China Launches Nationwide Investigation into Medical Industry Corruption

News, Page 5 issue 475, June 28, 2010
Translated by Tony Liu
Original article: [Chinese]

The Central Commission for Discipline Inspection of the Communist Party of China (CPC) and the Ministry of Supervision and Ministry of Health are launching a nationwide campaign against corruption in China's medical industry, the EO learned.

The campaign is taking place in the backdrop of the many scandals surrounding the medical industry that have occurred in recent months, such as the exposure of problems with the storage of vaccines in Shanxi and the widespread discontent over the report of investigations taking place into many high-level officials working at the State Food and Drug Association (SFDA).

Anti-Corruption Campaign

"The wind has turned, can you feel it?" a manager named Hu at a pharmaceuticals enterprise in Jiangsu province said in an interview with the EO.

The practice of pharmaceutical enterprises offering bribes will be the focus of the investigation this time around.

"For instance, who did the pharmaceutical enterprise bribe? How many times has it offered bribes? What favor was given in exchange for the bribe?" a source familiar with the matter revealed to the EO.

Previously, when the relevant departments inspected the pharmaceuticals enterprises' financial records, if no major problems were found, they would usually conclude the inspection.

"However, the inspection this year is much stricter than last year's. If there is a questionable area in their financial records, the pharmaceutical enterprises involved will be questioned for several hours," a source from a Beijing-based pharmaceutical group said.

In addition, this investigation is also focusing on the sales agents of pharmaceutical enterprises.Generally speaking, if a sales agent is discovered of bribing a hospital, the investigators can track down the other hospitals they have bribed and the medical system personnel and leaders involved by following clues.

A source from the SFDA revealed to the EO that local pro-curatorial organs will also participate in the investigation.

At present, four sale representatives working in Beijing have already been detained by investigators for questioning, said the above source, adding that the name of the pharmaceutical companies and drugs involved remained unknown.

An Intensive Investigation

According to industry analysts, the investigation is a result of three consecutive medical industry scandals that have been reported.

The first is the investigation of five officials at the SFDA including Wei Liang, an investigator at the SFDA's Drug Registration Department, for receiving bribes from pharmaceutical enterprises.

The second scandal involves the exposure of improper storage of vaccines in Shanxi and the sale of fake vaccines in Hebei and Jiangsu provinces.

The third, most recent scandal, is the investigation into Zhang Jingli, the vice director of the SFDA.

In fact, Ma Wen, deputy secretary of the Central Commission for Discipline Inspection of the Communist Party of China (CPC) and head of the Ministry of Supervision leaked news of the investigation at an internal meeting held by the Ministry of Health in early May this year.

At the meeting, she said citizens were dissatisfied with the present conditions of the purchase and sale of medicine and other medical services, and especially dissatisfied with the inflated drug prices and the high occurrence of medical personnel accepting bribes and kickbacks.

Chen Zhu, Minister of Health, said his ministry would strengthen its supervision of the
cost of medical treatment and hospital fees and thoroughly investigate all actions in violation of regulations and laws.

Bribery Links

"The pharmaceutical industry is a closed circle, in which many sales representatives share the same interests with hospital employees," said a pharmaceutical company subcontractor.

The most important goal of pharmaceutical enterprises is to gain the qualifications to release drugs on the market.

At present, drugs in China are categorized into new drugs and generic drugs.

The above source told the EO that a pharmaceutical company must take at least ten years to develop a drug, but if there are shortfalls in the experimentation of the drug, even drugs that have taken over ten years to be developed may not be approved by relevant industries.
The length of time for generic drugs to reach the market is shorter because the original version of the drug already went through the necessary experimentation. Generic drugs directly enter the third phase of clinical trials, small scale experiments in hospitals. "First five or six hospitals must be chosen, this can take as little as three years, but normally takes four or five; then add two years for the trial, which makes 7 years total," said a source familiar with the matter

In order to shorten the time required for market approval, "some pharmaceutical companies will choose to bribe officials to help them make false reports on the drug trials. As a result, the trial length for the generic drug will likely be shortened to two years instead of the original six or seven years," the source continued.

Only if the drug was found to have serious quality problems or side effects, would the hospital and the SFDA order the discontinuation of the drug.

"In such situations, some pharmaceutical companies will bribe related officials or hospital leaders to allow the drug to continue being sold. The officials involved or persons won't be exposed until the media reports the serious medical incidents or side effects caused by the drug," a source from pharmaceutical industry told the EO.

A source familiar with the matter said, "the expenses of pharmaceutical companies for putting a drug on the market will be targeted by the investigation."

This article was edited by Rose Scobie