News / Asia

China Intensifies Pharmaceutical Bribery Investigation

A woman enters an office of GlaxoSimthKline in Beijing, China, July 11, 2013.
A woman enters an office of GlaxoSimthKline in Beijing, China, July 11, 2013.
Reuters
China is intensifying its investigation into rampant bribery in the pharmaceutical and medical services sector with a fresh three-month probe slated to begin on Thursday, the official Xinhua news agency reported.
 
The investigation by the State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, is aimed at stamping out bribery, fraud and other anti-competitive practices in various sectors, Xinhua said.
 
It comes as other Chinese regulators such as the National Development and Reform Commission (NDRC) and the police conduct multiple investigations into how foreign and domestic companies do business in the world's second-biggest economy.
 
Much of the focus has been on the pricing of items from medicine to milk powder and whether companies are violating a 2008 anti-monopoly law.
 
“It seems that the NDRC and SAIC have learned from their recent experience that they have the power to force companies to change their practices and bring prices down,” said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specializes in anti-trust law.
 
“They seem to be willing to exercise their powers in even more sectors that directly concern consumers.”
 
The SAIC would hand down severe punishment for bribery found in the bidding process for drugs and medical services as that hurt the interests of the Chinese people, Xinhua said.

Low salaries feed problem
 
Corruption in China's pharmaceutical industry is fueled in part by the low base salaries for doctors at the country's 13,500 public hospitals.
 
“Commercial bribery not only leads to artificially high prices, it undermines market order in terms of fair competition and corrupts social morals and professionalism,” Xinhua said.
 
The NDRC, which oversees pricing, is already investigating 60 foreign and domestic pharmaceutical firms over their pricing practices. This investigation has yet to conclude.
 
Separately, the SAIC said it wanted to prevent China's industry associations from being the “driving force”, or organizers, of monopolistic behavior, an official at the SAIC, Cao Hongying, was quoted by Xinhua as saying.
 
Among the 12 monopoly cases that China has announced, nine of them were organized by industry associations, Xinhua said.
 
The investigations underline China's toughening stance on corruption and high prices in the pharmaceutical industry, as the government seeks to make healthcare access universal and faces an estimated $1 trillion healthcare bill by 2020.
 
Many Chinese prefer foreign brands over local drugs because of the widespread circulation of fake medicine.
 
Novartis in spotlight
 
The latest foreign drugmaker in the spotlight is Switzerland's Novartis AG, after a Chinese newspaper reported that it bribed doctors to boost sales in June and July of this year.
 
The 21st Century Business Herald quoted an unidentified former employee, who had supervised sales at large Beijing hospitals, as saying her manager told her to give 50,000 yuan ($8,200) in kickbacks to doctors to guarantee 640,000 yuan in cancer drug sales over the period.
 
It said the employee, identified by the pseudonym Li Li, asked the company for 5 million yuan or she would take unspecified action.
 
Novartis said it could confirm that a former employee had filed a complaint with the local Chinese labor authority and  also made a claim to the drugmaker for compensation. It said it had launched an internal investigation through its business practice office.
 
“Novartis takes allegations of misconduct seriously and will take appropriate actions depending on the findings once the investigation is concluded,” the company said in a statement.
 
Police have detained four Chinese executives of GlaxoSmithKline and questioned at least 18 other staff after allegations the British drugmaker funneled up to 3 billion yuan to travel agencies to facilitate bribes to doctors and officials.
 
The British firm has said some of its senior Chinese executives appear to have broken the law.
 
Health Ministry officials are also investigating drugmaker Sanofi SA over bribery allegations, something the French company has said it was taking “very seriously”.
 
Chinese authorities have also visited sites operated by Danish drugmaker Novo Nordisk A/S ; another Danish firm H.Lundbeck A/S ; Britain's AstraZeneca Plc ; Eli Lilly & Co and Belgium's UCB SA.
 
China is increasingly important for big drugmakers, which rely on growth in emerging markets to offset slower sales in Western markets. IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world's second-biggest drugs market behind the United States by 2016.
 
The SAIC investigation will also look into misleading or deceptive marketing practices used by car dealers, placement agencies and real estate agents among others, Xinhua said.

You May Like

UN Ambassador Power Highlights Plight of Women Prisoners

She launches the 'Free the 20' campaign, aimed at profiling women being deprived of their freedom around the world More

Satellite Launch Sparks Spectacular Light Show

A slight delay in a satellite launch lit up the Florida sky early this morning More

Fleeing IS Killings in Syria, Family Reaches Bavaria

Exhausted, scared and under-nourished, Khalil and Maha's tale mirrors those of thousands of refugees from war-torn countries who have left their homes in the hopes of finding a better life More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs