GSK - Ka Ching The UK Taxman

On Monday 14 May BBC Panorama aired a programme about UK Corporate companies and the way they dodge paying tax.

Unsurprisingly, pharmaceutical giants GlaxoSmithKline were named and shamed by the BBC for using a tax haven at the heart of Europe to save millions in tax.

Glaxo, of course, deny any wrong-doing:

“GSK is very disappointed with this programme which was extremely misleading and lacking in context.  Specifically, the programme’s selective use of facts led to a misrepresentation of GSK’s actions and a failure to recognize GSK’s significant UK tax contribution. 


"GSK strongly refutes any allegation of wrongdoing. At all times the company proactively disclosed its tax transactions to the relevant authorities and both the UK and Luxembourg tax authorities are agreed that GSK paid all the taxes due." 


A short video of the BBC show has surfaced on YouTube, whereas the full half hour exposé can be viewed by UK viewers on the BBC IPlayer located HERE - Sadly, due to contractual obligations, the BBC cannot show this documentary to other countries.

The Global Tax News website has picked up on this story and write:

GSK used interest payments paid on loans from Luxembourg subsidiaries, which, it was said, was effectively taxed at less than 1%, to reduce its UK income tax bill by GBP34m (USD54m). Narrator, Donal McIntrye, added, "The company puts its money into Luxembourg and borrows it back. It just sends money round in a circle and picks up a tax break on the way,"


It's unknown if GSK plan to sue the BBC, one would have thought that if they [GSK] were so cocksure that they had done no wrong then the BBC should be held accountable for what was broadcast.

This isn't the first time GlaxoSmithKline have been involved with allegations of financial shenanigans.

1996: Price Fixing
Fifteen big drug companies formally agreed yesterday to pay more than $408 million to settle a class action lawsuit charging them with conspiring to illegally fix prices that they charged to thousands of independent pharmacies. In the settlement, which is subject to approval by a Federal district judge in Chicago, the 15 companies agreed to pay more than $388 million in cash. One of the defendants, SmithKline Beecham P.L.C. of London, agreed to supply the plaintiffs with a generic version of cimetidine, SmithKline's Tagamet brand ulcer treatment, valued at $20 million, as well as $30 million in cash. [LINK]


1996: Medicad Fraud
In the latest big settlement by a clinical laboratory company of Federal Medicare fraud charges, SmithKline Beecham P.L.C. expects to pay the Government about $300 million this year, without admitting any wrongdoing. [LINK]


1997: Overbilling Private Insurance Companies
SmithKline Beecham P.L.C. has been sued by 37 private health insurers contending that the company's clinical laboratory division overbilled them by hundreds of millions of dollars. [LINK]


2002: Illegally Inflating Prices
The state attorney general sued 18 drug makers and marketers, accusing them of illegally inflating prices and costing the state and consumers tens of millions of dollars. The scheme hurt taxpayers because they finance the Medicaid and Medicare programs that were forced to pay the exaggerated drug prices, Attorney General Mike McGrath, left, said. The lawsuit names Abbott Laboratories; American Home Products; Amgen; AstraZeneca; Aventis Pharma and Hoechst Marion Roussel, both owned by Aventis; Baxter Pharmaceutical Products; Bristol-Myers Squibb; Eli Lilly; Chiron; Dey; GlaxoSmithKline and SmithKline Beecham, which have merged [LINK]


2002: Bribery
SmithKline Beecham, which merged with Glaxo to become Glaxo SmithKline, has become embroiled in a criminal investigation into the alleged bribing of more than 1,000 German doctors in order to secure orders for the drugs it manufactured in the late 1990s. [LINK]


2003: Payments To Doctors

New York plans to sue two major pharmaceutical companies today, accusing them essentially of paying doctors and pharmacists to choose the companies' drugs over competing medicines.

