GlaxoChinaGate contd. - Bwaaa!

China Drug Probe 'Unfair,' Euro Group Says
Thu, 09/05/2013 - 8:30am

Foreign companies believe they are unfairly being singled out for scrutiny in bribery and pricing investigations, the biggest European business group in China said Thursday.

The comments by officials of the European Chamber of Commerce in China follow announcements about fines imposed on dairy suppliers over pricing issues and an investigation into possibly bribery by employees of drug manufacturers GlaxoSmithKline and Sanofi.

In pricing investigations, the chamber's member companies believe "there is a disproportion of how foreign companies are covered on this issue" compared with Chinese rivals, said its president, Davide Cucino. He said foreign companies also believe accusations against them receive more prominent publicity from state-controlled media.

Cucino was speaking at the release of a report by the chamber, which represents 1,700 companies in China, on business conditions and suggestions for regulatory changes. This year's report appeals to Beijing to open government-dominated industries wider to private competition.

Officials of the chamber have met with Chinese authorities to discuss the pricing investigations, said Cucino. He said the chamber stressed that any action should be according to law but gave no other details of the meeting.

In the dairy case, six foreign suppliers were fined for vertical price-fixing, or setting minimum retail prices for baby formula. Such a tactic is common in foreign markets but lawyers say the anti-monopoly law prohibits it.

A spokesman for the Cabinet's planning agency was quoted by Chinese media on Aug. 16 as saying it would look into possible anti-monopoly violations in petroleum, telecommunications, autos and banking.

Drug manufacturers have been rattled by investigations into whether Britain-based GlaxoSmithKline PLC and French rival Sanofi SA bribed doctors to prescribe their medications.

Investigations have targeted only foreign companies, including those with the strongest standard operating procedures, or SOPs, to prevent employee misconduct, said the president of the chamber's pharmaceutical working group, Bruno Gensberger.

"What I feel a little bit unfair, the foreign companies that are most serious about SOPs have been the most investigated and the most discriminated," said Gensberger. "To my knowledge, today no Chinese company has been investigated."

Authorities say they are investigating whether employees of GSK and Sanofi improperly paid doctors, hospital administrators and others to encourage use of its medications. GSK employees are accused of laundering money through travel agencies to evade its internal anti-bribery controls.

Such payments are widespread in China's medical system. Health experts say such bribery by Chinese drug companies is routine, while global suppliers are less likely to engage in it due to anti-corruption laws in their home countries.

http://www.dddmag.com/news/2013/09/china-drug-probe-unfair-euro-group-says?

GlaxoChinaGate contd. Briton held in China arrested amid pharmaceuticals probe

(Reuters) - A British risk consultant held in China since mid-July amid an investigation into the country's pharmaceutical industry has been arrested, the British Embassy in Beijing and his family said on Wednesday.

Peter Humphrey and his wife, Yu Yingzeng, were detained in Shanghai on July 10 as police probed bribery allegations against British drugmaker GlaxoSmithKline (GSK).

In China, an arrest typically means police believe they have enough evidence for a case to be brought to trial. Detentions can last for weeks and end in release without charges being filed.

It was not immediately clear if Humphrey's arrest was directly related to the investigation of GSK, which has been accused by China of funneling up to 3 billion yuan ($489 million) to travel agencies to facilitate bribes to doctors and officials.

China has taken a tough stance on corruption and high prices in the pharmaceutical industry as it unrolls wider healthcare access and faces an estimated $1 trillion healthcare bill by 2020.

"We can confirm the arrest of a British national, Peter Humphrey, in Shanghai on Monday the 19th of August. We are currently providing consular assistance," British Embassy spokeswoman Hannah Oussedik told Reuters by phone.

Oussedik declined to offer additional information about the reasons for Humphrey's arrest. The U.S. Embassy in Beijing could not be reached immediately to confirm whether Yu was also arrested. The U.S. Consulate in Shanghai declined to comment.

