News / Asia

    GSK Scandal Reveals Shortcomings in China's Health Care System

    A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai, July 12, 2013.
    A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai, July 12, 2013.
    VOA News
    A series of investigations into hospitals and pharmaceutical companies in China has uncovered extensive use of kickbacks and spurred a debate over how to reform the country’s health care system.
     
    The inquiries include the probe targeting Britain’s GlaxoSmithKline drug group and dozens of hospitals in China implicated in a $500 million scheme to bribe officials and doctors to promote sales. 
     
    The practices uncovered in the GSK scandal are no surprise to those working in China’s health care system, said Benjamin Shobert, managing director of Rubicon Strategy Group - an organization that advises foreign companies entering the Chinese health care market.
     
    “The question was when one of the big players was going to get caught, and what was going to be the fallout from the government deciding to crack down,” Shobert said.
     
    An open secret
     
    A radiology worker at one Beijing hospital, who wished to remain anonymous, told VOA that so called “commissions” to doctors are a common occurrence.
     
    “The hospital often holds meetings saying that doctors cannot prescribe medicine with commissions, once found they will lay you off, and deduct money,” she said, “But privately nobody is so inflexible.”
     
    A recent survey by the Chinese Medical Association indicates some 54 percent of doctors in China admit to having accepted sales kickbacks from drugs companies.
     
    Media reports have also focused on the impact corruption has on the price of drugs and consumers. GSK executives have been quoted in the media as saying that the cost of financing the bribery scheme led them to mark up drug prices by 20 to 30 percent.
     
    Overpriced drugs
     
    A related probe in the coastal city of Zhangzhou found that most employees working at all of the city's 72 hospitals had accepted bribes. As a result, by some accounts patients were charged 10 times what the hospital paid for a drug.
     
    “This idea that if every drug out there… has this kind of inefficiency built into it, that is an unsustainable inefficiency,” said Shobert. “It needs to go away.”
     
    But analysts believe the only way to stop hospital corruption is to fundamentally change the way health care is financed in China. 
     
    A problem born from market reforms?
     
    Before China’s free market reforms started, in the late 1970s, the health care system was largely public and covered almost the entire population.
     
    In its push to liberalize financially onerous sectors of its economy, the government reduced public subsidies to health care in the mid-1980s and allowed hospitals to earn income from services and drugs.
     
    Thirty years later, the government owns and operates over 90 percent of China’s hospitals, but only provides a small percentage of their funding.
     
    “These abuses evolved as a matter of necessity,” said Shobert. “Doctors and hospitals had to find ways to make up shortfalls in funding and reimbursements as an institution. And as an individual, doctors had other ways to capture compensation.”
     
    More state money at stake
     
    For years, Chinese patients shouldered much of the rising costs of the health care system, but that is changing, says Wu Xun, associate professor at the Lee Kuan Yew School of Pubic Policy of the National University of Singapore.
     
    “After 2009 the government has very aggressively pumped in more resources into the health system, mostly to finance the health care scheme,” Wu said.
     
    This has included expanding basic medical coverage to China's rural population as well as a implementing a broader plan for national health care reform. 
     
    Wu said that means it’s no longer only the patients shouldering the cost of graft.  
     
    “Much of this corruption costs end up with more costs for the government insurance fund,” Wu added.
     
    As the government’s financial stakes in health care grow, analysts believe it will need to make the system more efficient and less corrupt.
     
    Analysts say the government case against GlaxoSmithKline and others implicated in bribery schemes is a necessary first step, but should be followed by more extensive reforms in hospitals' management, funding and accounting.
     
    Shobert said clearer limits on how companies should operate within the sector will be a welcome development for foreign firms that are desperate to grab a share of the China market.
     
    “China is so critical for these pharmaceutical companies in terms of justifying their share price,” he said. “They have to know what the rules are, they have to know how they are going to get enforced and right now, all of those things being thrown in flux, there is a lot of concern about what exactly can we generate from China in terms of profitable and sustainable growth.” 
     
    GlaxoSmithKline executives have already apologized to Chinese authorities over the bribery scandal and launched an internal investigation. The firm replaced the head of its China operations this week, and warned the scandal could have some impact on its future performance in the country.
     
