6 Min Read
LONDON (Reuters) - Drugmaker GlaxoSmithKline (GSK.L) - hit by bribery claims in five countries - is to employ hundreds more doctors as members of staff as it seeks to build a new sales model designed to eliminate sharp marketing practices.
Following a decision to cut commercial ties with outside doctors, GSK expects to increase its in-house team of physicians by 10-20 percent over the next year or so from around 1,500 at present, Chief Medical Officer James Shannon told Reuters.
Leaders of Britain's biggest drugmaker believe they have a blueprint that will put GSK ahead of rivals when it comes to ethical behavior - but the company keeps getting knocked back by allegations of past corrupt practices.
GSK is now investigating claims that bribes were paid to doctors in Poland, Iraq, Jordan and Lebanon, following a much larger case of alleged bribery in China.
Chinese authorities in July accused GSK of funneling up to 3 billion yuan ($483 million) to doctors and officials to encourage them to use its medicines in a case that the company has described as "shameful".
Shannon, the man charged with overhauling relations with the medical community, admits that changing fundamentally the way GSK interacts with doctors will require "a lot of work".
The firm aims to become the first in the industry to stop paying outside doctors to promote its products, end payments for medics to attend conferences and delink incentives for sales representatives from individual sales targets.
It won't be easy. A key challenge in the process, which is due to be completed by 2016, is how to make the transition without ceding business to rivals in the $1 trillion-a-year drugs industry.
Since none of its peers have yet followed suit, industry analysts - and some company insiders - say GSK's unilateral move risks putting it at a marketing disadvantage, particularly in emerging markets.
"It's a hard thing to do, and it could have a negative impact on revenues," said Stijn Vanacker, global healthcare analyst at investment manager Robeco. "Doctors are the ones who use the drugs. They are the customers, and you need them onside."
There is a long tradition of drug companies paying outside medical experts, known as "key opinion leaders", to speak on their behalf at medical meetings, based on the expectation that other doctors will trust their opinions.
Shannon acknowledges the risk in abandoning the decades-old practice but believes society's demands for squeaky clean relations between doctors and industry means GSK will be at a competitive advantage in the long term.
"Sometimes you have to take a slight step backwards to move forwards," he said in an interview.
"I'm assuming society will continue the pressure, and everybody else will have to follow, and I would rather be doing this in an organized way over the next 18 months rather than find that regulations have changed and we are forced to implement it in six months."
In the United States, where GSK has already decoupled rep pay from sales volumes, it has found that business has not suffered, and in some cases commercial staff are getting access to doctors who refuse to see rivals, Shannon said.
Adapting to the new, stringent in-house rules will require a re-balancing of resources at GSK.
Part of that will see GSK giving more money to third-party academic organizations to fund medical education, but the company is also expanding its medical affairs department and recruiting more trained doctors to work full-time for the company. Shannon said he was looking to recruit both junior medics as well as some leaders in their field.
Some of them will act as expert speakers at medical meetings where outside experts have been used up until now.
"It is still important to have those discussions, but there will probably be less than we have today," Shannon said.
"This is not a one-for-one process of stopping paying doctor X and replacing him by doctor Y - this is an entire rethink about our business practice."
GSK also intends to make much greater use of digital technologies, such as webcasts and webinars, to communicate with doctors instead of paying for them to attend conferences.
Despite the barrage of bribery reports, GSK insists it does not have a "systemic issue with unethical behavior" and says it has a clear system for dealing with violations, which resulted in 48 dismissals and 113 written warnings last year.
Public concerns about interactions between drugmakers and doctors are unlikely to go away, with companies now obliged to disclose payments to individual doctors in the United States and similar rules set to take effect in Europe in 2016.
Authorities on both sides of the Atlantic are also looking for cases to prosecute under the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, which prohibit payments to government officials, including state-employed doctors, to obtain business overseas.
Pfizer (PFE.N) and Johnson & Johnson (JNJ.N) have both settled claims under the FCPA within the past three years, and a Reuters examination in 2012 of filings by the world's top 10 drug companies found that eight of them had warned of potential costs related to charges of corruption in foreign markets.
Additional reporting by Adam Jourdan in Shanghai; Editing by Will Waterman