Shanghai police did not respond to a request for comment.

A statement issued by a member of Humphrey's family said both Humphrey and Yu had been arrested.

A source close to the family said they had not yet been told which charges would be laid against Humphrey, or when, but the statement said lawyers told the family the couple had been detained last month because they broke a law related to buying private information.

Humphrey and Yu co-founded ChinaWhys, a business risk advisory firm that has done work with drugs companies, including GSK, separate sources familiar with the matter have said.

Humphrey worked as a journalist for Reuters in the 1980s and 90s. The ChinaWhys website says he has been a risk management specialist and corporate detective for 14 years.

In March 2010, four executives from mining giant Rio Tinto were jailed for taking bribes and stealing commercial secrets. Three of those executives were Chinese while the fourth was a Chinese-born Australian.

(Reporting by Michael Martina, Megha Rajagopalan, Hui Li and Shanghai newsroom; Editing by Kazunori Takada and Nick Macfie)

http://www.reuters.com/article/2013/08/21/us-china-briton-arrest-idUSBRE97K0C120130821?feedType=RSS&feedName=topNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=992637

GlaxoChinaGate cont. - now the overcharging issues hit the press in India

http://www.financialexpress.com/news/drug-firms-overcharged-rs-2700-cr/1155294?

FYI a crore of rupees is about US$200,000

GlaxoChinaGate contd. - BBC reports on China drug costs: The human price

12 August 2013 Last updated at 17:44

By Martin PatienceBBC News, Beijing

For Zhang Yansheng and his wife Yang Hongxia, medical costs consume an entire salary

At her home on the outskirts of Beijing, Yang Hongxia is busy preparing dinner. She makes noodles as her mother-in-law watches on.

For Hongxia, 39, life is pretty tough.

Her husband, Zhang Yansheng, 41, is in the room next door watching TV. He is suffering from a brain tumour and cannot walk or talk.

Like more than 95% of the population he has some form of government health insurance. But the schemes do not cover all the costs.

His wife works as a bus conductor. But she spends her entire salary, around $600 (£388), on paying for her husband's medication.

The family only survives with hand-outs from relatives.

"When my husband fell sick he was a young man," said Hongxia.

"We didn't have a lot of savings. It's a huge burden for us."

Bribes

As Beijing expands provisions for healthcare, government spending is soaring.

It was estimated at $385bn (£249bn) in 2011.

It is expected to more than double by the end of the decade, according to a report by the consultancy firm, McKinsey.

The government has made clear that reform is required to rein in costs. It is starting with the drugs industry - investigating possible price-fixing in up to 60 foreign and Chinese companies.

Last month a detained executive from the British firm GlaxoSmithKline confessed on state TV that his company paid bribes.

The firm has said it appears some of its local staff acted outside the company's "processes".

Five employees working for other foreign drugs firms have confirmed to the BBC that corruption is a problem.

One of the salesmen said his company paid about $1,000 (£647) to get its product back on the shelves at one hospital.

"I don't deny [giving money to doctors] happens in foreign companies," the sales representative said.

Mr Zhang's brain tumour drugs: Chinese families have to spend their savings when they get sick

"It is rare though and only very few people get it," he added.

In a system overwhelmed by patients, corruption is an open secret.

We filmed touts illegally selling appointments outside a Beijing hospital. They are so well established they even have business cards.

One tout told us if we paid him $50 (£32) he would get us appointment that afternoon. Otherwise you would have to wait for weeks.

'Unsustainable'

Families here spend a huge chunk of their savings when they get sick. By tackling corruption the authorities hope to make healthcare cheaper.

In doing so, Beijing hopes to boost domestic consumption.

"We've had the gold rush here and now the current economic model is unsustainable," says James McGregor, a business analyst.

"In order to build a consumption-driven economy, consumers need to be confident in the future, the government and their healthcare.

"And that may be why the government is going after all these pharmaceutical companies, because they've got to build confidence among the people.

