Police Investigate GlaxoSmithKline Sales Practices In China

China’s Public Security Bureau (PSB) has launched an investigation of GlaxoSmithKline’s operations there following whistle-blower allegations that the company has paid Chinese doctors to prescribe its medicines. The company, in a statement, says it is aware of a police probe but “at this stage, it is unclear from the PSB what the precise nature of the investigation is.”

The police have visited GSK offices in Beijing, Shanghai, and Changsha, but the offices remain open and operating normally, says GSK spokeswoman Catherine Hartley. She would not confirm media reports in Hong Kong and China that police have detained GSK employees, including a foreign executive.

An internal audit of GSK sales practices in China is wrapping up, Hartley says, but so far the company has found no evidence of wrongdoing. (The recent firing of a GSK research executive in China, reported on page 17, is unrelated to sales practices.)

In a 2009 report, the accounting firm PricewaterhouseCoopers warned that Chinese authorities are increasing their scrutiny of drug company sales practices in China. It advised firms to set up internal controls to stop sales staff from paying bribes.

The report noted that such checks are important, because “the pharmaceutical industry is particularly prone to bribery and corruption.” Drug companies in China still give “incentives” to doctors who boost sales of particular drugs by writing a large number of prescriptions, the report said.