He likes a good adventure and likes solving cases,” said his friend Stuart Lindley, who runs a financial services company in China. “But he was definitely aware that some of that stuff was risky.”

In April 2013, Mr. Reilly met with Mr. Humphrey at Glaxo’s glass office tower near People’s Square in central Shanghai. According to meeting notes obtained by The Times, they discussed the emails, the sex video and Ms. Shi, the suspected whistle-blower. Mr. Reilly told the investigator that she held a grudge against Glaxo.

At the meeting, Mr. Reilly asked the investigator to look into the break-in at his apartment. But he made clear that he also wanted to assess what power and influence Ms. Shi might have with the government.

Legal experts say Mr. Reilly should not have been put in charge.

“The executive so accused has an obvious conflict of interest in overseeing such an investigation,” said John Coates, a Harvard Law School professor. “Even if the executive were entirely innocent of the whistle-blower’s charge, giving that same executive the role of investigating the whistle-blower smacks of retaliation.”

Efforts to reach Mr. Reilly, who has since left the company, were unsuccessful.

Using the code name Project Scorpion, Mr. Humphrey and his staff spent the next six weeks working undercover, gathering evidence. They visited Lanson Place, the upscale apartment complex where Mr. Reilly lived when the sex tape was made. They created a dossier on the suspected whistle-blower, searching for motives and ties to high-ranking officials or regulators. They interviewed former co-workers, scrutinized her résumé and scoured the web for information about her father, a former health official.

Glaxo may have crossed a line in this regard, putting the company more sharply in the government’s sights.

As part of the investigation, Mr. Humphrey turned to a Chinese detective to acquire a copy of Ms. Shi’s household registration record, or hukou. The official document contained information about her husband and daughter. The authorities had warned private detectives about acquiring confidential government documents.

“This type of household information is supposed to be private,” said John Huang, a former government official who is now managing partner at McDermott, Will & Emery in Shanghai. “But people were buying and selling it.”

Glaxo got little payoff from the investigation.

On June 6, 2013, Mr. Humphrey delivered a 39-page report to Glaxo that said Ms. Shi was probably the whistle-blower and even had a “track record of staging similar attacks” at a previous job. But the report included no evidence linking her to the emails or the sex video, according to a draft obtained by The Times.

Glaxo’s strategy of bribery and discrediting ultimately failed.

With the Chinese government in the midst of a crackdown on corruption, the police carried out a series of raids on June 27, 2013. They seized files and laptops from multiple Glaxo offices and interrogated dozens of employees. In Shanghai, four senior executives were detained. Investigators also raided the offices of several travel agencies that had worked closely with Glaxo, including China Comfort Travel.

A week later, the police stormed Mr. Humphrey’s apartment in Shanghai. He and his wife were charged with violating privacy laws.

Mr. Humphrey declined to comment on the specifics of the Glaxo case. His son defended his work, saying Glaxo engaged him “under false pretenses.” “My father is an honorable and law-abiding man,” said the son, Harvard Humphrey.

When prosecutors announced the case against Glaxo in July 2013, several weeks after arrests began, their allegations closely mirrored those of the whistle-blower. They described an elaborate scheme to bribe doctors and workers at government-owned hospitals using cash that had been funneled through a network of 700 travel agencies and consulting firms.

“It’s like a criminal organization: There’s always a boss, and in this case GSK is the boss,” said Gao Feng, one of the lead investigators.

Glaxo said little about the developments until July 15, when several high-ranking executives confessed from prison on state-run television. After that, the company capitulated, issuing a blanket statement for its misdeeds: “These allegations are shameful and we regret this has occurred.”

Cleaning Up Corruption

Photo

In this screenshot, Mark Reilly, center, the head of Glaxo’s operations in China, was escorted by the police to the courtroom to hear his sentence in September 2014 at the Changsha Intermediate People’s Court in the Hunan Province in central China. Credit Imaginechina

Dressed in a dark suit and a blue tie, Mr. Reilly, the Glaxo executive, was led in handcuffs into a small courtroom in the city of Changsha, in central China, in September 2014. With security guards behind him, he stood alongside four other senior Glaxo executives as a judge read the charges.

“The defendant company GSKCI is guilty of bribing nongovernment personnel and will be fined 3 billion yuan,” the judge, Wu Jixiang, said sternly, referring to Glaxo’s Chinese name. The company and the executives, having confessed, were given relatively light sentences, the court said.

Mark Reilly was sentenced to three years in prison and ordered to be expelled from China.

After handing down that sentence, the judge turned to Mr. Reilly.

“Do you obey the court’s verdict? Do you appeal?” he asked.

Mr. Reilly said that he would not challenge the verdict. Because he was swiftly deported, he will not serve prison time in China.

Glaxo is still trying to clean up the mess.

In China, Glaxo has promised to overhaul its operations and has put in place stricter compliance procedures. The company has changed the way its sales force is compensated and has eliminated the use of outside travel agencies.

Glaxo has also tightened oversight of expenses and cash advances, areas central to the case. Employees must now send in photographs of the guests and food, to verify that the meetings took place.

And in August 2015, Glaxo tried to make amends by rehiring Ms. Shi, an acknowledgment that the company had erred in firing an employee suspected of being a whistle-blower.

But the decision also hinted at a more troubling admission — that Glaxo had targeted the wrong person. There are indications that Ms. Shi was not the whistle-blower, and that there may have been more than one person.

The emails sent to regulators were written in fluent English and came mostly from a Gmail account. The email with the sex video came from a local Chinese account and was written in poor English. The only similarity was the anonymity.

The Times sent emails to both accounts and got a response from just one, the person who had written the detailed emails to the Chinese authorities and Glaxo. “You have reached who you are looking for,” the person replied.

In a series of exchanges, the author denied being Ms. Shi, acting in concert with her or sending the video. The person said Glaxo had erroneously blamed Ms. Shi for the emails and never found the actual whistle-blower.