"You can't order people to take money out of their pocket and spend it - you've got to lure them to do it because they're happy with the way things are."

Back at her home, Yang Hongxia and her family are finishing up dinner.

For Hongxia any thoughts about holidays or new furniture remain a distant dream.

Every penny she has goes on paying for her husband's medical bills. Until drugs get cheaper, the best they can hope for is to just scrape by.

Yang Hongxia works as a bus conductor and needs family help to meet the cost of her husband's medication

http://www.bbc.co.uk/news/world-asia-china-23670744

Bribery 'routine' for foreign pharmaceutical firms in China

12 August 2013 Last updated at 14:59

By Martin Patience BBC News, Beijing

Chinese drug salesmen admit paying bribes. Martin Patience reports

Bribes are routinely paid by major foreign pharmaceutical firms operating in China, the BBC has learned.

Five drugs salesmen for foreign companies told the BBC their firms paid bribes in order to increase sales of their products.

None of them wanted to be identified, fearing they would lose their jobs.

The revelations come as Beijing widens its investigation into drugs-price fixing amid a bribery scandal engulfing drugs giant GlaxoSmithKline.

'Inflated prices'

One of the salesmen said his company paid about $1,000 (£647) to get its product back on the shelves at one hospital.

"I don't deny [giving money to doctors] happens in foreign companies," the sales representative said. "It is rare though and only very few people get it," he added.

But he described an incident where a product had been cleared from a hospital's shelves, which proved to be "an embarrassment" for him and his company.

"If we follow the normal procedure to recover it, it is very complicated. It will cost a lot of money and energy. We looked for a quick way."

He admitted that strictly speaking, the money paid out to ensure the product returned to shelves was probably a bribe and that his manager signed it off. He said it would have cost a lot more to achieve the same result through official routes.

"It may cost us more if we have not paid the bribe. It will be a lot of money and energy," he said.

Such revelations follow last month's allegations by the Chinese police that the British drugs giant GlaxoSmithKline had engaged in "mafia-style behaviour". GSK was accused of directing up to £320m through travel agencies to facilitate bribes to doctors and officials.

A detained Chinese executive from the firm told state television that bribes paid by his company had inflated prices of its products by a third.

GSK has said that it is co-operating with the Chinese investigation.

China's health care spending is expected to more than double by the end of this decade.

By investigating possible drugs price fixing the authorities are hoping to tackle the rising costs

http://www.bbc.co.uk/news/world-asia-china-23662909

GlaxoChinaGate contd. the cartoon

GlaxoChinaGate contd. - GSK scandal dangles prospects of real medical reforms - China Economic Review

Wednesday, July 31, 2013

China’s pharma crackdown

Chinese doctors have come a long way in the past half century. The barefoot, barely trained physicians of Mao-era China would hardly recognize the rapidly evolving image of a playboy with a stethoscope gallivanting on sex-fueled vacations.

The slow and painful probe into UK pharma giant GlaxoSmithKline's China business has stirred such wild notions.

According to reports, GSK has been bribing Chinese doctors to prescribe its products such as Botox and a number of antidepressants. The illicit funds, some US$450 million, were reportedly channeled through Chinese travel agencies, which offered the doctors vacation getaways with prostitutes.

But the case is calling into question far more than just the kickbacks and sex parties the London-listed firm allegedly treated Chinese doctors to. In fact, new details indicate the case could sweep up several international industry players as it progresses.

Documents acquired by The New York Times showed that global pharma firms including Roche Holding, Merck, Novartis and Sanofi were clients of Shanghai Linjiang International Travel Agency, a now-shuttered company that the Chinese government fingered in the GSK case.

Authorities have already questioned drug makers AstraZeneca and Belgium’s UCB. In early July, the National Development and Reform Commission (NDRC) said it would investigate the pricing of pharma products at 33 multinationals.

Foreign drug makers must be trembling at the thought of a much deeper dig into wrongdoings.

