Sunday, 29 December 2013

Blacklisting for healthcare firms involved in bribery

by Laurie Burkitt
China's health regulators are rolling out a corporate blacklist for drug and medical-device companies implicated in commercial bribery, a move aimed at stamping out corruption in the country's graft-ridden health-care sector.
Beginning in March, the National Health and Family Planning Commission will publish on its website a record of medical-related manufacturers, agencies and individuals charged with bribery by courts, and sued, punished or investigated for bribery, the commission said in a statement on its website Friday. The statement also said that the agency reserved the right to place any company on the list for legal and regulatory violations.
Listed companies will be barred for two years from selling their products within the province in which they are implicated, the statement said. It said companies can apply as usual to sell their products in other provinces but will be at a disadvantage.Companies listed twice in a five-year period will be banned nationally for two years, the statement said.
The developments come amid a heightened state of scrutiny of China's health-care industry.
The Ministry of Public Security in July accused U.K. drug company GSK of bribing doctors, hospitals and government officials in an effort to sell more drugs at higher prices. Glaxo has said it appears some of its managers in China might have broken the law, and says it is cooperating with the probe.
French food giant Danone's baby-food arm Dumex Baby Food Co. announced in October it would overhaul management and marketing at its infant formula business in China following allegations by the official China Central Television that it paid hospital staff to use its products and boost sales.
The health commission's list will show details such as the name, address and legal representative of bribery-connected manufacturers or individuals, as well as information on their alleged crimes, the statement said. It also said regional health departments will be required to report companies to central authorities within a month of any alleged offense.
Medical companies have in recent years flocked to the Chinese market, where a health-care overhaul has expanded access to services and boosted demand for pharmaceuticals and medical devices. The country's health-care spending is expected to triple to $1 trillion by 2020 from $357 billion in 2011, according to consulting firm McKinsey & Co.
Yet the country's hospital system, underfunded and strained, has historically been plagued by kickbacks and ripe for corruption. Doctors are widely seen as underpaid, which makes them prime recipients of honorariums, which are legal, or illegal cuts of sales from drug companies, industry insiders say.
Health-care companies typically sell through multiple layers of distributors that are difficult to oversee, industry players say.
Source: WSJ

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