Drug Companies and Health in China

Cesar Chelala

Faced with declining prescription drug sales in the U.S., and having lost patent protection for many profitable drugs, the pharmaceutical industry is relying increasingly in new markets such as China and other fast-developing countries. The Economist Intelligence Unit estimates in $166 billion drug sales by 2017 in China, making of this country a natural market for companies looking for further growth. The revelation of corrupted practices, however, is a cause for concern.

In China, relationships between doctors and patients are under stress. One of the reasons is the unethical relations between many doctors and several drug companies. Although the practice of bribing doctors is not new in China, new allegations have surfaced recently against some well-known drug companies that demand new and more effective measures against this practice. According to some estimates, up to 30 percent of the cost of drugs is kicked back to doctors to increase sales.

There are several ways in which doctors are bribed by drug companies: they go from making cash payments and all-expenses-paid trips, to presents for their families and even “sexual favors.” Drug companies also bribe hospitals to stock their drugs so that doctors can prescribe them.

In addition to GlaxoSsmithKline, several other companies have been accused of rampant bribery, among them Eli Lilly, Pfizer, AstraZeneca, Sanofi, Novartis, Novo Nordisk and UCB. Both Eli Lilly and Pfizer have been accused of making illegal payments in China. The Swiss drug maker Novartis was also accused of bribing doctors to prescribe its anticancer drug Sandostatin LAR.

Some observers explain that doctors in China are prone to bribery due to the extremely low salaries they receive. For example, a doctor who is just out of medical school in Beijing earns approximately 3,000 yuan ($490) a month –including bonuses-, a salary that is equivalent to that of a taxi driver, and it is even lower for those in rural areas.

Not only drug companies bribe doctors, though. Oftentimes, patients bribe doctors to get procedures done, or done earlier. For some physicians, the main part of their salary comes from both patients and from drug companies’ bribes. Ministry of Health officials have been trying for years to put a stop to such practices, to no avail. According to some experts, some hospitals over treat and over examine patients to increase profits.

Under-the-table payments from patients to doctors are called “hongbao,” which is a reference to the cash-filled red envelopes given as presents during Lunar New Year festivities. These payments cover from jumping the queue for appointments to extra surgical fees.

Corruption extends far beyond the pharmaceutical industry and the health care system and encompasses many other aspects of Chinese market practices. According to some observers, bribing is a cultural behavior; you get things done according to the people you know. Particularly in the practice of medicine, it is a behavior that persists in detriment of people’s health. Chinese authorities are looking into bribing practices by 60 Chinese and foreign drug manufacturers.

Although the government cannot easily raise doctors’ salaries, since if would feel a similar pressure from all public sectors, regulating agencies should put a ceiling on drug prices, and make sure that these prices are not circumvented. More strict regulations should be established prohibiting doctors from accepting bribes and placing fines on companies which offer those bribes.

In the U.S., the Foreign Corrupt Practices Act bars companies from bribing foreign officials to gain business. In China, the Practicing Physicians Law, issued in 1999, forbids doctors from asking or illegally accepting money from their patients.

In China, an important step to make health care affordable to all citizens is to eliminate bribes to doctors for their services. In addition, as stated by the prestigious medical magazine The Lancet, “Training for doctors in China on managing their relationships ethically with the drug industry and other organizations should start at medical school and be part of continuing professional education.”