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China accuses GlaxoSmithKline of bribery, more pharmaceuticals could soon be investigated

Chinese police have accused GSK of funnelling up to 3 billion yuan to travel agencies to facilitate bribes to doctors and officials to boost sales and the price of its medicines

Reuters , Wednesday 24 Jul 2013
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China's official news agency hinted that more foreign and local pharmaceutical firms could soon be implicated in a corruption scandal sweeping the industry, in the wake of bribery accusations against British drugmaker GlaxoSmithKline.

The Xinhua news agency said on Wednesday the government was trying to tackle "rampant" malpractice in the pharmaceutical sector, including corruption.

Underscoring the rot in China's health sector, Xinhua said 1,000 doctors, nurses and administrators at 73 hospitals in Zhangzhou city in the southeastern province of Fujian had been found taking kickbacks. It gave no details.

"It will not be surprising if more pharmaceutical companies and hospitals, domestic or international, are to be involved in probes in the days to come," Xinhua said in an English-language commentary without naming any firms or hospitals.

"Big international firms should shoulder (their) due responsibilities to bid farewell to malpractice, setting a good example and serving as a wake-up call for domestic pharmaceutical companies."

Such commentaries, while not official statements, provide a window into the government's thinking. English-language commentaries are also often intended for international consumption.

Chinese police have accused GlaxoSmithKline of funnelling up to 3 billion yuan ($488.81 million) to travel agencies to facilitate bribes to doctors and officials to boost sales and the price of its medicines.

GSK has called the accusations "shameful" and on Monday said some of its Chinese executives appeared to have broken the law.

Xinhua said the following government agencies were all taking action: the ministries of public security and health, the National Development and Reform Commission, which sets prices, and the State Administration for Industry and Commerce, a regulator.

"It is true that malpractice has (been) rampant in China's pharmaceutical industry and hospitals for years, but now China (is) determined to reform its health system and root out malpractice, including taking kickbacks and price-fixing," the commentary added.

Chinese police have questioned local employees from another British drugmaker, AstraZeneca. The company has said police were treating this as an individual case and not related to other investigations.

Authorities have also visited the offices of Belgian drugmaker UCB.

And the authorities have detained a British and a U.S. citizen, although it is not clear if those detentions were directly linked to the pharmaceutical probe sparked by the GSK allegations.

Corruption in China's pharmaceutical industry is fuelled in part by the low base salaries for doctors at the country's 13,500 public hospitals.

Xinhua on Tuesday said 39 employees at a hospital in southern Guangdong province would be punished for taking kickbacks totalling 2.82 million yuan from two local drugmakers between January 2010 and December 2012.

China has committed to making health care affordable for its 1.37 billion people.

But ordinary Chinese cite the cost of medicine as a major irritant. Many Chinese prefer foreign brands over local drugs because of the widespread circulation of fake medicine. ($1 = 6.1374 Chinese yuan)

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