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

Analyst: Joint-Arab Military Force Poses Perilous Challenge

Although international forces are desperately needed to counter the threat of the Islamic State group, analysts say conflicting alliances could escalate fighting More

Asia’s Middle Class Changes Demand for Wheat Grain Exporters

Changes in tastes and diets are boon for wheat exporters such as Australia and the United States More

S. African Comedian Taking Over Popular TV Show

Mixed-race comedian Trevor Noah, who is loved for his edgy jibes about race and language, is taking the helm from Jon Stewart at The Daily Show in US More

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.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More