If it involved the record industry we’d call it payola: undisclosed kickbacks to radio station executives, owners and disk jockeys to boost broadcasts and thus record sales. In the pharmaceutical industry it’s simply seen as a sign of the deep esteem drug makers have for medical practitioners.
Earlier this month the United States Department of Justice announced a US$3bn settlement with drug giant GlaxoSmithKline (GSK) over a range of improprieties. Contrary to recurrent protestations that GSK is a model of corporate best practice, the company has agreed that it failed to report safety data, engaged in unlawful promotion of prescription pharmaceuticals and engaged in false price reporting.
The settlement resolves GSK’s civil and criminal liability, avoiding even more costly class actions, but tells us something about the state of medicine in the United States and Australia.
Much of the media attention about GSK’s uncomfortably close relationship with doctors has centred on GSK’s (legal but unethical) ghosting of medical journal articles, editorials and research papers. GSK supports the International Federation of Pharmaceutical Manufacturers & Associations' global ban on such publishing but continued to disregard notions of research integrity.
Is it alone? As US Senator Grassley has commented, such misbehaviour is of concern because it potentially distorts the readers' prescribing activity, with consequent increased costs and an undue reliance on medication that may not be as effective as claimed. It also, of course, erodes the integrity of research in the life sciences.
There has been less attention to pharmaceutical payola in Australia, where benefits are received by individual medical practitioners and the owners of medical practices. (The latter are increasingly important, with the continuing shift away from the independent “family doctor” to health-centre chains where each practitioner is an employee.)
There is no public register of gifts or other relationships between practitioners and drug companies, equipment suppliers or the handful of pathology service providers that dominate the market. Financial details don’t move beyond the practitioner or investor’s lawyers, accountants and Australian Taxation Office. There’s no comprehensive and authoritative data on drug company influence over doctors.
We’d be able to more easily assess this potential influence if we had a detailed picture of the payola. But the new Medicines Australia code merely requires pharmaceutical companies to provide the “aggregate” data, a level of generality that inhibits meaningful scrutiny and action by regulators or consumers.

That’s why the GSK settlement is interesting – it throws light on the corporate behaviour we rarely see. The US Department of Justice noted that GSK “paid millions to doctors to speak at and attend meetings, sometimes at lavish resorts”. It sponsored “dinner programs, lunch programs, spa programs and similar activities”. GSK must have been reasonably confident that there would be some return on that largesse. And there’s no reason to believe GSK is unrepresentative of the pharmaceutical industry.
We might shrug off the willingness of big pharma to co-opt academics – a consultancy here, a paid presentation there – and to host practitioners at “conferences” in Cable Beach, Coolum, Hawaii or Singapore where blasé attendees reportedly engage more with a golf club than with epidemiology. That’s fine if we’re going to accord doctors the same respect as car dealers or chiropractors.
We might instead think of gift giving as a form of payola or as akin to the undisclosed “cash for comments” payments made by some of Australia’s leading financial and telecommunication companies. The upshot of inquiries about these payments was that the companies should pay for what is readily identifiable as advertising, rather than what is disguised as personal opinion and a deeply held belief on the part of the announcer.
Practitioners are unlikely to embrace greater transparency of their gifts and benefits through a publicly accessible “register of interests or benefits” akin to those covering members of parliament. But given the commitment of the drug companies to best practice in corporate citizenship – and the potential for embarrassment if there was aggressive investigation by a royal commission – they might promise to cut back the corporate hospitality that’s labelled “continuing professional development”.
Given GSK’s disregard of its own ethics code, and of industry code that’s used to justify self-regulation, we might also be less trusting in heeding such promises. Such wariness means that Medicines Australia and the practitioner associations need to tighten up both their codes and their monitoring of those codes. That’s a bitter pill to swallow, but one required for public health.
Adam Dunn
Research Fellow at University of New South Wales
Don't forget that it was also GSK, who publicly declared their new interest in transparency and decided to lead the way in pushing the agenda of transparency for gifts to practitioners in Australia. And this was well over a year ago.
http://www.crikey.com.au/2011/05/02/big-pharmas-big-reveal-gsk-will-tell-what-it-pays-doctors/
GSK's comment on the $3B was that (I'm paraphrasing) it was from a different era in the company's history and that they have changed since then. Given that other countries have already taken strong steps in the right direction, shouldn't the blame for the lack of transparency be aimed directly at the government?
Ken Harvey
Adjunct Associate Professor of Public Health at La Trobe University
Ironically, the Australian government supports self-regulation of the pharmaceutical industry. This has led to nine self-serving, self-regulatory Codes of Conduct in the Therapeutic Goods Industry which differ widely with respect to content, monitoring, complaint procedures, sanctions and transparency; it’s certainty not a level playing field.
Another problem is that such codes do not apply to non-members. Ranbaxy provides a recent example, see: https://theconversation.edu.au/companies-tussle…
Read moreStephen Lehocz
Stephen Lehocz is a Friend of The Conversation.
Interested public.
pardon me, for being cynical about GSK's attempts at transparency on payola to the medical industry, but the criminal investigations by the FBI was going on for quite a few years, so GSK would definitely know they would need some damage control here in Australia. Once they were found the finding were made known, obviously their 'good' reputation would be well and truly blackened.
And are you seriously putting the blame for GSK's lack of ethics onto the Australian government?
Adam Dunn
Research Fellow at University of New South Wales
You're probably right in the first paragraph. In the second paragraph - no. I'm suggesting the government could have done more to ensure transparency. It shouldn't have taken the company to be the leaders in this area.