The Times was unable to verify the identity of the person, who described working in Shanghai but declined to come forward for fear of retribution.

“I didn’t reveal to GSK personnel that I was the whistle-blower because doing so would have placed me in potential physical jeopardy,” the whistle-blower wrote in an email to The Times. “You understand that criminals — you know that they were convicted later in Chinese courts — were in charge of GSK China at that time, and I truly believe that they would have harmed me in some fashion had they discovered my identity. ”


http://www.nytimes.com/2016/11/02/business/international/timeline-glaxo-fallout-china.html

After a whistle-blower working for one of the world’s biggest pharmaceutical companies began sending anonymous tips about fraud and corruption inside its operation in China, authorities there moved in. They arrested top executives and corporate detectives the company had hired to track down the whistle-blower. Here is how the events transpired.

Photo

Credit Aly Song/Reuters

China Rules

Articles in this series examine how multinational corporations doing business in China must adjust to an increasingly assertive state.

    December 2011 A self-described whistle-blower working inside Glaxo sends an email to Chinese regulators, detailing fraud and corruption in the pharmaceutical maker’s Chinese operations. It is the first of about two dozen emails sent over a 17-month period.

    April 2012 Glaxo executives in China begin hearing that a whistle-blower has been sending documents to Chinese regulators claiming widespread corruption at the company.

    July 2012 The company pleads guilty in the United States to criminal charges for improper drug marketing and kickbacks to doctors. The company’s chief executive, Sir Andrew Witty, pledges that it “is never going to happen again.”

    December 2012 Vivian Shi, the head of government affairs for Glaxo in China, is fired, supposedly for falsifying travel expenses. But the real reason, according to internal documents, is that Ms. Shi is suspected of being the whistle-blower.

    January 2013 The whistle-blower sends a 5,200-word email to the Glaxo chairman, senior executives and the company’s outside auditor. The email, like the previous ones to authorities, describes a systemic fraud and bribery scheme. The allegations are dismissed by the company as a “smear campaign.”

    Photo

    “This illegality almost killed a person,” a whistle-blower wrote to Chinese regulators in January 2013.

    March 2013 Top Glaxo executives in London receive another whistle-blower email, this time showing Mark Reilly, the head of the company’s operations in China, engaged in a sexual act in his apartment.

    April 2013 Glaxo hires ChinaWhys, a private consulting firm run by Peter Humphrey and his wife, Yu Yingzeng, to investigate the suspected whistle-blower and a break-in at Mr. Reilly’s home. The investigation is code-named “Project Scorpion.”

    Photo

    A whistle-blower alleged that a Glaxo executive in was being bribed with sex. Notes from a Glaxo meeting in April 2013 describe a graphic video attached the the whistleblower’s email.

    June 2013 Mr. Humphrey presents the findings of his investigation to Glaxo. Although his report offers no evidence connecting Ms. Shi to the emails, he notes the suspected whistle-blower has a “track record of staging similar attacks.”

    Photo

    “She has a past track record of staging similar attacks,” stated a private investigator’s report in June 2013.

    June 2013 The police carry out a series of coordinated raids on Glaxo offices throughout China, detaining four executives, including the country’s chief legal officer. Several travel agencies working closely with Glaxo are also raided.

    July 10, 2013 Mr. Humphrey and Ms. Yu, the private investigators hired by Glaxo, are detained by the police.

    July 15, 2013 At a news conference in Beijing, prosecutors accuse senior executives at Glaxo’s Chinese operations of running an elaborate scheme to bribe doctors and hospital workers, describing it as an “organized crime operation.”

    July 16, 2013 Four Chinese executives at Glaxo confess on state television to the bribery and fraud scheme.

    July 18, 2013 Glaxo’s finance chief is barred from leaving China.

    August 2013 Mr. Humphrey and Ms. Yu are formally arrested in Shanghai.

    August 2014Mr. Humphrey and Ms. Yu are convicted of illegally obtaining government records about individuals during their corporate investigations, a charge they denied. They each served two years in prison.

    Photo

    In December 2013, a U.S. government consular detailed the jail conditions of Mr. Humphrey’s wife Yu Yingzeng.

    Sept. 19, 2014 At a one-day trial held in secret, Mr. Reilly, the head of Glaxo’s Chinese operations, and other company executives plead guilty to fraud and bribery. Glaxo agrees to pay a $500 million fine. Mr. Reilly is deported from China.

    Was the GlaxoSmithKline FCPA resolution a missed opportunity?


    Yes!…


     https://www.complianceweek.com/blogs/the-man-from-fcpa/was-the-glaxosmithkline-fcpa-resolution-a-missed-opportunity#.V_2JVtw-04A

    Was the GlaxoSmithKline FCPA resolution a missed opportunity?

    Tom Fox | October 11, 2016

    The U.K. pharmaceutical giant GlaxoSmithKline has resolved an outstanding FCPA matter for the conduct of its China subsidiary, GSK-China that settled an SEC investigation for a fine of $20 million, with no profit disgorgement—quite a favorable move for the company. Even more amazingly, the company received a declination from the Justice Department, even though it was under the equivalent of a Deferred Prosecution Agreement, called a Corporate Integrity Agreement, for the actions unrelated to its FCPA violations in marketing off-labeled marketed products.

    Of course these resolutions did not stand alone as the company had been sanctioned by the Chinese government with a fine of approximately $490 million back in 2014 for the actions of GSK-China. Company employees were criminally convicted and non-Chinese senior executives of the China business unit, who were convicted were deported from China. GSK’s sales in China went in the tank and continue to suffer through this date.

