1 Boring Old Man

Reforms urged for pharma industry

CHINADAILY USA

By XU WEI

2013-09-04

Experts have called for reforms of public hospitals and more legislation on the pharmaceutical industry, after police revealed more details on Tuesday of suspected financial violations by GlaxoSmithKline China. The British pharmaceutical giant has been under investigation since early July over suspected bribery and tax-related violations, more details of which have been provided recently by company employees, according to the website of the Ministry of Public Security. According to police investigators, the pharmaceutical company had "indulged" in the bribery of doctors — or at least "given tacit permission" — saying that individual employees were responsible for transgressions.

Chinese authorities have detained four Chinese GSK executives on allegations that employees paid nearly $490 million in bribes through travel agencies to hospital officials and doctors with the aim of boosting sales of pharmaceutical products. Huang Hong, general manager of GSK’s business operations in China, told Xinhua News Agency that the company set an annual growth target of 25 percent, which is 7 to 8 percent higher than the industry average. The "irrational" target was impossible to accomplish without violating regulations, she said.

Meanwhile, a sales team covering the company’s major customers was expanded from less than 10 members to more than 50 over the past five years, and was allocated almost 10 million yuan [$1.63 million] of "public relations funds". This money was allegedly used to maintain close ties with key staff members in charge of the allocation of drugs in major hospitals, to ensure that GSK products would be prescribed by doctors. As of Tuesday night, China Daily had not received a response to the allegations from GSK China.

Yu Mingde, chairman of the China Pharmaceutical Enterprises Association, echoed Wang’s claim that bribery of doctors is a common practice for pharmaceutical companies seeking to increase their sales. However, he said he believes that a solution to the issue of corruption lies in reform of the public hospital system to ensure the incomes of doctors.

"Despite the ongoing medical reforms, many hospitals still rely on pharmaceutical sales to maintain their operations, which is a major reason for bribery from pharmaceutical companies," he said. "The problem can only be solved through reform of funding sources for public hospitals, and enabling them to open their operations to the market." The police investigation of GSK is part of a wider campaign by the central authority to crack down on commercial bribery inside the pharmaceutical industry.

^{hat tip to Pharmagossip}   

Bribery by GSK China was coordinated at company level: Xinhua

Reuters: SHANGHAI

Sep 3, 2013

A Chinese police investigation into drugmaker GlaxoSmithKline has discovered that alleged bribery of doctors in China was coordinated by the British company and was not the work of individual employees, state media reported on Tuesday. Police in July detained four senior Chinese executives at GSK over allegations the company funneled up to 3 billion yuan [$490 million] to travel agencies to facilitate bribes to doctors and officials to boost the sale of its medicines. "It is becoming clear that it is organized by GSK China rather than sales people’s individual behavior," the official Xinhua news agency reported.

GSK said the issues identified in the Xinhua report would be a "clear breach of our corporate values" and it shared the desire of the Chinese authorities to root out corruption. "We remain deeply concerned by the allegations of fraudulent behavior and ethical misconduct in our China business," a company spokesman said. The company has said previously that some of its senior Chinese executives appear to have broken the law, and that it has zero tolerance for bribery.

China accounts for just 3.5 percent of GSK’s global drug sales but demand is growing fast – up 17 percent last year – and the company is investing heavily, with more than 7,000 staff in China, as well as five factories and a research center. Guo Jianhua, head of recruitment at GSK China, was quoted by the official People’s Daily newspaper as saying the company had turned a blind eye to illegal behavior. "When the problems were exposed, the company pushed all responsibilities to individual employees," Guo said. It was unclear which problems Guo was referring to or if he was one of the detained executives…

In my mind, it’s a question of privilege. The pharmaceutical industry in currently claiming medical privileges – for example the right to publish its clinical trials in academic medical journals [by hiring on willing academic physicians as authors] yet withholding the raw results of those very trials offering only their jury-rigged versions. They want to publish as scientists or physicians but treat the data as a "trade secret." In the market-place, they behave as businessmen, shady businessmen at that, and participate in schemes reminiscent of the black markets, hiring sales forces that play dirty.

"Unless we can find a solution to the commercial incompetence problem, we have to recognize that the pharmaceutical industry has an irreducible conflict of interest in relation to the way it represents its drugs, in science and in marketing. And unless we can resolve this in a way that is more in the public interest and in patients’ interest, I would argue that drug companies should not be allowed to evaluate their own products."