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[e-drug] E-DRUG: FT on China and drug pricing and corruption

E-DRUG: FT on China and drug pricing and corruption
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**China widens probe into drug pricing and corruption**
By Patti Waldmeir in Shanghai, Jamil Anderlini in Beijing and Andrew 
Jack in London
August 14, 2013 5:26 pm

Pressure on pharmaceutical companies operating in China intensified on 
Wednesday as mainland authorities announced a broadening of their 
investigation into drug pricing and corruption in the healthcare sector.

The government of Shanghai - whose public hospitals buy a large 
proportion of medicines sold in China - instructed hospitals to look for 
corruption in the purchasing and prescribing of drugs, as well as in 
clinical trials conducted with hospital participation.

In an apparently separate move, the central government's State 
Administration for Industry and Commerce (SAIC) announced that it would 
look for 'bribery, fraud and anti-competitive practice'� in a wide range 
of industries that touch the lives of consumers, from drugs and medical 
services to school admissions.

News that additional government authorities are getting involved in the 
China drug probe came as Novartis said it was investigating 
whistleblower allegations that it pressured a senior saleswoman to bribe 
doctors to drive sales of one of its oncology medicines.

A Chinese newspaper said a former Novartis sales representative told the 
paper that she was ordered to secure Rmb650,000 ($106,000) in sales of 
one of the Swiss company's drugs by providing Rmb50,000 to doctors.

A Novartis spokesperson said the company started an internal 
investigation upon hearing of the allegations. 'Novartis takes 
allegations of misconduct seriously and will take appropriate actions 
depending on the findings once the investigation is concluded.' The 
company added: 'It is important to note, however, that this employee 
made a claim to Novartis in the amount of Rmb5m'�.

Over the past few weeks, Chinese media have carried a steady stream of 
stories alleging corruption and other irregularities in the healthcare 
industry, following the announcement of a probe into alleged bribery by 
staff at GlaxoSmithKline. Police say as much as Rmb3bn was routed 
through Shanghai travel agencies in order to bribe doctors, and GSK has 
admitted that some of its staff may have broken Chinese laws.

Last week, the authorities started a probe into Sanofi, which is facing 
whistleblower claims that staff bribed hospital doctors in China. 
According to the official Xinhua news agency, Beijing municipal 
authorities have formed a task force to investigate whether Sanofi staff 
paid more than 500 doctors approximately Rmb1.7m in bribes disguised as 
'research grants'. Sanofi said it took the claims 'very seriously' and 
was investigating.

The Shanghai Municipal Health and Planning Commission broadened the 
focus of its investigation from drug companies to hospitals and doctors. 
It called on them to 'do a good job in prevention, investigation and 
punishment of commercial bribes in clinical prescriptions', as well as 
improving regulation of clinical trials.

Local industry experts say there are anecdotal signs some hospitals are 
barring visits by pharmaceutical sales representatives in ways that 
could affect drug sales, at least in the near term.

The SAIC investigation, which is due to begin on Thursday and last for 
three months, appears to be targeted more broadly, taking in a wide 
range of industries apart from pharmaceuticals. 'The campaign will 
strictly root out commercial bribery and practices that limit 
competition and protect consumers rights and interests. It will also 
strengthen regulation over agents and middlemen and root out fake 
advertising,' the SAIC said.

Copyright The Financial Times Limited 2013.
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