    Perhaps the U.S. authorities felt the company had suffered enough. However, in this age of increasing international enforcement, it may well be the SEC and Justice Department missed an opportunity to demonstrate how they would give credit for anti-corruption prosecutions, done by other governments, under local anti-corruption laws; such as was done by Chinese authorities with GSK-China. U.S. authorities could have not only cited to the successful use of domestic Chinese laws as an example in the international fight against bribery and corruption but also specifically stated that how the fine and penalty paid by GSK-China was considered in the calculation of the fine by U.S. regulators.

    Such an approach would have emphasized the U.S. government’s favorable outlook for greater international sanctions against corruption, as well as shown companies that they would not be whip-sawed by regulators across the globe for the same conduct. It could have been one of the most public examples of how the U.S. government viewed the international fight against corruption.

    I think an opportunity may have been missed. 

    Whistle-Blower Greg Thorpe Speaks Out Against The GSK Department Of Justice (Sham-Fine) ‘Gift’ To GSK…


    The Guardian 2014

    “…Britain’s Serious Fraud Office has launched a formal criminal investigation into GlaxoSmithKline’s sales practices, piling further pressure on the drugmaker which is already being investigated by Chinese authorities and elsewhere amid allegations of bribery.

    Britain’s biggest pharmaceutical company, run by Sir Andrew Witty, said it had been informed on Tuesday that the SFO had “opened a formal criminal investigation into the group’s commercial practices”.

    “GSK is committed to operating its business to the highest ethical standards and will continue to cooperate fully with the SFO,” it added. A spokeswoman was unable to give further information. It is understood the SFO is looking at possible patterns across numerous global jurisdictions including China.

    The Guardian reported last July that GSK had briefed criminal investigators from the SFO on its activities in China.

    Under the 2010 Bribery Act, the SFO has powers to investigate and prosecute corruption at home or abroad. In some circumstances companies can be considered for immunity from prosecution if they can demonstrate they have been proactive and alerted SFO investigators to evidence of wrongdoing as soon as they found it…”


    Following on from my post two days ago (about Erika Kelton-Whistle-Blower attorneys’- article on GSK CEO Andrew Witty in Forbes online), GSK whistleblower Greg Thorpe left some interesting comments on it. (see here)

    I have long thought that GSK’s 3 Billion dollar fine gave merely the appearance of justice-to the media and the public- but didn’t really deliver it at all. The only ones that really benefited from this 3 Billion dollar fine were the many attorneys involved and GSK themselves. Patients did not get justice, many people were harmed and some died. There was no real justice for those harmed.

    On the surface of it, it seems like a lot of money, and a big fine, but 3 Billion is nothing to GSK, it’s around 3 months profit, and in any case- the profits that they made -pushing the various drugs detailed in Greg’s complaint off label- over the decade that the case was (unethically) sealed-and the years previous (to when Greg raised the alarm) more than made up for the criminal behavior that GSK were fined for anyhow.

    As Greg so perfectly put it- this fine was a ‘gift’ to GSK.

    Disturbingly also, GSK were then fined 2 years later (500 million) in the biggest corporate bribery scandal in China. It seems that GSK broke its corporate integrity agreement (one of the main stipulations for GSK’s fine with the US department of Justice) literally less than 2 years after it signed it. Was GSK setting up this bribery network during the time it was signing this corporate integrity agreement with the US department of Justice? Who was overseeing the funding of GSK’s elaborate bribery scam? that’s something that journalists and the media should be researching to find out…

    GSK are also under investigation by the serious fraud office in the UK.

    Personally, I don’t think that GSK will be brought to justice in the UK, or the US, for any of this extremely unethical and immoral behavior. GSK operate above the law because they are a cash cow for the UK economy; they are hugely influential over politics, healthcare, universities, and the media- globally. They are an unimaginably profitable company, and their stranglehold upon powerful people, and organizations around the world (from political sway to university/academic control),  stretching back about a century, keeps them protected from facing justice for any of the crimes that they commit.

    GSK epitomize an evil, untouchable, unaccountable corporate entity that has influence and power beyond our imaginations. They get away with corporate fraud, bribery, harm to patients (and often corporate manslaughter of patients) because the governments and justice systems (particularly, in the UK, Europe and US) are nefariously influenced by GSK’s huge financial, legal and corporate power. They have every facet of society in their pocket…

    Like big oil and the military industrial complex, the big banks etc, Big Pharma’s like GSK are literally untouchable. From time to time they face paltry, meaningless, fines, such as the department of Justice charade- however their corporate culture remains the same.

    They hire people like Andrew Witty to become the face of their new branding strategy, but they never ever atone for many of the crimes that they commit.

    At the end of the day, it’s all about money and greed…

    In this corporate dominated world, the individual is considered value-less and disposable..

    The average joe, on the street; the ordinary consumer or patient- has little or no power, to fight these kinds of corporations. If big oil destroys the environment, it doesn’t have to face any real justice, if the military industrial complex wants to fund wars in the middle east, leading to deaths of innocent people in those areas, maiming and dismembering kids and women, and men- it’s allowed to, and if Big Pharma wants to sell a dodgy drug to you, and lie about side effects, and even kill you and get away with it, it’s allowed to do this without proper recourse.

    The CEO’s of these entities, are so rich, and well protected by the high political, legal and professional class, that they can simply do what they please, and at the end of their tenure, they can ride off into the sunset with multi-million pound nest eggs and golden parachutes. It doesn’t matter what the corporation does while the CEO is in charge, even if the company commits fraud continually, and pushes drugs off-label to people harming them and sometimes killing them- the CEO’s are let off the hook…

    They are untouchable…

    We are at their mercy, and they have no mercy..

    They behave sociopathically because that’s the nature of how they do business. Despite protestations of new ethical branding, they are unable to change because the corporate environment in which they thrive doesn’t allow for humane characteristics.

