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China's bribery probe goes national

Expands investigation that already affects GSK, Sanofi, Lilly, AZ, Lundbeck, Novo and UCB

China flagChina is expanding its investigation into the promotional practices of the pharmaceutical industry with a three-month, nationwide probe starting this week, according to the Xinhua news agency.

The report suggest that the State Administration for Industry and Commerce (SAIC) is stepping up its scrutiny of bribery, fraud and anti-competitive practices in the wake of the arrest of four GlaxoSmithKline (GSK) executives last month and a series of visits by Chinese officials to facilities operated by international pharma companies.

The probe is part of a wide-ranging investigation into the pricing of pharmaceuticals in China, and comes after reports that new medicines are sometimes launched there at a 100 per cent premium or more to the price charged in Western markets.

Prior crackdowns have led to fines and price reductions for other products such as milk powder, and the latest operation will target not only pharmaceuticals but also other products such as medical services and education, said the news agency.

The SAIC aims to "root out commercial bribery and practices that limit competition and protect consumers' rights and interests", according to Xinhua.

Lawfirm Squire Sanders notes that companies found to have been indulging in bribery and other forms of corruption could face prosecution and penalties either under China's Anti-Unfair Competition law which is administered by the SAIC or - if the transgressions are deemed very serious - the country's criminal law system.

In the GSK case, as the investigation is being carried out by the Ministry of Public Security "it appears that GSK China and certain of its senior executives might be charged with violation of either or both laws", suggested Squire Sanders.

The lawfirm also questioned whether this should be perceived as a measure to specifically target foreign companies.

"The new government in China has announced from the day it took office that it will crack down on corruption," it said.

"In almost any jurisdiction, as a practical matter, it will typically be easier to implement such a programme through enforcement against foreign parties rather than against local ones."

Article by
Phil Taylor

15th August 2013

From: Sales, Regulatory



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