Inside Story: Medicine and Drugs in China

Follow us on TWITTER: http://twitter.com/cnforbiddennews Like us on FACEBOOK: http://www.facebook.com/chinaforbiddennews A leading global pharmaceutical company GlaxoSmithKline (GSK) has allegedly been involved in bribery inside China. The issue of black gold has again been exposed in the field of China's medicine. Medicine in China, from production to the counter, goes through pharmaceutical companies, distributors, government facilities, hospitals, and then to the patients. The price increases at each link, so costs for medicine are high. GSK China Investment Co., Ltd. has four executives on suspicion of serious economic crimes. Police have taken compulsory measures, under charges of suspicion of commercial bribery and tax-related crimes. The British headquarters for GSK published an apology statement on it's official website on the evening of July 15. It expressed shame. Vice President Liang Hong, of GSK China Branch, and other senior executives are alleged to have reported false registration fees. They took rebates from travel agencies, and also bribed hospitals and government officials to allow their pharmaceutical products into the health care system. Some of the money was directly rebated to executives in cash. The rest remained on the books in the travel agency, as a standby. GSK's largest source of income in China is drug sales. Pharmaceutical industries target government officials, hospitals, doctors, and some foundations with bribes. Almost all of the cost of these bribes is hidden in the price of drugs. A pill originally costing 30 Yuan to produce, may be raised to a cost of 300 Yuan for patients. Zhang Zanning, Director of China Health Law Society, and Law School professor in Southeast University: "Foreign drug dealers and manufacturers could not get into the Chinese pharmaceutical market without bribing officials. The official operation often is in a black-box, so it does not belong to the hospital, and is unsupervised." Zhang Zanning said it reflected China's status quo on institutional corruption. Zhang Zanning: "Because of commercial bribery in the medical industry, the doctor often accepts it passively, rather than actively requires it. Bribery with officials is generally a manipulation of power. If you do not bribe him, you can't accomplish anything, so it is essentially different." From the 1990s until now, there have been many incidents where international business organizations in China have been involved in incidents of commercial bribery. For example, U.S. based Pfizer pharmaceutical company was punished by U.S. SEC in August 2012. It was involved in bribing Chinese authorities, as well as public officials. Siemens Medical Group had bribed five hospitals in China, between 2003 and 2007, with tens of millions of US dollars. In addition, Morgan Stanley, IBM, Lucent, Wal-Mart, Depp, Avery Dennison have alleged commercial bribery in China. In China, drug price includes the costs, factory prices, wholesale prices, the tender prices, government guidance, hospitals purchase prices and finally the retail prices. In the seven stages, drug pricing in each is not publicly available. According to a senior medical representatives, drug prices paid by patients are 8 times the factory price. For example, for an injection to treat liver disease, the factory price is about 5-6 Yuan. The national distributor price is 7-8 Yuan, the provincial agency price is 8-9 Yuan. The officially recognized bid price is 36 Yuan, and drug prices basically fluctuate around the basic price. Provincial agencies sell it to pharmaceutical companies at 32 to 33 Yuan, which is 90-94% of the bid price. Pharmaceutical companies sell it to the hospital at a price of 36 Yuan, and the hospital then sells at 42 Yuan to patients, 15% higher than bid price. The basic reason for high drug prices is that public monopolies and drugs sales are used to support hospitals. Liang Hong, GSK Vice President and general manager of business operations said, GSK operating expenses accounted for a proportion of 20% -30% of the drug price. To put a drug to market, they must deal with various departments. Drug registration involves Drug Administration, so the price involves the Development and Reform Commission. Health insurance involves human resources, as well as social security. Local markets involve local tender offices, and to enter hospitals involves the hospital director, department director, and doctors. If links in the chain of drug production were fewer, corruption will decrease. Fundamentally, drugs and medicine are mixed together, Doctors are dependent on drug sales, which is the biggest problem. 《神韵》2013世界巡演新亮点 http://www.ShenYunPerformingArts.org/