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• Monitoring and compliance

Monitoring and compliance

We recognise that strong policies, codes of practice, and good training do not guarantee that all employees will meet our standards. Our internal compliance systems are designed to identify and address breaches of our codes.

This section covers:

• The role of our Corporate Ethics and Compliance department.
• Channels for employees to report concerns or suspected cases of misconduct. The number and type of contacts through these channels in 2005.
• How we address misconduct. The number of employees dismissed or disciplined for misconduct in 2005.

Corporate ethics and compliance function
Our Corporate Ethics and Compliance department works with the GSK business units to promote effective risk management and compliance programmes, identify and address compliance issues, and to ensure appropriate oversight and upward reporting for GSK senior management and the Board. We now have a dedicated, full-time compliance officer in each of our seven major business units - R&D, Manufacturing, Biologicals, Pharma Europe, International Pharma, Japan Pharma and US Pharma, in addition to the corporate compliance officer, who reports directly to the CEO.

Compliance officers are senior managers with direct access to the leadership teams of GSK functions. They are a source of expertise for anyone with a question on ethics or compliance with GSK policies. Compliance officers define training needs and communicate the latest developments on new policies and legislation affecting GSK, as well as deliver training and assess compliance issues in their business units. Many markets also appoint local compliance champions.

In the US we appointed four compliance staff as sales and marketing compliance advisers. Their role will be to provide feedback on infractions, conduct customised training, and recommend process improvements. We have also hired and trained staff for a new compliance data analysis and reporting group. This group has already begun to analyse monitoring and investigation data to highlight suitable areas for focus and follow up for each business unit in the US.

Sales representatives are supervised by sales managers who regularly monitor educational events, visits to doctors, and expenses. We also have independent monitors to review records in a number of key risk areas in the US. Our internal audit department continues to deploy significant resources to provide regular audits of business processes, including auditing our sales and marketing practices globally. As a result of the audit findings the decision making process for grants and donations is being updated. In Europe and our International region, these decisions will now be made by the relevant medical department, instead of commercial staff.

The European code of marketing practice includes a quarterly reporting mechanism where the markets confirm whether any breaches of the code of practice have occurred, the severity of any breaches and what actions have been taken to prevent recurrence. These reports are reviewed by senior managers. A similar procedure for monitoring expenses was launched in 2005, which highlighted some inconsistencies across countries, and other areas for improvement. During 2006, the countries in our European region will receive more central direction regarding monitoring of expenses and other relevant expenditure.

Reporting channels
Employees are encouraged to seek help and to report any concerns or suspected cases of misconduct. They can do this through their line management, a compliance officer, or through our confidential Integrity Helplines or offsite post office box (in the US).

The Helplines and post office box are promoted through the Employee Guide to Business Conduct, on the GSK intranet and during training. The Corporate Ethics and Compliance function is promoted as a source of information and advice, as well as a mechanism for reporting concerns.

In 2005 there were:

• 3,644 contacts with the compliance functions, mainly in the US. This is an increase from 2,593 last year.
• Of these, 77% were from employees seeking advice or information; 23% were from employees reporting suspected cases of misconduct.

Outside the US, mechanisms to track this information are evolving with general trends and issues being visible to senior management and addressed through action where necessary.

Doctors can raise any concerns or report unethical conduct by GSK sales representatives through our customer response centres, during our market research or via industry associations such as PhRMA and the ABPI. Staff retrained to deal with concerns about marketing practices that might be raised by healthcare professionals, patients or the public. They redirect calls to appropriate senior management or a compliance officer if necessary.

Addressing misconduct
Our Corporate Ethics and Compliance department monitors and tracks allegations and suspected cases of legal, ethical or policy infractions. It also ensures that all such allegations are appropriately investigated. Disciplinary action, up to and including dismissal, is taken where necessary.

In 2005:

• 1,126 employees were disciplined for misconduct (compared with 954 in 2004).
• Of these, 331 were dismissed or agreed to leave the company voluntarily, compared with 256 in 2004.
• Other disciplinary actions included verbal and written warnings (795 instances) and financial penalties. Employees staying with the company received re-training and increased monitoring.

The numbers have increased since 2004. We believe this is probably due to better reporting of breaches, as people become more familiar with what should be reported and when. It is anticipated that the numbers may continue to increase during 2006, as detection and reporting mechanisms are further refined.

The 1,126 disciplinary actions included 278 cases of employees breaching sales and marketing codes. These 278 cases resulted in 91 dismissals or separations from the company. There were also 100 verbal warnings and 87 written warnings. These included many small over spends on the allowed limits for hospitality during scientific meetings.

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