    If GSK think that I am wrong about anything that I have written on my blog, I am open to amending any blog post to set the record straight, and furthermore I would be happy to discuss any of the issues raised on this blog with Andrew Witty, the CEO, of GSK anytime and anyplace (as long as its recorded and released to the public) so there you go Andrew, take me up on that offer anytime you wish- and show the world that GSK are really concerned with ‘patients first’ and ‘transparency’ – prove to the world that you’re not the corporate lackey that we all think you are…

    (I won’t hold my breath)

    Anyhow, here’s Greg’s comments– make of them what you will…

    Erika Kelton and her so called whistleblowers are frauds, period.

    Kelton told me specifically in a letter that “Off label marketing is not fraud”.

    Her firm would not take this case until they found out I was right.
    Both her me too whistleblowers were terminated GSK employees and Matt Burke was terminated for off label promotion as a Regional Manager, forcing some 200 plus representatives under him to do the same.

    This was AFTER I went to the highest ranking people in the company, complaining of off label fraud and kickbacks.

    These clones of me used much of the same information I sent Kelton…only to file a separate case about 4 months AFTER I had to get some rookie counsel to represent me.

    Her version of the story and their statements are not only false and misleading but probably defamatory to my position on the case. The Department of Justice gave ME standing as first to file and my attorneys handled the award.
    The award was decreased to the minimum largely because her “me too” terminated clients were actually deemed ” planners and initiators ” of the Fraud.

    This was a 9 year joke, and that is the time it took the DOJ to decimate my complaint and reduce it from some 350 pages with 750 exhibits to some 80 pages or so of a huge quid pro quo to GSK.

    I have a lot more to say on this and it was largely Kelton and her boys inaction and lack of substance on the major drugs…Paxil, Imitrex, Zyban and Wellbutrin that the settlement was so paltry.

    The settlement amounted to 3 months of PROFIT for GSK. It makes me sick, and Kelton declares victory ? I call bullshit.

    Criminal actions no doubt occurred over these 9 years including an illegal seal from the public on the case….9 years !! Sara Bloom, Kelton’s buddy was lead investigator and seemingly spearheaded the Gift to GSK.
    I have questions as to the role of Eric Holder also in this whole charade.

    A GSK defense attorney became Attorney General 5 years into the case. He supposedly recused himself, but there are indications he had his moles in the DOJ putting the clamps on any criminal indictment…let alone the insanely low penalty. Hundreds of thousands of patients were killed or suffered…nothing done. A slap on the wrist. Holder is now back at the same law firm, DEFENDING GSK. Anyone smell the RAT ?

    I have a lot more intimate knowledge about all of this…and have already been threatened for coming forward.

    I was the ONLY whistle-blower who was wrongfully terminated for coming forward.
    So Erika until you can stop lying and putting lipstick on this pig of a case…that cost the taxpayers Tens… if not hundreds of millions of dollars…
    I suggest you keep your mouth shut and comply with my request to show how you really handled the information I first gave to you…when you would not file, and declared in writing that “OFF LABEL DETAILING IS NOT FRAUD”…. It certainly is, especially when people die because of statements made to physicians, even by your own so-called whistle blowers

    To Forbes …..

    If you want the truth about this whole incredible 9 year quid pro quo….I will give you the truth, and not in some self serving article put forth to generate business for a lawfirm.

    The article makes me want to puke. You will get the whole truth from me, not just what some me-too attorney wants you to believe.

    Truth man, why don’t you publish the letter to me from Kelton ? Says it all on her integrity and real role in the case on the “killer” off label promotion…not some innocuous promotion on Advair for mild asthma, which in most cases helped patients….which she lays claim to…..having nothing on Imitrex, Paxil, or Avandia.

    The really harmful drugs. A useless pawn, and I have the evidence, including HOW she got into the case, and it was not because of the DOJ at all initially.

    Get real Erica, you can’t hide the real truth on this Government Fraud forever. That is the bottom line.

    The truth will come out, and not in a few paragraphs here…sooner or later.
    Greg Thorpe

    One other note, Kelton insists that GSK listen to internal whistleblowers.
    Certainly I agree…however this is coming from an attorney and a lawfirm who would not listen to the only internal whistle-blower in the 3 Billion dollar gift.
    Maybe Erica should take a little of her own advice..instead of only listening to terminated employees, planners and initiators of the Fraud, then claiming THEY
    were the leading whistleblowers.


    They both secured good jobs outside the company and lived the good life for ten years….while I went through hell for reporting while employed, then was subject to wrongful termination after almost 25 years with the company.

    Really Erika…you can fool some of the people some of the time..as the saying goes.

    Matt Burke, your main bread and butter, as you know… would not even put his name on the complaint until I forced him to do so, or hit the road. Some hero ?

    Come clean, seriously…it is about more than generating business for your firm through false and misleading statements. Bottom line you and your clients only got in the way in this case, especially in settlement discussions. The truth hurts, huh ? If I am wrong Burke can reply….but he will not.

    He was grossly unjustly enriched and could be in prison, instead of living the good life off of my initial complaints.

    Greg Thorpe

    GSK’s Dodgy Cervarix … Patients Sue GSK In Japan Because Of Side Effects…


    http://www.japantimes.co.jp/news/2016/03/30/national/victims-government-recommended-cervical-cancer-vaccine-sue-state-drugmakers/#.Vwe9kD94NaX

    Victims of government-recommended cervical cancer vaccine to sue state, drugmakers

    by

    Staff Writer

    Victims suffering side effects from cervical cancer vaccines that were once recommended by the government announced Wednesday they will file a lawsuit against the state and drugmakers.

    “Many victims are still suffering from side effects of the human papillomavirus (HPV) vaccines Cervarix and Gardsil, which include overall pain and disorders of perception, movement and memory,” lawyer Masumi Minaguchi, a representative from the planned lawsuit’s defense team told a news conference in Tokyo.

    Minaguchi said the victims will file the suit sometime after June against the central government, GlaxoSmithKlien PLC, the maker of Cervarix, and Merck Sharp & Dohme Corp., the maker of Gardsil, at four district courts in Tokyo, Nagoya, Osaka and Fukuoka.