     

    You May Like

    Multimedia US Observes Memorial Day With Wreath-laying, National Concert

    Obama lays a wreath at the Tomb of the Unknown Soldier in Arlington Cemetery

    The Strife of the Party: Will Trump Permanently Alter Republicans?

    While billionaire mogul's no-holds-barred style, high-energy delivery are what rocketed him to nomination, they also have created rift between party elites and his supporters

    China's Education Reforms Spark Protest

    Beijing is putting a quota system in place to increase the number of students from poor regions attending universities

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Chinese-Americans Heart Trump, Bucking National Trendi
    X
    May 27, 2016 5:57 AM
    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Chinese-Americans Heart Trump, Bucking National Trend

    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Reactions to Trump's Success Polarized Abroad

    What seemed impossible less than a year ago is now almost a certainty. New York real estate mogul Donald Trump has won the number of delegates needed to secure the Republican presidential nomination. The prospect has sparked as much controversy abroad as it has in the United States. Zlatica Hoke has more.
    Video

    Video Drawings by Children in Hiroshima Show Hope and Peace

    On Friday, President Barack Obama will visit Hiroshima, Japan, the first American president to do so while in office. In August 1945, the United States dropped an atomic bomb on the city to force Japan's surrender in World War II. Although their city lay in ruins, some Hiroshima schoolchildren drew pictures of hope and peace. The former students and their drawings are now part of a documentary called “Pictures from a Hiroshima Schoolyard.” VOA's Deborah Block has the story.
    Video

    Video Vietnamese Rapper Performs for Obama

    A prominent young Vietnamese artist told President Obama said she faced roadblocks as a woman rapper, and asked the president about government support for the arts. He asked her to rap, and he even offered to provide a base beat for her. Watch what happened.
    Video

    Video Roots Run Deep for Tunisia's Dwindling Jewish Community

    This week, hundreds of Jewish pilgrims are defying terrorist threats to celebrate an ancient religious festival on the Tunisian island of Djerba. The festivities cast a spotlight on North Africa's once-vibrant Jewish population that has all but died out in recent decades. Despite rising threats of militant Islam and the country's battered economy, one of the Arab world's last Jewish communities is staying put and nurturing a new generation. VOA’s Lisa Bryant reports.
    Video

    Video Meet Your New Co-Worker: The Robot

    Increasing numbers of robots are joining the workforce, as companies scale back and more processes become automated. The latest robots are flexible and collaborative, built to work alongside humans as opposed to replacing them. VOA’s Tina Trinh looks at the next generation of automated employees helping out their human colleagues.
    Video

    Video Wheelchair Technology in Tune With Times

    Technologies for the disabled, including wheelchair technology, are advancing just as quickly as everything else in the digital age. Two new advances in wheelchairs offer improved control and a more comfortable fit. VOA's George Putic reports.
    Video

    Video Baby Boxes Offer Safe Haven for Unwanted Children

    No one knows exactly how many babies are abandoned worldwide each year. The statistic is a difficult one to determine because it is illegal in most places. Therefore unwanted babies are often hidden and left to die. But as Erika Celeste reports from Woodburn, Indiana, a new program hopes to make surrendering infants safer for everyone.
    Video

    Video California Celebration Showcases Local Wines, Balloons

    Communities in the U.S. often hold festivals to show what makes them special. In California, for example, farmers near Fresno celebrate their figs and those around Gilmore showcase their garlic. Mike O'Sullivan reports that the wine-producing region of Temecula offers local vintages in an annual festival where rides on hot-air balloons add to the excitement.
    Video

    Video US Elementary School Offers Living Science Lessons

    Zero is not a good score on a test at school. But Discovery Elementary is proud of its “net zero” rating. Net zero describes a building in which the amount of energy provided by on-site renewable sources equals the amount of energy the building uses. As Faiza Elmasry tells us, the innovative features in the building turn the school into a teaching tool, where kids can't help but learn about science and sustainability. Faith Lapidus narrates.

    Special Report

    Adrift The Invisible African Diaspora