GlaxoSmithKline to stop paying doctors for product promotion

GlaxoSmithKline has said it would stop paying doctors for the promotion of its products and tying compensation of sales representatives to the number of prescriptions doctors wrote, The New York Times reports.

The company also plans to stop payments to healthcare professionals for attending medical conferences by the start of 2016, the report said.

The move comes following a major bribery investigation in China, where, according to authorities, the biggest drugmaker in the UK stood accused of making corrupt payments to doctors and officials to boost its drug sales.

The company has been accused by Chinese police of funnelling up to 3 billion yuan to travel agencies to facilitate bribes for boosting its drug sales. The accusations are the most serious, made against a multinational in China in years.

According to Andrew Witty, Glaxo's chief executive, the proposed changes were not related to the investigation in China, but formed part of an effort to stay in step with how the world was changing.

He said, the company recognised it had an important role to play in providing doctors with information about its medicines, but this needed to be done clearly, transparently and without any perception of conflict of interest.

The move was welcomed by Harvard professor Dr Jerry Avorn, one of the most vocal critics of the practice.

He told The New York Times, that it came as a modest acknowledgement of the fact that learning from a doctor who was paid by a drug company to give a talk about its products was not the best way for doctors to learn about those products.

The company, last year, had to pay a record $3 billion in fines for resolving charges of drugs being marketed for unapproved uses.

A number of other major pharma companies had settled similar cases, and it could be expected that others would follow the company's lead as all payments to doctors would need to be made public next year under the requirements of Obamacare.

Meanwhile, moneycontrol.com quoted Yogesh Radke, head of Quantitative Research, Edelweiss Securities, as saying that long-term investors would stand to benefit from holding on to GlaxoSmithKline (GSK) Pharma stock even after the London-listed parent company announced a voluntary open offer to hike its share to 75 per cent in the Indian subsidiary.

According to Radke, there were several stocks that had performed well post their open offers and so, one could build a portfolio of such stocks.