    “The victims wish to live a peaceful life and prevent further suffering by finding out the truth (about the vaccine side effects),” Minaguchi added.

    She said the defense team will seek additional plaintiffs to join the lawsuit by holding seminars in April and May. Currently, 12 plaintiffs are taking part in the suit, according to Minaguchi.

    Saitama Prefecture resident Nanami Sakai, who plans to be one of the plaintiffs, was one of four to attend the news conference. The 21-year-old, who was given Cervarix twice in 2011, said she did not receive information about the pros and cons of the vaccine before receiving the injections.

    “I’d like to know why I was left scarred by the vaccine, why I was not able to receive proper treatment right away and why my situation was not adequately conveyed to the state,” Sakai said.

    Sitting in a wheelchair, Sakai said she has numbness in the right side of her body, back and around her chest.

    Yui Taniguchi, who suffers from a number of symptoms including severe headaches and occasional loss of vision, said she decided to join the suit in order to show that there are many people whose lives have been turned upside-down by the vaccines’ side effects.

    “I felt I needed to speak out so that we won’t see another such victim in the future,” Taniguchi, a 17-year-old high school student from Nara Prefecture, said at the news conference.

    Cervical cancer is caused by the human papillomavirus, which is transmitted mainly through sexual intercourse. The cervical cancer vaccines are believed to help prevent HPV.

    According to health ministry figures, 2,022 people suffered side effects out of an estimated 2.59 million who had received injections of Cervarix by the end of 2014. Out of an estimated 790,000 people given Gardasil 453 experienced side effects.

    In April 2013, after the Diet revised the Preventive Vaccination Law, the health ministry began recommending that girls between the ages of 12 and 16 be vaccinated.

    However, the ministry halted the recommendations in June that year following a number of cases involving reported side effects.

    The health ministry says about 9,000 women in Japan develop cervical cancer each year and around 2,700 die from the disease.

    Seroxat/Paxil Study 329: Nobody Pinned Anything on Us


    http://brodyhooked.blogspot.ie/2012/07/inside-paxil-study-329-courtesy-justice.htmlhttp://brodyhooked.blogspot.ie/2012/07/inside-paxil-study-329-courtesy-justice.html

    “…Inside Paxil Study 329, Courtesy the Justice Department

    I’ve previously discussed the now-infamous Study 329, which took discouraging data on the efficacy and safety of paroxetine (Paxil) in kids and spun it into an article claiming excellent results:
    http://brodyhooked.blogspot.com/2011/11/will-brown-university-investigate.html

    Thanks to the U.S. Justice Dept. complaint in the suit recently settled by GlaxoSmithKline for a record $3B: http://www.justice.gov/opa/documents/gsk/us-complaint.pdf
    –we can follow the history of this study in more detail, based on the internal GSK documents discovered during the proceedings, and see just how the data were manipulated for marketing purposes.

    Study 329, directed by Dr. Martin Keller of Brown University, was one of 3 clinical studies in children and adolescents that were all interpreted by GSK scientists between August and October, 1998 to be discouraging. Study 329’s protocol specified two primary endpoints, and on neither measure did Paxil do better than placebo. The study also logged in 11 serious adverse reactions to Paxil, much more than in the placebo group, including 5 with agitated or suicidal behavior, the major risk for which eventually the FDA issued a black-box warning for the SSRI class of antidepressants…”

     

    http://davidhealy.org/study-329-response-from-the-authors/#comment-44667

     

    What exactly did Martin Keller mean when he said that ‘nobody ever pinned anything on us’? (in regards to his involvement in the Paroxetine-Paxil/Seroxat Study 329).

    Interesting ‘choice of words’ methinks…

     


     

    Study 329: Nobody Pinned Anything on Us

    March, 31, 2016 | 2 Comments

     

     

    Who Will Replace His Royal-Ness Andrew Witty At GSK?


    It seems to be that GSK just replace one sociopath with another..

    I can just imagine the interview process for CEO…

    We’ve had JP Garnier (he was a very good sociopath), then we had Witty (who was arguably even better).. very convincing , very slick…

    Who next?

    I bet it’s something like a tick the boxes ‘sociopath’ checklist for the selected candidates…

    Something like this perhaps?…


    2960020302001

     

     

     


    http://news.sky.com/story/1661575/woodford-demands-outsider-to-take-gsk-helm

    Woodford Demands Outsider To Take GSK Helm

    The high-profile fund manager tells Sky News a “fresh pair of eyes” is needed to replace Sir Andrew Witty at GSK.

    10:58, UK, Thursday 17 March 2016

    GlaxoSmithKline Chief Executive Andrew Witty poses with his medal after being honoured with a Knighthood by Prince Charles

    Sir Andrew Witty poses after being honoured with a knighthood

    Britain’s biggest drugs-maker, GlaxoSmithKline (GSK), has been told to ignore internal candidates in its search for a new boss as shareholders intensify demands for a radical overhaul of the company.

    Speaking exclusively to Sky News, Neil Woodford, the City’ s best-known fund manager, said that GSK needed “a fresh pair of eyes” to replace Sir Andrew Witty, who will step down next year.

    “I have a strong preference for an external candidate,” the head of investments at Woodford Investment Management said on Thursday.

    Mr Woodford’s demands will put pressure on Sir Philip Hampton, GSK’s new chairman, to appoint an executive from elsewhere in the pharmaceuticals industry to succeed Sir Andrew.

    That would come as a blow to possible internal candidates such as Emma Walmsley, who runs GSK’s consumer products division, and Abbas Hussain, president of its global pharmaceuticals unit.

    Sky News revealed last autumn that Mr Woodford was seeking a break-up of the £69bn company, which owns brands such as Nicorette and Horlicks.