However, the question now is whether or not these investigations will bring about cheaper drug prices for Chinese consumers while also shedding some light on the environment that allowed GSK's malpractice to thrive.

So far, the signs are promising. GSK’s president already traveled to Beijing to pledge lower drug prices. The government hasn't simply unleashed one of its periodic attacks on Western firms, and state media is reporting at length on domestic malfeasance.

A probe into Chinese hospitals in the city of Zhangzhou in Fujian province found that more than 1,000 nurses and administrators in 73 different hospitals had taken bribes. About 90% of all doctors in the city. A separate investigation showed that 39 employees at one Guangdong hospital took kickbacks.

While lounging on the beach with bikini-clad call girls is inexcusable, Chinese doctors that take bribes may simply be using the cash to pay the rent. The starting wage for a doctor is about US$490 a month, or about as much as a taxi driver.

The incredible amount of money paid out on drugs is one major factor in keeping doctors and medical staff poor. Most Western countries spend between 10 to 12% of their annual health care budgets on drugs; China forks out more than 40%.

China has been struggling with an arduous reform of its medical system for years. Cutting back on the price it pays for drugs is a good place to start.

The results from the NDRC pricing probe will not be available until the end of the year. But if that ministry-level body is as successful as it has been in getting multinationals in other sectors to cut product prices this year, it could free up scarce funds to reinvest in medical talent.

Some doctors may enjoy free trips to Bermuda with hookers in tow, but health care costs for average Chinese are rising and quality medical care is slipping out of their reach.

http://www.chinaeconomicreview.com/GSK-pharmaceuticals-drugs-

probe-corruption-travel-reform-AstraZeneca-UCB-healthcare?

GlaxoChinaGate contd. - Now French, US drugs drug companies visited by Chinese Authorities in probes

DRUGMAKERS Sanofi of France and the United States’ Eli Lilly are the latest pharmaceutical companies to be visited by authorities, in a sign that China is stepping up investigations into the industry.

Sanofi confirmed that officials from the Shenyang Administration for Industry and Commerce, in northeastern Liaoning Province, visited its regional offices on Monday.

“We are not aware of the purpose of this visit and we will work closely with the authorities on that,” Sanofi said in a statement.

“We’re committed to abiding by the laws and regulations that apply in each country where we operate,” the statement said.

Eli Lilly’s operations are also under review but the company said this had no connection with ongoing investigations of UK drug firm GlaxoSmithKline by the Ministry of Public Security.

“Shenyang Administration for Industry and Commerce started to review our business operations early this year and we continue to fully cooperate with the inquiries,” the company said in a statement yesterday.

Lilly also denied online posts that it had been ordered to pay a fine of several million yuan by the Shenyang authorities.

“We have not received any formal notice from Shenyang authorities regarding the results of this investigation,” the statement said.

The investigation into GlaxoSmithKline is ongoing.

Police last month detained at least four Glaxo executives and related personnel in China, alleging they were involved in passing bribes totaling 3 billion yuan (US$484 million) to government officials, medical associations and foundations, hospitals and doctors.

Police are also investigating other officials and hospitals that may be involved.

Elsewhere, British pharmaceutical company AstraZeneca last month also confirmed that its Shanghai office had been visited by police and that a sales representative was questioned.

Belgian drugmaker UCB also said its office in Shanghai had been visited by officials from the State Administration for Industry and Commerce seeking information on compliance.

The State Council said last month that it would be stepping up medical system reform and surveillance of any misbehavior involving drug pricing and procurement.

It added that it would also extend scrutiny of medical institutions to include medical staff and their practices.

Now J&J must pay for price fixing in China

A COURT yesterday ordered Johnson & Johnson to pay 530,000 yuan (US$86,434) in compensation to a Beijing company over price manipulation.

The Shanghai Higher People’s Court revoked a previous verdict and ruled that Johnson & Johnson Medical China Ltd and Johnson & Johnson Medical Shanghai Ltd compensate Rainbow Medical Equipment & Supply Company, a former dealer in the US pharmaceutical giant’s products.

