1 Boring Old Man

China to Launch Fresh Probe of Drug-industry Bribery

MoneyNews

from Thomson/Reuters

14 Aug 2013

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. 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 organisers, of monopolistic behaviour, 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…

^{hat tip to Pharmagossip}   

 

My understanding of matters business is embryonal, but I think I’ve learned something along the way that I didn’t know. The corporations in a given industry are like the Aspens in our Rocky Mountains – connected by the roots. I didn’t always know that. In the late 2000s, we learned that the shady practices of the mortgage brokers was industry-wide, filtering down from AIG to the corner banks in small town USA. Now we’re in the middle of learning that the invasion of the pharmaceutical industry into our academic institutions and journals is rampant, and that their devious sales and marketing practices are, again, industry-wide. The firewall of scientific integrity has been no match for their efforts.

It’s no exaggeration to say that they will do what they can get away with, and more if the gain outruns the penalty. It appears that what they’ve done in China are things they might be afraid to do in the West, just as the Clinical Research Industry has been exploitative abroad – notably in India [Ed Silverman of Pharmalot is the go-to guy for India]. They push the limits, whatever they are. We know they do it because they’ve gotten away with it and many of us secretly long for someone to lower the boom. Enter stage left – China, an unlikely white hat atop a red giant to the rescue.

Maybe our governments can develop some of that Aspen-like connection. "Medicines," in my opinion, ought not be the stuff of capitalism. Over the years, I’ve come around to wondering if Medicine as a whole isn’t in a similar category. I would never have entertained that thought as a young doctor, maybe not as a middle aged doctor, but from this end of life, it looks different to me. So much of the practice of medicine today is caught up in a tug of war between hospital corporations and pharmaceutical companies bleeding every penny possible while third party carriers bleed services to increase their profit – patients and doctors are asea in the middle. You can get an ER MRI for a bad headache, but you can’t find someone to talk to long enough to get to the bottom of things. It’s obvious why the other Social Democracies don’t emulate our medical system. Our tug of war is expensive and the care is lousy.