The lawsuits contend that GlaxoSmithKline and Pharmacia, the two large drug companies, gave discounts to doctors and pharmacies that bought their drugs. [LINK]

2004: Bribery

Italian officials claim GlaxoSmithKline gave more than US$275 million in cash, holidays and other incentives to physicians, pharmacists and others [LINK]

2005: Non-Payment of IRS Taxes

GlaxoSmithKline said a tax dispute with the United States might cost the company $7.8 billion, after it received a second claim from the government yesterday. The Internal Revenue Service is seeking $1.9 billion in taxes on profits earned from 1997 to 2000 [LINK]

2005: Overcharging The US Government

GlaxoSmithKline PLC will pay $150 million to settle claims it overcharged the government for two anti-nausea drugs, and prosecutors say they're looking into 150 cases of drug price fraud. [LINK]

2006: Inflating The Average Wholesale Price of its Medicines

GlaxoSmithKline, the pharmaceutical company, said yesterday that it had agreed to pay $70 million in a national settlement of civil lawsuits that accused the company of inflating costs of several medicines, including its blockbuster Zofran nausea drug. [LINK]

2008: Tax Evasion

GlaxoSmithKline still can’t get its tax right. The IRS is now challenging it concerning the period from 2001 to 2003. The dispute is over inter-company financing arrangements. Call that transfer pricing by any other name.


GSK, of course disputes the claim. But let’s recall, this is the company that has already settled $3.4 billion over transfer pricing issues with the IRS in 2006 (the biggest tax settlement ever), and remains in conflict with HM Revenue & Customs on the same issue for all periods since 1994. [LINK]


...And don't even get me started on Paxil and Avandia!

UK Tax Office Turn Their Attention To Payments Made By the Pharmaceutical Industry

Not before time too!

It appears HM Revenue & Customs [HMRC] are seeking information from pharmaceutical companies regarding payments made to doctors, psychiatrists, key opinion leaders etc. Finally, it appears, this 'dine and dash' world that exists between pharmaceutical companies and medical professionals is being probed by the relevant authority.

The Association of the British Pharmaceutical Industry [ABPI] has sent out a letter warning its members that the HMRC are making enquiries into payments made by the pharmaceutical industry [Fig 1]

It is my opinion that the ABPI do everything to protect the pharmaceutical industry. Earlier this year I highlighted how Britain's biggest pharmaceutical company, GlaxoSmithKline, seem to hide behind the ABPI Code of Practice with regard to answering patient queries about medication. In typical fashion, Glaxo, tell concerned patients who write to them about Seroxat withdrawal problems, to "talk to their doctor" - thus putting the onus of blame on someone else's shoulders. [Back Story]

The ABPI letter, which is publicly available, sees the association tell its members that statutory requests have been sent out to ABPI member companies by the HMRC who are asking for details of "gross payments to any medical professional [including dentists] for any type of service from which Pay As You Earn [PAYE] tax has been deducted."


The letter continues with:

According to HMRC "this may include [but is not limited to] assistance with clinical trials of new drugs, clinical investigations, consultancy, speaking at conferences and Honoria."


Way to go.

Fig 1

Fid 


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2012 Olympics - Team Glaxo

Scientists at GlaxoSmithKline have teamed up with the World Anti-Doping Agency [WADA] to investigate medicines that could having performance enhancing potential in sport.

I just love seeing the word doping in the same sentence as GlaxoSmithKline.

It amazes me that a sporting event, which brings nations together, would opt for help from a pharmaceutical company who have, let's just say, a rather tainted history when it comes to helping people.

Paxil and Avandia are just two of their products that spring to mind, not to mention their best selling fruit drink, Ribena, the drink that wasn't really full of the vitamin C that they proclaimed.

The Mirror mobile writes:

GSK will supply WADA with confidential information about medicines in early stage development that could be abused by athletes once they are licensed for use.

Excuse me while I change my underwear...I've just pissed myself laughing.

GSK providing confidential information about drugs in early stage development?

Have I awoken this morning in another dimension?

