Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comCompliance Concerns Force Drug Company to Shift Business Model
Author: Dan Brecher|January 3, 2014
Conflicts of interest are a chief compliance concern in many industries, from financial services to information technology. In the pharmaceutical field, one company is taking dramatic steps to reduce its potential liability by significantly changing its business model.
Compliance Concerns Force Drug Company to Shift Business Model
Conflicts of interest are a chief compliance concern in many industries, from financial services to information technology. In the pharmaceutical field, one company is taking dramatic steps to reduce its potential liability by significantly changing its business model.
GlaxoSmithKline recently announced that it plans to address their compliance concerns and halt the commonly used practice of paying medical professionals to promote its medications. The drug maker will also stop setting marketing goals based on the number of prescriptions that doctors write.
The decision follows several recent scandals involving conflicts of interest in the pharmaceutical industry. It also begins to address the long-standing criticism that the companies routinely put profits before patients.
For GlaxoSmithKline, its latest legal headache involves allegations that four senior Chinese executives paid kickbacks to Chinese doctors for prescribing their drugs. According to Chinese officials, the executives used travel agencies as intermediaries to pay bribes to government officials, doctors, and other members of the Chinese drug industry.
In this country, the company paid a record $3 billion fine for promoting drugs for unapproved uses and failing to report safety problems with several popular medications. Following last year’s settlement, the company vowed to overhaul its sales and marketing tactics.
In addition to penalties for illegal kickbacks and false marketing claims, the Affordable Care Act (ACA) also places additional pressure on drug companies to be more open about their relationships with medical professionals. Under an ACA provision entitled the “Physician Payment Sunshine Act,” drug makers must disclose any transfer of value to a physician that exceeds $10, including money, gifts, meals, and other perks.
Drug companies must also report whether a physician or his or her family members have an ownership stake in the company outside of publicly traded stock. The information will be made publicly available with the goal of educating patients about possible conflicts of interest that may impact their care.
Given the increased regulatory and public scrutiny, it would not be surprising if other pharmaceutical companies follow GlaxoSmithKline’s lead.
Key Contacts
Let`s get in touch!
Compliance Concerns Force Drug Company to Shift Business Model
Author: Dan Brecher
GlaxoSmithKline recently announced that it plans to address their compliance concerns and halt the commonly used practice of paying medical professionals to promote its medications. The drug maker will also stop setting marketing goals based on the number of prescriptions that doctors write.
The decision follows several recent scandals involving conflicts of interest in the pharmaceutical industry. It also begins to address the long-standing criticism that the companies routinely put profits before patients.
For GlaxoSmithKline, its latest legal headache involves allegations that four senior Chinese executives paid kickbacks to Chinese doctors for prescribing their drugs. According to Chinese officials, the executives used travel agencies as intermediaries to pay bribes to government officials, doctors, and other members of the Chinese drug industry.
In this country, the company paid a record $3 billion fine for promoting drugs for unapproved uses and failing to report safety problems with several popular medications. Following last year’s settlement, the company vowed to overhaul its sales and marketing tactics.
In addition to penalties for illegal kickbacks and false marketing claims, the Affordable Care Act (ACA) also places additional pressure on drug companies to be more open about their relationships with medical professionals. Under an ACA provision entitled the “Physician Payment Sunshine Act,” drug makers must disclose any transfer of value to a physician that exceeds $10, including money, gifts, meals, and other perks.
Drug companies must also report whether a physician or his or her family members have an ownership stake in the company outside of publicly traded stock. The information will be made publicly available with the goal of educating patients about possible conflicts of interest that may impact their care.
Given the increased regulatory and public scrutiny, it would not be surprising if other pharmaceutical companies follow GlaxoSmithKline’s lead.
