CPPCC - what they're saying about health

It's that time of the year again - the Chinese People’s Political Consultative Conference (CPPCC). The toothless talking shop cum fancy dress parade as deputies from around China meet to chinwag and talk up the government's policies. It's an occasionally interesting forum - some grievances are allowed to be aired, but usually only to justify measures that are already being taken.
There has been quite a bit of talk about healthcare this year. Most of the problems discussed are ones that have been given a regular airing on this blog: doctors' income linked to overservicing, excessive workload of doctors and the issue of publish for promotion. On the last point, Prime minister Li Keqiang attended one meeting that heard about the problem of junior doctors having to publish academic papers in order to qualify for promotion. He was told that more than a quarter of doctors had their articles written for them by ghostwriters and agencies. The PM said this was a bad situation and doctor's should be rated on their practical skills, not writing skills.

Our old friend Professor Zhong Nanshan made an appearance at one People's Conference, at which he re-stated his concerns about doctors' pay being linked to sales of drugs and number of procedures and devices provided. He cited the case of one cardiologist who implanted several expensive cardiac stents for a patients who was not even seriously ill. Zhong Nanshan said the problem of doctors' ethic arose because up to 80% of their income was tied to hospital profits. This meant doctors were given quotas to meet and the 'profit-driven' mentality meant that hospitals were more like department stores than public health facilities, he said. Zhong Nanshan said that to end the problem of overservicing there was a need to de-link doctors' incomes from prescribing and servicing levels. Doctors should be paid a higher basic salary that reflected their worth, he said - and he stressed this did not mean a return to the 'iron rice bowl' mentality.

The problems caused by pharmaceutical commission were highlighted this week by the news that GSK is to sack 110 of its employees in China in the wake of last year's massive bribery scandal that resulted in the company being fined  $450 million. The widespread use of bribes, commissions and backhanders caused a lot of pain for the multinational pharma company when exposed. The staff who have lost their jobs may well be scapegoats. The man at the top, CEO Andrew Whitty, kept his job but had his salary package halved to a measly $6 million. Whitty said  “substantial changes” had been made at GSK China, including training for managers in anti-bribery and corruption practices.

Other 'unhealthy tendencies' raised at the CPPCC include the hospital VIP suites reserved for officials and local bigwigs. Professor Huang Zemin of East China Normal University said hospitals had two different worlds, with the VIP outpatient wards reserved for officials being quiet and luxurious whereas the outpatient room for the general public was crowded and noisy. A fair point, but the VIP suites have already been slated for abolition, so he's hardly breaking new ground there.

And also from the CPPCC, a cry for help from the paediatricians.  One of the country's top paediatricians, Professor Shu Xiaomei, told the CPPCC that there was a crisis in paediatrics as very few doctors go into this branch of medicine in China. The reasons are that paediatricians earn very little compared to other doctors, again because they don't prescribe so many drugs or do many procedures). Another reason for the unpopularity of paediatrics is the high workload and the huge pressure from pushy parents - often leading to violence when things go wrong. Professor Shu said there was also no formal training program for paediatrics, unlike other specialties and therefore the speciality was a 'tree without roots'.

The workforce theme was raised by another delegate at the CPPCC, who said that China simply does not have enough qualified doctors to do everything that the public expected of them. His succinct appraisal was that "without more doctors, all discussion about health reforms is empty talk. "
Other CPPCC delegates said that the push to create a primary care system based around community clinics was commendable but facing the major problem of neither doctors nor patients wanting to go anywhere near primary health clinics. Dr Zhao Ping, of the Chinese Academy of Medical Sciences, said patients did not go to local clinics because they had poor equipment and poorly trained staff and could not refer to the best specialists.
"People don't trust these clinics and hospitals. The thing is, people want to go to better and larger hospitals, and so do healthcare workers. We don't have a mechanism in-place to keep our best healthcare workers at community clinics," he said.