Would it be ethical for a depressed athlete, who is taking Seroxat [Paxil in US] to enter the archery competition? Look out spectators, that arrow may just be coming in your direction [see Tobin v GSK]

Maybe an advantage will be gained by Pole Vaulters if they are taking Paxil? If memory serves me correct [difficult when you've been on Paxil for a number of years] Paxil keeps the wolf from the door but the blood in the pole...if you catch my drift. **Winks.

Maybe Glaxo can provide WADA with information on beta blocker type drugs, those types that slow the heart rate down and give an advantage to sports men and women? Speaking of matters of the heart, maybe WADA are comfortable working alongside a company whose own suppression of information regarding their diabetes drug, Avandia, put lives at risk of those taking it. [U.S. Senate Investigation of Avandia]

Or maybe WADA are perfectly happy working hand in hand with a company who were fined for code violations in regard to three doctors' conferences sponsored by the company? [Medicines Australia Code of Conduct Violations]

Perhaps Glaxo could provide the soft drinks to the athletes. The gruelling marathon runs can be testing for the long distance runners - Never fear, they can always refresh themselves with Glaxo's Ribena, the nutritional drink that is full of vitamin C... or so we thought?

Two New Zealand schoolgirls humbled one of the world's biggest food and drugs companies after their school science experiment found that their ready-to-drink Ribena contained almost no trace of vitamin C.

Students Anna Devathasan and Jenny Suo tested the blackcurrant cordial against rival brands to test their hypothesis that cheaper brands were less healthy.

Instead, their tests found that the Ribena contained a tiny amount of vitamin C, while another brand's orange juice drink contained almost four times more.

The outcome of this saw Glaxo fined [New Zealand fines GlaxoSmithKline for misleading ads]

If Ribena isn't on the agenda for the athletes then maybe Glaxo could branch out into the bottled water market...then again, maybe not. In 2008 Glaxo were one of three companies who were each fined for system failures that led to the release of trichloroethylene, TCE, into the public drinking water system in Scottsdale, Arizona. Trichloroethylene is a colorless liquid which is used as a solvent for cleaning metal parts, should come in handy for the javelin throwers.

In fact GSK have a history of pollution.

According to the Factory Watch website, GSK’s chemical plant in Ulverston is one of the most carcinogenic polluters in the UK. Factory Watch’s information, compiled from Environment agency data, looked at over 1,500 factories nation-wide. The Ulverston site was ranked number three on Factory Watch’s list, emitting 773 tonnes of carcinogens in 2001, 10 per cent of the national total.

In September 1992 the Ulverston site (then owned by Glaxo Wellcome) dumped several toxic chemicals in the river Leven, without authorisation. The chemicals included trichloroethylene [again], chloroform, and chlorobenzene. [Friends of the Earth, Factory Watch press release, 8 February, 1999]

Also, in May 1994, the Ulverston site discharged, again without authorisation, 1,350m3 of “ineffectively treated effluent” into M. The company was required by law to notify the authorities within 24 hours, but they didn’t until six days later.[ENDS Report 292, May 1999, pp. 33-34]

I'm sure the Olympic Committee must be delighted to have on board a company who were fined back in 2006 for tax evasion too. GlaxoSmithKline agreed to pay approximately $3.4 billion to settle charges by the IRS that the company under-reported profits to avoid paying U.S. taxes. The Internal Revenue Service accused GSK of a practice called "transfer pricing," by which a company claims most of its earnings belong in a country where taxes are low. The transactions at issue, which concerned the way GSK priced drugs for sale through its U.S. subsidiary, occurred between the years 1989 and 2005. [Underreporting Profits]

Yes, I, for one, am so happy that Glaxo are part of the breath-taking spectacle that is the Olympic Games.

Memo to the Olympic committee: Perhaps you could entice some bank robbing prisoners from Wormwood Scrubs to work in your financial department.

Good old Glaxo - flying under the radar yet again.

I have asked WADA to comment on this article. I shall let readers know if they decide to answer.