When I started doing research for HOOKED, one of the first books I came across was by the Australian business sociologist John Braithwaite, whose 1984 volume bore the catchy title Corporate Crime in the Pharmaceutical Industry. Recently, I recommended this book to a colleague interested in the international pharmaceutical trade, but apologized for suggesting such an old and possibly out-of-date source. While Braithwaite focused a lot on the bribes Western drug companies paid in developing nations to push their products and evade regulation, I figured a lot must have changed since 1984 and that the situation must be a lot better.
Turns out I should not have worried about being out of date.
According to Katie Thomas in the New York Times:
--some of the same drug companies whose illegal activities have landed them in hot water in the U.S. are up to similar tricks internationally, and the Chinese government, in particular, is trying to rein them in.
Thomas tells us that as the Chinese pharmaceutical market blooms (with 95% of Chinese now having health insurance, probably a better percentage than in the US) and as China tries to position its own companies to compete more effectively with transnational Pharma, “selling pharmaceuticals and other health care products in China is increasingly fraught with peril, as shown by accusations in China this week that GlaxoSmithKline funneled payments through travel agents to doctors, hospitals and government officials to bolster drug sales in the country.
“Chinese officials have compared the company’s operations to organized crime…”
Is it strange that GSK, in particular, should have been caught doing these questionable things? “GlaxoSmithKline has been struggling to rebuild its image after a $3 billion fine in the United States last year, in which the company admitted to improperly promoting its antidepressants and failing to report safety data about the diabetes drug Avandia. Andrew Witty, who took over as chief executive in 2008, has repeatedly pitched the company as a global leader in ethical practices and said it had moved on from its previous lapses.”
As part of “rebuilding its image,” GSK issued a contrite statement in response to these recent charges: “In a statement, Glaxo said it was ‘deeply concerned and disappointed’ by the accusations. ‘GSK shares the desire of the Chinese authorities to root out corruption,’ the company said, adding that it had stopped its relationships with the travel agencies identified in the investigation and was reviewing past transactions with them. ‘These allegations are shameful and we regret this has occurred.’”
Following the superb precedent set by the Claude Rains character in Casablanca, I think the correct term that one is “shocked, shocked” to discover these corrupt practices going on in a morally pristine operation.
But the claim to have been caught by surprise by these revelations—that apparently a few loose cannon were free-lancing without the knowledge of any company higher-ups—starts to ring hollow according to observers quoted by Thomas such as attorney Richard L. Cassin: “[T]he accusation by Chinese authorities that Glaxo channeled as much as 3 billion renminbi (about $489 million) through more than 700 travel agencies makes this case more egregious than most. ‘The question of 700 travel agencies, it’s an astounding number,’ he said.”
Thomas also tells us that despite the strong growth of the Chinese national pharmaceutical industry, “some believe Western companies will have an edge because consumers may be willing to pay more for brands that are known for high-quality ingredients.
“‘There are so many drugs that are poor quality in China, so the ability to differentiate yourself is important,’ said Craig A. Wheeler, the chief executive of the American generic drug maker Momenta Pharmaceuticals. His company is developing complex drugs known as biosimilars through a business deal with Baxter, which has an established presence in China.”
Now, let me get this straight—as we posted a while back:
--when 21 Americans died in 2007 after taking contaminated heparin made with sub-par Chinese ingredients from uninspected factories, wasn’t it Baxter that sold the product? And these are now the people who claim to have the superior-quality drugs that the Chinese ought to buy instead of their own home-made products?
So I guess I won’t toss my copy of Braithwaite’s book on the recycle pile just yet.