    He believes the group would be far more valuable if it separated its HIV business ViiV, its consumer healthcare division and Stiefel, its dermatology division, from its core medicines and vaccines arm.

    GSK said on Thursday that Sir Andrew would step down at the end of March 2017, with a formal recruitment process now underway.

    The City has grown frustrated at GSK’s lacklustre share price performance, with the stock down about 10% over the last 12 months as investors wait to see whether a pipeline of promising new products will deliver.

    Under Sir Andrew, its chief executive since 2008, GSK has signalled a shift away from highly priced prescription drugs in favour of vaccines and consumer products.

    Analysts at Deutsche Bank said the announcement about Sir Andrew’s retirement was unlikely to signal material strategic changes at GSK.



    http://www.bloomberg.com/news/articles/2016-03-17/glaxo-chief-executive-witty-plans-to-step-down-next-year

    GlaxoSmithKline CEO Andrew Witty to Retire in March 2017
    Marthe Fourcade
    Ketaki Gokhale
    KetakiGokhale
    March 17, 2016 — 7:12 AM GMT
    Updated on March 17, 2016 — 12:10 PM GMT

    Board will search for CEO candidate inside, outside drugmaker
    Chairman Hampton also plans `board refreshment’ this year

    GlaxoSmithKline Plc Chairman Phil Hampton began an overhaul of the biggest U.K. drugmaker by launching a search for Chief Executive Officer Andrew Witty’s successor and replacing a third of the board as he seeks to pacify some disgruntled investors.

    Witty, 51, will retire next March, after almost a decade at the helm, the London-based company said in a statement on Thursday. Glaxo also plans what Hampton termed a “board refreshment” as directors Deryck Maughan, Stephanie Burns, Daniel Podolsky and Hans Wijers won’t stand for re-election at the annual meeting in May.

    Andrew Witty
    Andrew Witty
    Photographer: Simon Dawson/Bloomberg

    Witty, once hailed as one of the pharmaceutical industry’s most visionary managers, has faced criticism for Glaxo’s lagging share performance, sluggish sales and a pipeline lacking promising medicines. A bribery scandal in China that led to a $489 million fine last year also tarnished his image, which he had built with initiatives to develop the world’s first malaria vaccine and reform the way medicines are marketed to doctors.

    “Glaxo needs a shakeup at the top,” said Gareth Powell, a portfolio manager at Polar Capital LLP in London whose holdings include Glaxo shares. “There’s a lack of truly innovative products, and that’s what they need to sort out.”
    Right Time

    Last year, Witty oversaw the biggest reorganization since the merger that created Glaxo 15 years ago. He sold the company’s cancer drugs to Novartis AG in exchange for the Swiss firm’s vaccines business and cash. The companies also formed a joint venture, controlled by Glaxo, to sell consumer health products.

    Glaxo shares fell 1.3 percent to 1,394 pence at 12:07 p.m. in London trading. The stock has returned an average of 10 percent a year over the past five years, compared with a 17 percent average annual return for the Bloomberg Europe Pharmaceutical Index.

    “By next year, I will have been CEO for nearly ten years and I believe this will be the right time for a new leader to take over,” Witty said in the statement. He began leading Britain’s largest drugmaker in 2008 after more than 20 years at the company, including postings in the U.S., Asia and Africa.
    Avoiding Deals

    Both internal and external candidates will be considered for the role. Glaxo investor Neil Woodford said he would like to see someone from outside the company take the top job. One of that person’s first tasks may be to slash the dividend, investors said.

    Potential candidates include Emma Walmsley, head of Glaxo’s consumer-health division, and Abbas Hussain, president of its drug business, according to reports in U.K. media. Chief Financial Officer Simon Dingemans and Roger Connor, who oversees global manufacturing and supplies, may also be considered as internal successors. David Epstein, head of Novartis’s pharmaceutical unit, may also be approached, the reports said.

    Witty’s views have diverged from those of his peers. He has avoided large-scale acquisitions that have consumed others such as Pfizer Inc. and Teva Pharmaceutical Industries Ltd. And in 2011, he started a program called Patient First that eliminated the link between sales targets and bonuses for Glaxo’s U.S. marketing team, following allegations of illegally promoting drugs. Few drugmakers followed his lead.
    Fresh Board

    Glaxo’s sales declined to 23.9 billion pounds ($34.2 billion) last year from a peak of 28.4 billion pounds the year after Witty joined. Core earnings per share will probably surge this year, the company has said, after two years of declines.

    “The decision will allow him to step aside at a high point following the company’s expected return to double-digit earnings growth in 2016,” Richard Parkes, an analyst at Deutsche Bank AG in London, wrote in a note to clients.

    One bright spot has been Glaxo’s portfolio of HIV medicines, which the company considered spinning off in an IPO before opting to keep it. The British drugmaker also has one of the broadest drug pipelines in the industry, with more than 70 new medicines in development (though many are early-stage drugs that won’t deliver sales anytime soon), according to a Bloomberg Intelligence pipeline analysis.

    A breakup of the company, favored by some investors including Woodford, might not generate that much value, according to an analysis by Bloomberg Intelligence analyst Sam Fazeli. Separating the drugs, vaccines and consumer-health units will probably increase Glaxo’s enterprise value of 83 billion pounds ($118 billion) by 10 percent or less, he estimated.

    GSK Named As One Of 6 Big British Firms Who Avoided UK Corporation Tax In 2014


    How does GSK get away with paying such low rates of corporation tax in the UK (or in some years such as 2014 -none at all)- despite claiming to be a UK company and despite the vast profits GSK generates globally?…
     
    See the Guardian article  (from 2009) under this latest one for more…

    http://www.independent.co.uk/news/uk/six-british-multinationals-including-shell-vodafone-lloyds-banking-group-did-not-paid-any-a6844676.html

    Six British multinationals ‘did not pay any UK corporation tax in 2014’

    The same year, the six companies in the top 10 of the London stock exchange made a combined global profit of 30bn. 