The court described Johnson & Johnson as a “vertical monopoly” after it deprived the Beijing firm of its dealership in 2008, halting supplies after the Beijing dealer was found taking orders for products below a minimum price set by the company.

A vertical monopoly is where

 a company controls its production and distribution channels to reinforce its leading position in the market.

The court said not all agreements involving the setting of minimum prices are illegal, but Johnson & Johnson was aiming to control prices in an uncompetitive market.

“Sometimes companies set minimum prices with dealers to encourage introduction of new products or lift the quality of products and services,” said Ding Wenjie, chief judge in the case. “But J&J was simply taking advantage of its dominant market position.”

The court rejected Beijing Rainbow’s claim for 10 million yuan in compensation to cover losses including advertising spending, employees’ severance fees, and for damage to its reputation.

J&J declined to comment yesterday.

http://www.shanghaidaily.com/national/JJ-must-pay-for-price-fixing-/shdaily.shtml?

Hongbao - the red envelope

http://hosted.ap.org/dynamic/stories/A/AS_CHINA_BRIBING_DOCTORS?SECTION=HOME&SITE=AP&TEMPLATE=DEFAULT

An addiction that is hard to break

http://www.forbes.com/sites/erikakelton/2013/07/29/is-big-pharma-addicted-to-fraud/?

Files Suggest a Graft Case in China May Expand - NYT

SHANGHAI — A few weeks ago, when Chinese investigators raided a small travel agency in this fast-growing city, they came upon something startling.

The agency appeared to be using fake contracts and travel invoices to help executives at the British pharmaceutical giant GlaxoSmithKline bribe doctors, hospitals, foundations and government officials, Chinese authorities said.

Soon after, the police shut Shanghai Linjiang International Travel Agency and detained its boss, Weng Jianyong. Four Chinese-born Glaxo executives were also held on suspicions of bribery and tax fraud.

But documents obtained by The New York Times show that in the last three years at least six other global pharmaceutical companies, including Merck, Novartis, Roche and Sanofi, used the same travel agency to make arrangements for events and conferences.

The records included invoices for hotel bookings, travel visas and airline tickets to Chinese cities, and to Australia, Italy, Japan, Korea and the United States. One of the drug companies appears to have used the travel agency to make a $2,500 grant to the Cancer Foundation of China.

The documents contain no indication of wrongdoing. But they suggest that big drug makers other than Glaxo could come under scrutiny as the Chinese government widens its investigation into fraud and corruption in the nation’s fast-growing market for pharmaceutical products. Chinese authorities did not respond to requests for interviews.

Over the weekend, Merck and Roche acknowledged using Shanghai Linjiang International Travel Agency. But they gave few other details about the nature of the relationship.

A spokeswoman in China for Merck would say only that the American company stopped using the travel agency in 2011, when Merck introduced a new procurement system.

Roche said it had worked with various agencies in China for business travel or organizing events, including Shanghai Linjiang International Travel Agency.

“Once allegations of illegal behavior by this agency on behalf of other parties were made public, we made an internal decision to immediately stop working with this agency, and we have begun to review the documentation of our previous interactions with them,” Roche said in a statement on Saturday. “This review is currently ongoing.”

A spokesman for Novartis said by e-mail that the company could not confirm or deny whether it had used the agency. Sanofi did not respond to repeated requests for an interview.

The scandal has battered the reputation of GlaxoSmithKline, which is also known as GSK. At a news conference last week, investigators likened the British drug maker to a boss in a criminal organization. They said it used the travel agency to bribe officials in hopes of illegally increasing drug sales and raising the prices of its products in China.

GlaxoSmithKline has said that what the government says its staff engaged in was “shameful,” and at odds with its policies. It pledged to cooperate with investigators. Over the weekend, the company’s chief executive, Andrew Witty, who is based in London, dispatched three top executives to China to deal with the scandal. On Sunday, one of the Glaxo executives met with investigators and apologized, according to Xinhua, the state-run news agency.

