Chinese government cracks down on pharmaceuticals corruption

As pharmaceuticals corruption increases, a ‘blacklist’ is introduced to ban offenders from operation

The Chinese government has ramped up anti-bribery measures for pharmaceuticals companies under the latest crackdown on corruption in the country.

Authorities in Beijing are compiling blacklists of pharmaceutical businesses, agencies and individuals found guilty of, or under investigation for, bribing employees at medical and health institutions.

Businesses named once on the blacklist – set for publication this month – will be barred from operating in the region where the offence was committed for two years. Companies appearing twice within five years will be given a two-year countrywide ban.

The action, announced by the state-run National Health and Family Planning Commission, is the latest in a series of steps taken by the Chinese authorities to target corruption in the sector over the past year.

Last year the Chinese government said it was investigating GlaxoSmithKline (GSK) over allegations that the company was running a £320m fund to bribe hospital officials and doctors. Sanofi, Novartis and Lilly are also currently being investigated in China for numerous alleged offences.

China accounts for only a small proportion of GSK’s global sales. But the pharmaceuticals market in China is expected to expand significantly over the coming decade, with the country likely to become the second largest global economy during this period.

In a 2013 survey by Transparency International more than half of the 114,000 respondents across 107 countries said that corruption as a whole had increased in the previous two years.

Robert Barrington, executive director at Transparency International, said: “I think a blacklist can theoretically be very effective, but it does require that companies go on a blacklist which requires a conviction.” He said that if no conviction is needed the blacklisting process can be open to political manipulation.

He added: “It can’t just focus on companies. It has to focus on the counterparties which in China would be officials and medical practitioners.”

Corruption in the pharmaceuticals and healthcare sector includes activities such as rigging clinical trials and bribing doctors to prescribe particular drugs.

“If doctors are highly incentivised to prescribe a drug they may give you something you don’t need or they might overprescribe it for much longer than you need, or they might prescribe an expensive drug rather than a cheap drug when a cheaper drug does as good a job,” said Barrington.

In the Transparency International survey, 17% of respondents had paid a bribe to a medical service.