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Doctor Payments to Boost Sales Remain as Glaxo Ends Fees

Pfizer Inc. (PFE), Sanofi and other large drugmakers will keep paying doctors to give talks about their products, leaving GlaxoSmithKline Plc (GSK) alone for now in its decision to halt such compensation.

Glaxo changed its policy after Chinese authorities accused the company of using cash and sexual favors to bribe doctors and health officials to promote product sales. The company’s competitors say physicians often remain the best source of information for their colleagues and should be rewarded for their work.

The industry is facing greater scrutiny about fees to doctors after paying at least $12.9 billion in fines and settlements in the U.S. alone since 2009, mostly over improper marketing, according to the U.S. Justice Department. Ensuring transparency for physician compensation among the companies that continue the practice is paramount, said Nikos Dedes, a member of the management board of the European Medicines Agency and founder of Greek HIV patient advocacy group Positive Voice.

“This should happen in a much faster manner,” Dedes said in a telephone interview from Athens. “There should be some pressure.”

Doctors prefer to learn about treatment options from their peers, and payments make sense given the time and energy required to understand and share information, according to companies that plan to keep remunerating physicians.

Photographer: Matthew Lloyd/Bloomberg

The GlaxoSmithKline Plc headquarters are seen in London. Glaxo’s spending on speaking fees dropped more than 80 percent from 2010 to about $2.5 million in each of the first three quarters of last year, according to ProPublica. Close

The GlaxoSmithKline Plc headquarters are seen in London. Glaxo’s spending on speaking... Read More

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Photographer: Matthew Lloyd/Bloomberg

The GlaxoSmithKline Plc headquarters are seen in London. Glaxo’s spending on speaking fees dropped more than 80 percent from 2010 to about $2.5 million in each of the first three quarters of last year, according to ProPublica.

Fair Compensation

“Few products in the world are as complex as an innovative medicine,” Scott MacGregor, a spokesman for Indianapolis-based Eli Lilly & Co. (LLY), said in a telephone message. Glaxo’s move won’t change how Lilly does business, MacGregor said. Work done by health-care professionals “needs to be compensated in a fair and transparent manner,” according to Paris-based Sanofi.

Pfizer, the world’s biggest drugmaker, is “committed to fairly compensating health-care professionals, clinical investigators and institutions for the work they do,” Dean Mastrojohn, a spokesman for the company, said in an e-mail.

Bristol-Myers Squibb Co. (BMY), like Pfizer based in New York, said it properly compensates physicians for their time. The company supports “appropriate efforts to increase transparency.” Dublin-based Shire Plc (SHP), the biggest maker of drugs for attention-deficit disorder, said “we appropriately compensate” physicians and researchers for their expertise.

The industry has taken steps toward disclosure this year. Drugmakers who belong to the European Federation of Pharmaceutical Industries and Associations, which include Sanofi (SAN), Lilly, Bristol-Myers and Pfizer, are being pushed to report payments under a rule set this year by the trade group.

Dollars for Docs

The European rule gives drugmakers until 2016 to disclose payments for the first time from the preceding year.

In the U.S., the Patient Protection and Affordable Care Act of 2010 required companies to track payments starting Aug. 1, and report the information to the government for annual publication starting next year.

Some drugmakers are already publishing data for the U.S., in some cases because of settlement deal requirements. ProPublica, a nonprofit investigative news organization, tracks that data in a project called Dollars for Docs. It shows that Glaxo had already pared back its payments.

Glaxo said in 2011 it changed its U.S. marketing practices by eliminating individual sales goals, after facing government investigations over its marketing of diabetes drug Avandia and other medicines. It settled those claims in 2012 by paying a record $3 billion, only to face allegations of bribery last summer in China. The London-based company said earlier this week it would abolish individual sales goals worldwide by 2015.

Exceeding Pfizer

Glaxo’s spending on speaking fees dropped more than 80 percent from 2010 to about $2.5 million in each of the first three quarters of last year, according to ProPublica.

That’s more than the $2.08 million per quarter spent by Pfizer. Lilly spent $5.94 million per quarter on speaking fees per quarter in the same 2012 time period.

By way of comparison, Merck & Co. (MRK) spent $4.81 million, and AstraZeneca Plc (AZN) paid $4.06 million.

Neither company answered calls and e-mails seeking comment.

Bayer AG (BAYN), Roche Holding AG and Novartis AG (NOVN) didn’t comment on whether they planned to follow Glaxo’s lead. Bayer of Leverkusen, Germany, said in a statement the company abides by the law and guidelines laid out by its trade associations.

“We’re observing these developments very closely,” said Daniel Grotzky, a spokesman for Basel, Switzerland-based Roche. “Obviously the overall trend is toward more transparency.”

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net; Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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