Meanwhile, the company’s China finance chief, Steve Nechelput, a British national, has been barred by Chinese authorities from leaving the country, though a person familiar with his case says he is not a target of the investigation.

According to the authorities, Glaxo has used 700 travel and consulting firms and spent nearly $500 million on conferences since 2007. Some travel agencies helped Glaxo executives commit fraud, the government asserts. But investigators have named just one: Shanghai Linjiang International Travel Agency.

The government said the Linjiang agency did very little booking on its own and mostly acted as a “money platform” that allowed Glaxo to create a huge slush fund. 

Lynn Zhang and Yiyi Dong contributed research.

Page 2 of 2

According to the government, the travel agency was handling about $16 million worth of Glaxo business a year, but seemed to be doing very little work. The government also said Mr. Weng had said that several other foreign drug companies were also “involved” in such actions, though he did not elaborate.

Corporate fraud specialists say using travel agencies, and marketing or consulting firms, to launder money, embezzle or create slush funds to bribe officials is common in China, even at multinational corporations operating in the country.

“People don’t realize there’s an active market for fake receipts and that shell companies are used to make bribe payments,” said Violet Ho, head of greater China operations at Kroll Advisory Solutions.

On Thursday, a handful of employees could be seen at the office of Shanghai Linjiang International Travel Agency in a modest building in Shanghai, but they declined to talk to visitors. Neighbors said they noticed the Linjiang staff was busy shredding documents, some of which could be seen piling up in hallway trash bags.

Reached by telephone Saturday, one Linjiang manager said: “Our main business was organizing conferences. Everything we did was standard practice.” He declined to say much more.

How the small agency secured business with many of the world’s biggest drug makers remains a mystery.

According to corporate records, the agency was formed in 2006 by Shanghai Linjiang Holdings, a local property company, the former Chinese soccer star Wu Chenying and the family of the company’s current manager, Mr. Weng. In a telephone interview on Sunday, Tan Yidao, the chairman of Shanghai Linjiang Holdings, said he sold his stake and surrendered control to Mr. Weng and his wife six years ago, after trouble occurred when some tourists died while traveling to Thailand with the agency.

“I sold because I didn’t think the travel business would do well,” Mr. Tan said.

He said he did not know that Mr. Weng or his wife had contacts in the pharmaceutical business. Mr. Weng, he said, had been in the restaurant business and his wife had worked at a travel agency before forming Linjiang Travel. According to the Chinese government, Linjiang’s  business with Glaxo took off in about 2010. Rather than organize tours, the government said, the travel agency created fake invoices for Glaxo, and that helped touch off an investigation. Records reviewed by The Times include invoices listing payments to other travel agencies to book hotels and flights, suggesting that Linjiang acted as a liaison in the deals. Some large Chinese pharmaceutical companies and other multinationals were also listed in the records.

The government says Mr. Weng and the GSK executives have confessed to faking invoices and bribing doctors and officials. 

In an interview seen last week on China Central Television, the big state-run broadcaster, Mr. Weng said he schemed with a senior GSK executive named Liang Hong, who is among the four who have been detained.

“Liang would tell me he is going to visit some experts, or some government officials and he needs to send some gifts,” Mr. Weng said in the interview. “Gifts approved by the company are about $15 to $30. That won’t be enough. Liang would say, ‘Mr. Weng, please arrange some cash for me.’ That’s basically how it was done.”

Lynn Zhang and Yiyi Dong contributed research.

http://www.nytimes.com/2013/07/22/business/global/

files-suggest-a-graft-case-in-china-may-expand.html?_r=1&

Arise Sir Andrew Witty, CEO of GSK

A New Year Honour!

There are also honours for a former drug dealer and a convicted share-trading crook! 

Pharma Giles writes ... about the GSK affair!

http://pharmagiles.blogspot.com/2010/10/gotcha.html


LOL