China fines GSK $492M, jails managers for bribery

BEIJING (AP) — A court fined British drug maker GlaxoSmithKline 3 billion yuan ($492 million) and sentenced its British former country manager and others to prison on Friday for bribing doctors and hospitals to use its products, a state news agency reported.

The fine was the biggest ever imposed by a Chinese court, the Xinhua News Agency said.

The case, which was first publicized in mid-2013, highlighted the widespread use of payments to doctors and hospitals by sellers of drugs and medical equipment in a poorly funded health system that Chinese leaders have promised to improve.

The former country manager, Mark Reilly, and others were sentenced to two to four years by a court in the central city of Changsha, according to Xinhua.

It gave no details of the prosecution's case and didn't say exactly how many people were sentenced.

But the police ministry said in May that Reilly was accused of operating a "massive bribery network." It said investigators believed Reilly ordered his salespeople beginning in January 2009 to pay doctors, hospital officials and health institutions to use GSK's products.

Authorities said that resulted in several billion yuan (hundreds of millions of dollars) in "illegal revenue" for the British drug producer.

Police previously identified four Chinese employees of GSK who they said confessed to bribery.

GSK announced in December 2013 that it would stop offering financial support to doctors and other health care professionals to promote its products.

Police said earlier that GSK employees funneled as much as 3 billion yuan ($490 million) through travel agencies and consulting firms, which kicked back some of that money for use as bribes. Police have not made clear how much was paid out in bribes.

Investigators said the scheme appeared to be aimed at evading GSK's internal controls meant to prevent bribery.

GSK said previously it opposed bribery and was cooperating with the investigation.

A second foreign drugmaker, AstraZeneca, said in July 2013 that police in Shanghai were investigating one of its salespeople.