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China ban for corrupt pharma firms

Published on 02/01/14 at 08:41am

Pharma firms found guilty of corruption in China will be barred from selling drugs and medical devices in the country for two years.

This is according to the Chinese government, which has over the past six months taken dramatic steps to stamp out fraud and bribery in the country, whilst also looking to lower its healthcare costs.

Authorities in Beijing announced this week that they were compiling a ‘blacklist’ of pharma companies found guilty of, or being investigated, for bribery.

The blacklists will name manufacturers, agencies and individuals charged with bribery by courts, those that have been sued, punished or investigated for bribery and the details of the alleged crime, according to the state-run National Health and Family Planning Commission.

They will include those found guilty of relatively minor bribery but who may not have been punished by China’s courts, as well as those who have received more minor administrative punishments from regulators.

Regional healthcare departments will be required to report their lists to the central healthcare commission within a month. Any medical practitioners who receive bribes will also be punished and in severe cases their medical licenses will be revoked.

Likely targets

Currently GlaxoSmithKline, Lilly, Sanofi and Novartis are all under investigation in the country for a number of alleged offences, including bribing doctors to ensure certain medicines were prescribed.

Those companies that appear once on the blacklist – that is due to be published online in March - will be banned from selling in the region where the offence took place for two years.

Those appearing twice within five years will be handed a two-year nationwide ban.

GSK has had the worse time of it in China after four of its senior executives in the country were detained in July, with one admitting on live television that the firm had acted outside the confines of the law.

A spokesman for GSK told The Times newspaper that the Chinese market was a minor one for the firm in a global context, given that it only accounted for 3% of its business last year, compared with about 26% for the US.

But whilst China accounts for a relatively small proportion of GSK’s group sales, the market is expected to grow rapidly over the next decade, given that China is expected to become the second biggest global economy in the next decade.

And according to consultancy group McKinsey, the country’s healthcare spending is forecast to nearly triple to $1 trillion by the 2020, from $357 billion in 2011, meaning no pharma firm can afford to not be involved in the country’s future growth.

Ben Adams 

 

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