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FCPA Blog Daily News

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Monday
Aug262013

Drug sellers ‘take vacations’ amid China anti-graft campaign 

Pharmas have told their sales teams to halt all activity in China to avoid being caught in the nationwide “enforcement storm,” according to the Guangdong-based Yangcheng Evening News.

“It is rumored that police in plain clothes are patrolling in hospitals; drug sales representatives will be fined 500 yuan ($81) and regional sales managers 1000 yuan ($162) once being caught in hospitals,” an unidentified sales representative told the paper.

Meanwhile, many medical conferences that were to be staged by pharmaceutical companies have been suspended. “Doctors are afraid of being drawn into corruption allegations through participation of medical conferences,” a company representative said.   

China’s pharmaceutical industry has been shaken by a series of bribery allegations naming major foreign drug producers -- GlaxoSmithKline, Sanofi, AstraZeneca, UCB, Baxter, Novartis, and Novo Nordisk among them.

The anti-graft sweep has triggered changes in the way drugs are being marketed in China. Traditional drug promotion featuring “guanxi-building” (relationship-building) through sponsorship of medical conferences and visits to doctors are now too risky.

But video conferences have become popular among the drug makers. And drug retailers are using e-marketing channels like WeChat to communicate with doctors.

Medical professionals are calling on the government to draft new “safe harbor” rules to regulate privately sponsored academic activities. Otherwise, experts fear, company-funded medical research funds will dry up.

In the latest corruption claim, the 21st Century Business Herald alleged that U.S. drug maker Eli Lilly & Co. paid 30 million yuan ($4.9 million) to doctors to promote its insulin products. The report cited as a source a former sales manager of the company.

Source: Yangcheng Evening News (羊城晚报), China.com (中国网), Reuters

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Hui Zhi is a Senior China Analyst with ethiXbase and the China Compliance Digest.