GSK probe indicates tightened drug sector supervision

An ongoing probe into suspected economic violations by multinational drugmaker GlaxoSmithKline (GSK) employees is being seen as part of efforts to tighten supervision in the medical sector.

The Ministry of Public Security announced last week that some employees from GSK China are being investigated for suspected bribery and tax-related violations. Four senior executives from the company are being held by police over their alleged involvement.

The probe has shed light on instances of hidden bribery that have driven up medicine prices. However, the case is not the first of its kind to be uncovered in China.

In December last year, the U.S. Securities and Exchange Commission (SEC) charged Eli Lilly and Company for its involvement in instances of alleged bribery that occurred in several countries, including China.

Four months before the Eli Lilly case, Pfizer's subsidiary in China was also found to have been involved in bribery.

The GSK suspects are believed to have several methods of concealment, such as channelling bribes through travel agencies.

It is believed that the exposure of the bribery represents just the tip of the iceberg.

An anonymous medical salesman from north China's Tianjin Municipality said salesmen have had to come up with more creative ways to bribe doctors and convince them to raise the cost of their medicine.

"In most cases, the doctors don't extort money in such explicit terms, but it is certain that they will not order products from those who do not give them a 'good return'," he said.

The unfair market advantage that enterprises have gained by using bribery may make it harder for smaller companies to survive and develop. In addition, the costs of bribery are eventually transferred to patients.

According to suspect Liang Hong, a medication that costs only 30 yuan to produce could end up setting patients back 300 yuan due to bribery.

Bribery can also affect patients' health, as bribes may influence doctors' decisions regarding what medication to prescribe.

A commerce official said Wednesday that the GSK probe is part of efforts to improve China's business climate and create equal competition opportunities for domestic and overseas investors.

The official said China firmly opposes any form of commercial bribery, and all companies, Chinese and foreign alike, will be subject to legal sanctions and assume legal responsibility if they break Chinese law.