    Six of Britain’s 10 biggest multinationals, including Shell, British American Tobacco (BAT) and Lloyds Banking Group, paid no UK corporation tax in 2014, an investigation has claimed.

    The reports come after Chancellor George Osborne received a backlash over calling a “sweetheart deal” with tech giant Google, which was allowed to pay £130m for back taxes over the last decade, a “success”.

    Lloyds, brewer SABMiller and drugs company AstraZeneca were also among the six multinationals not to have paid any coropration tax in 2014, reports the Sunday Times.

    The same year, the six British companies made a combined global profit of £30bn.

    British Petroleum (BP) and drugs company Glaxo Smith Kline (GSK) refused to reveal how much UK corporation tax they paid, but GSK declared it had paid some tax in 2014. 

     

     

     



    The title to more than 40 GlaxoSmithKline trademarks went to a factory in Puerto Rico, including the trademark for the top-selling diabetes drug Avandia.

    The trademark for the newly launched breast cancer drug Tykerb was assigned to Ireland, another low-tax regime, in 2005, followed there by the firm’s Sensodyne toothpaste brand in January 2008.

    In 2007, the Puerto Rico trademarks, including Avandia, were shifted on to the firm’s Irish operation in Cork. Glaxo’s production was phased out at SB Pharmco Inc in Puerto Rico after quality control problems.

    The value of Glaxo’s trademarks, their intellectual property, has been estimated to constitute as much as 5% of the eventual selling price of a drug. The company explains in its most recent annual report: “Profits arising from certain operations in … Puerto Rico and Ireland are accorded special status and are taxed at reduced rates compared with the normal rates of tax in these territories. The effect increased earnings per share by 4.9p in 2007, 7.2p in 2006 and 2.7p in 2005.”

    Helen Jones, Glaxo’s head of tax, told us: “It is a widespread and totally accepted practice for global companies to license out intellectual property in return for royalties which reflect the value of work carried out by the holder.”

    Glaxo pays on average more than 80% of its tax to overseas countries rather than to Britain. Last year as a result, although the British official tax rate has been 30%, and Glaxo’s worldwide profits were £7.4bn, the company’s actual UK tax bill was only £450m. This is still a hefty sum, and it is to Glaxo’s credit that it declares its UK tax charge (although it still does not disclose how much UK tax is actually paid over in cash each year). But it is only a tiny fraction of the pharmaceutical giant’s profits particularly relevant to the amount of Glaxo’s initial research and development carried out by British scientists in Britain.

    Glaxo says it is natural that most of its tax is paid overseas, where it has more than 80% of its 100,000 employees. The company claims more than 90% of its turnover is “not related to the company’s UK subsidiaries”. It is not clear how much more UK tax would be paid if the intellectual property created in the UK had been kept in the UK.

    Glaxo has been embroiled in tax rows around the world, not only in the UK, but in Canada, Japan, and most of all the US, where it makes the most lucrative sales. In 2006, it finally agreed to pay the US £1.7bn to settle a huge dispute over sales of the ulcer drug Zantac and others produced in the Puerto Rico factories. The US claimed it was being cheated out of its fair share of global tax.

    Transnational companies do sometimes find themselves caught in the middle of arguments between different countries about their respective share of the tax cake.

    The US is also currently demanding another $680m, which Glaxo disputes, over attempts to deduct loan interest from Glaxo profits. The company was locked in a lengthy fight with the British tax authorities, described as being over “transfer pricing” and “controlled foreign company” issues, in which Glaxo was accused of piling up too many profits abroad.

    Glaxo said last year that there were “wide differences in positions” between the company and HM Revenue & Customs, which might lead to litigation. But in June, the disputes were suddenly resolved “with no material impact on the expected tax rate for the year”.

    This followed shortly after meetings between Glaxo executives and Gordon Brown, and public threats that Glaxo might relocate to the Republic of Ireland.

    In 2006, Glaxo paid US £1.7bn to settle dispute over sale of drugs produced in Puerto Rico

    GSK To Face Trial Over Reed Smith Partner’s Suicide


    Scott Flaherty, The Am Law Daily January 13, 2016    | 0 Comments

    GlaxoSmithKline headquaters.

    GlaxoSmithKline headquaters.

    Credit: Maxwell Hamilton via Wikimedia Commons

    More than five years ago, Reed Smith partner Stewart Dolin killed himself at a Chicago train station, leaving behind a wife, two children and a sucessful career. Now his widow has moved a step closer to trial in a case accusing GlaxoSmithKline LLC of hiding the suicide risks of its blockbuster antidepressant Paxil and contributing to Dolin’s death.

    Wendy Dolin has been pursuing negligence and fraud claims against GSK since August 2012. About two years earlier, in July 2010, Stewart Dolin went to Chicago Transit Authority station on his lunch break and died after stepping in front of an oncoming train. A medical examiner deemed the death a suicide, and an autopsy confirmed the presence of a generic version of GSK’s antidepressant Paxil, according to court documents.

    On Tuesday U.S. District Judge James Zagel in Chicago declined to rule on a pair of motions that GSK’s defense lawyers at King & Spalding and Dentons filed last year, hoping to scuttle the case before trial. In a brief docket entry, the judge explained that he won’t make a decision on GSK’s summary judgment motions before a trial scheduled to begin on Sept. 19.

    Stewart Dolin, pictured right in an undated photo, was 57 and a co-chair of Reed Smith’s corporate and securities group when he died.

    In the lawsuit, Wendy Dolin’s lawyers at Los Angeles-based personal injury firm Baum Hedlund Aristei Goldman allege that the suicide came just six days after the Reed Smith partner began taking a generic version of Paxil to treat anxiety and depression.