Stephen Lehocz
Stephen Lehocz is a Friend of The Conversation.
Interested public.
I don't know if I totally agree with you, I reckon a company should "just be ethical" - that's a dream, I know. But you make a good point, the Government should be leading here.
Leo Kerr
Consultant
Leaders Adam? remember they are a marketing company - marketing companies have much expertise at spin - I'll wait till the evidence is in for this leopard to have changed its spots.
Sue Ieraci
Public hospital clinician
This essay makes some valid points about pharmaceutical advertising in the world of private medicine, but neglects the vast number of services that are conducted in government-funded public health services.
The main determinant of government contracts for pharmaceuticals, all else being equal, is cost. Of course the companies compete for these contracts with special deals and short-term discounts. What matters in the long run is that effective medications are being delivered in a cost-effective way.
I would call for transparency across-the-board in the marketing of pharmaceuticals. This would include:
- Group evaluation of products for general practitioners
- Ethical stocking and pricing by pharmacists
- No direct marketing of "remedies" by prescribers such as naturopaths or homeopaths
Laurie Willberg
Journalist
"... neglects the vast number of services that are conducted..." Gee, maybe the author didn't intend to cover that topic. Does "irrelevant" ring a bell?
The control of pharmaceuticals due to their toxic and even addictive nature is a far cry from Homeopathics, herbals and nutraceuticals.
Suppose you worry about the misdemeanours in your profession and leave prescribing issues pertaining to other professions out of it.
Bruce Baer Arnold
Lecturer in Law at University of Canberra
Thanks. There's a follow-up item in the pipeline (so much to write, too few hours in the day)
Given that homeopathic pills and potions do not contain discernible pharmacologically active ingredients (the principle of extreme dilution espoused by proponents of homeopathy mean that the 'medications' comprise water, alcohol, sugar etc but not an active compound) I'm reluctant to characterise those products as pharmaceuticals or medications.
With all respect to Mr Willberg, the practice of homeopathy is not a profession (in the sense that Australian law treats professions) and should not be privileged as such ... call it entertainment or a quasi-religious belief system.
As I've noted elsewhere in TheConversation, if we're characterising the practice of homeopathy as a profession we should be consistent and for example characterise waste collection as the profession of Garbology or serving behind the counter at Maccas as the profession of Hamburgerology.
Lisa Hodgson
Director
Hi Sue,
It’s interesting that you reduced these very serious offenses by a major pharmaceutical company (others have been found guilty of similar or worse charges) to “pharmaceutical advertising in the world of private medicine” and go on to reassure that none of these charges have any effect on public health services? More interesting is that when I presented this information on the GSK court decision on another thread you called it “propaganda”. I guess it depends on the messenger?
Of course…
Read moreJoel Mayes
Bicycle Mechanic
I'm curious to how you feel about this article here Laurie
A consortium of pharmaceutical companies in Germany have been paying a journalist €43,000 to run a set of web sites that denigrates an academic who has published research into their products.
http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.sueddeutsche.de%2Fwissen%2Fhomoeopathie-lobby-im-netz-schmutzige-methoden-der-sanften-medizin-1.1397617
Stephen Lehocz
Stephen Lehocz is a Friend of The Conversation.
Interested public.
This FBI press announcement describes more than just ‘payola’ to doctors.
Read morehttp://www.fbi.gov/boston/press-releases/2012/glaxosmithkline-to-plead-guilty-and-pay-3-billion-to-resolve-fraud-allegations-and-failure-to-report-safety-data
Holding back safety information on various drugs that showed it causes heart problems (Avandia), willfully lying about the effectiveness of a drug, holding back data on safety, falsifying trial results as well as huge payola to various health professionals.
These…
Leo Kerr
Consultant
Great article Bruce - a very bright light needs to be shone on the pharmaceutical industry as in broad terms it has been involved in criminal activity globally for at least several decades. The hefty fines being recorded for activities such as fraud, bribery, illegal marketing has brought the industry in to such disrepute in the U.S. that it is seen as only just above big tobacco in terms of trust and integrity. Large as the fines may seem they are often paltry in comparison to the substantial profits made and can be considered 'the cost of doing business'.
Lisa Hodgson
Director
Oh wait, there's more, much more than just advertising problems in private medicine . . .
"GlaxoSmithKline, the British drug giant, has agreed to pay $750 million to settle criminal and civil complaints that the company for years knowingly sold contaminated baby ointment and an ineffective antidepressant — the latest in a growing number of whistle-blower lawsuits that drug makers have settled with multimillion-dollar fines." http://www.nytimes.com/2010/10/27/business/27drug.html?_r=1&pagewanted=all
"GSK fined over vaccine trials; 14 babies reported dead" http://www.buenosairesherald.com/article/88922/gsk-lab-fined-$1m-over-tests-that-killed-14--babies
Not reading about this in the newspapers?
Lisa Hodgson
Director
"Cash tills are ringing at GlaxoSmithKline thanks to soaring demand for its swine flu vaccine Pandemrix, and Relenza, which treats the symptoms of the illness that has led to hundreds of deaths around the world. Analysts predict a £1bn revenue windfall in 2010 as governments stockpile medicines designed to combat a possible pandemic"
"Andrew Witty, GSK's chief executive for the past 18 months, stresses that the company has worked hard to come up with a vaccine and that "it would be foolish to deny that events like these aren't good for business"."
http://www.guardian.co.uk/business/2010/jan/10/glaxosmithkline-swine-flu-revenue-boost