China's investigation into alleged corruption at pharmaceutical multi-nationals has widened in recent days. GlaxoSmithKline (GSK), accused last week of paying over $400m in bribes to doctors and lawyers to boost sales, admitted this week that senior executives "appear to have acted outside our processes and controls, which breaches Chinese law". Meanwhile, three AstraZeneca sales executives have been arrested, although the group was claiming early this week that they had no reason to believe the swoop was related to the bribery allegations.
What the commentators said
This affair is certainly starting to look like "a crusade against Western pharmaceutical giants", said Ben Griffiths in the Daily Mail. Could bribery allegations actually be designed to pressurise Western firms into cutting their prices and thus help China cope with a soaring healthcare bill? Note that GSK has now hinted at price cuts in the Chinese market.
What's more, added The Wall Street Journal, the Chinese government's investigation didn't start as a criminal matter, but as a probe into the costs of drugs made by both domestic and foreign pharma groups. A foreign firm was targeted first because "that helps distract attention from a health system that relies on corruption to stay afloat".
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Hospitals are forced to keep prices for most services below cost, so drug sales is one of the few areas in which they can make money. They encourage poorly paid doctors to prescribe more drugs by linking bonuses to revenue, while doctors also get kickbacks from drug firms. But instead of changing this "dysfunctional" cause of high drug prices, concluded The Wall Street Journal, China is "taking aim" at the likes of GSK.
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