    The complaint accuses GSK of failing to include a warning on Paxil’s labeling that the drug has ties to suicidal behavior in adults. At the time of Dolin’s death, according to the suit, Paxil’s labeling only referenced an association with suicide risk among people aged 24 and younger. Dolin’s lawyers, led by Baum Hedlund’s Brent Wisner, also lodged broader accusations that GSK knew about Paxil’s association with suicide in adults and deliberately concealed that information for decades.

    The suit also initially made related claims against Mylan Inc., the drug company that manufactured the generic Paxil that Stewart Dolin actually took. Zagel, however, dismissed Mylan in 2014, finding the claims against the generic maker were preempted by federal drug labeling law.

    GSK, defended by Atlanta-based King & Spalding partners Andrew Bayman and Todd Davis and Chicago-based lawyers from Dentons, has denied Dolin’s allegations. The company’s defense lawyers lodged a pair of summary judgment motions in late July, arguing that GSK should be cleared of any liability on multiple grounds.

    One of those motions focused on a federal preemption argument. At the time of Stewart Dolin’s suicide, GSK’s lawyers wrote, the company hadn’t been required by the U.S. Food and Drug Administration to include warnings about suicide risks associated with Paxil for patients older than 24.

    A separate GSK motion seeks to undermine other aspects of the suit, including allegations that Stewart Dolin’s doctor didn’t know about Paxil’s full suicide risks before prescribing it. The defense lawyers also reiterated that Dolin had taken a generic version of Paxil, made by Mylan, before the suicide.

    “A plaintiff must establish that it was the defendant’s product that actually caused the alleged harm,” GSK’s legal team wrote in support of the summary judgment motion, which was made publicly available in October. “It remains undisputed that Mr. Dolin never ingested GSK’s product Paxil.”

    Dolin’s contested both motions in court, but at a status hearing on Tuesday, Zagel put off his ultimate decision on the issues until sometime after the trial begins.

    King & Spalding’s Davis referred a request for comment to GSK. In a statement, a company spokeswoman noted that the company’s summary judgment motions remain pending with the court and that Dolin had not been taking brand-name Paxil.

    Baum Hedlund’s Wisner, who represents Dolin, said in an email on Wednesday that he’s encouraged that the judge declined to rule on GSK’s pretrial motions.

    Forbes: GlaxoSmithKline’s Move To Drop Use Of Medical Experts Is Misguided


    http://www.forbes.com/sites/johnlamattina/2016/01/11/gsks-move-to-drop-use-of-medical-experts-is-misguided/

    GlaxoSmithKline’s Move To Drop Use Of Medical Experts Is Misguided

    I cover news on drugs and R&D in the pharma industry

    The reputation of GlaxoSmithKline has suffered a number of hits in the past few years. In 2012, it paid $3 billion to the Department of Justice to settle charges that GSK paid doctors to prescribe drugs for unapproved uses. In 2014, GSK had to pay a fine of $488 million in China for bribing doctors to prescribe its drugs.

    As reported by Andrew Ward of the Financial Times, GSK is trying to clean up its image by stopping the practice of paying doctors to promote its products. On the surface, this sounds like a noble thing to do. After all, there are those that believe that “good drugs should sell themselves” and promotional efforts are only needed for unimpressive new medicines. Actually, that’s not the case.

    When a new product is launched, a company seeks to make its availability known. It will also seek to have experts in the field talk about the new drug to doctors who are most likely to prescribe it. These discussions focus on the value of the drug, the benefits it brings compared to existing therapies, how the drug should be best prescribed and, yes, even the side effects. Any company, large or small, will strive to find experts who are well known and are well respected among their peers to discuss its drug. If a company is fortunate to recruit such an expert, it will pay all of that expert’s expenses as well as an honorarium for her time and efforts.

    Ah, there’s the rub–money! Because these experts get paid, there is an unfortunate perception on the part of some that these experts are really “hired guns” who are acting as shills for the evil drug company. GSK is trying to change this perception by no longer using such paid experts. Instead, GSK plans to hire people to perform this function so that it will be transparent to all that these are GSK employees touting its medicines.

    By doing this, GSK feels it is taking the high road. In fact, a GSK executive claimed that the use of paid external experts will one day be viewed as the same as smoking on airplanes. “People will look back and say ,‘Did we really used to do that?’”

    If true, that would be a shame. Using experts to tout a new drug benefits not just the company but patients and physicians. An expert puts his name and reputation on the line when discussing his or her experience with a new medicine. Such testimony can be very powerful. That’s why companies do this. An expert provides an imprimatur of the meaningfulness of the clinical data that supports the drug’s benefits. This can provide assurance to prescribers and, ultimately, patients that experts in the field believe this new medicine has value.

    Recommended by Forbes

    But, of course, these experts are being PAID. How can they be trusted? Well, can we really expect experts to do this on a pro bono basis? I doubt that any of us would agree to take time to do this sort of work for free. Furthermore, all of these payments are now publicly disclosed. As a result of the Affordable Care Act (“Obamacare”), every payment in excess of $10 made to a physician by a drug company is now publicly reported. Thus, people have complete transparency as to the amount experts are being paid for their work.

    One has to question what real value GSK’s new policy will create. If a newly hired GSK physician presents to a group of doctors about a new GSK drug, will he or she have more credibility than an outside expert? The GSK physician will undoubtedly have goals on the effectiveness of his or her work–essentially, greater drug sales. Yet, it is difficult to believe a GSK employee will generate more credibility than an external expert who has little stake in the ultimate commercial success of the new drug. If I were a physician or a patient, I would be more comforted knowing some of the leading lights in the field have used and endorsed the new drug as opposed to a GSK employee.

    The biopharmaceutical industry certainly needs to improve its reputation. GSK, in particular, faces challenges and I am sure it believes that it is doing the right thing with this shift in policy. However, I think this move is a disservice to the those who are diligent about learning the pros and cons of new drugs. Hopefully, the rest of the biopharmaceutical industry will not follow GSK’s lead on this topic.

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