But it's not just the CPPCC, here are some other major medical news stories from China this week:

• Two doctors in their 20s have died suddenly of 'overwork' in the last few weeks, prompting some doctors to say that the pressure of work is too high.

• Baidu's CEO Robin Li says Baidu is looking at online appointment systems.

• China's first new advertising law in 20 years is expected to tighten up regulations around advertising of medical products and healthcare services .

• A Fuzhou doctor became a social media viral sensation when he was photographed working while hooked up to an IV infusion. Weibo users praised him for his dedication for working while sick. 

• International medical experts have expressed concern at China's crackdown on ketamine. While the drug is sometimes abused, it is also a very important and safe anaesthetic, and any restriction would be a major blow for safe surgery in poor countries, they say.

My January news blog ...

Regrettably, I am cutting back on my blogging about China medical news this year. I've been doing this for more than a year now, out of enthusiasm and my own personal interest in the area, but it's becoming too much of a burden on my time. And of course it is all unpaid. Unless there is a sponsor out there who wishes a regular stream of China medical news? After my day job doing much the same thing about Australian medical news I find it hard to sit down at home and do the writing for this blog. So from now on I shall probably only update the site about once a week. That is not enough to cover the many things happening in healthcare in China, but that's your lot. As they say in Yorkshire, you don't get owt for nowt.

This week I have been reading about how patients in Shanghai with chronic diseases will now be able to pick up their repeat prescriptions from community clinics instead of the big hospitals. It's a move intended to relieve the overcrowding at the tertiary hospitals and sounds like an obvious and sensible idea. Whether it will work or not depends on whether China's hospital-obsessed patients can be persuaded to show up at the low-status community clinics.

There are also moves to try curb China's high levels (approaching 50%) of caesarean section intervention in pregnancy. A feature article by Yang Wanli describes how some obstetricians in China are trying to persuade women to opt for natural birth. However, the barriers are a lack of available analgesia for women in labour and the industrial production-line mentality of China's hospitals.

Rural health is a major issue in China this month, with the State Council approving a plan to boost the rural medical workforce. The Council wants to see rural areas of China have qualified doctors replace the current 'barefoot' practitioners. However, well-meaning intentions will not fix the huge rural medical workforce problem in China. The simple problem is that university qualified doctors do not want to work in rural villages. The pay is pathetic, there is no status and the workload is high. As this article shows, the current rural medical workforce is mostly unqualified and often dangerously lacking in skills.

That's not to say that rural health is completely hopeless in China. There have been great achievements in some areas of public health such as immunisation and basic child health. However, as a major article by Chinese paediatricians the Archives of Diseases in Childhood shows, the next step for China is to try reduce the incidence of more complex diseases in children. China has done well in tackling the easily preventable causes of child disease, now it must turn its attention to the difficult stuff - the consequences of preterm birth, and the many congenital and metabolic diseases.

One problem with monitoring China's progress in child health is knowing whether or not the official  figures are true. Take measles vaccination for example. According to official reports, China has 95% measles vaccine coverage of infants. But when researchers analysed the causes of measles outbreaks in Hunan and Jiangsu that affected hundreds of children they found that the actual rates of measles immunisation more like 80%.

And finally, for those who put their faith in western healthcare companies helping improve the health of China, take a cautionary look at the sorry tale of GSK. A well regarded company in the west, GSK was the subject of high profile bribery allegations and a court case that jailed one of its British executives for  his role in the bribes to doctors and hospitals. Now the company is reported to be cutting the jobs of 1000 employees in China following the downturn in its business there (including a 60% drop in revenue).

How GSK bribed doctors in China: the gory details

GSK's Mark Reilly, given a suspended prison sentence by Chinese court for bribery.

by Michael Woodhead
The main points of GSK's record 3 billion yuan ($500 million) fine for bribery in China have been reported elsewhere - I won't go over the same ground.

Suffice to say that several senior executives (including one from the UK) have been implicated in the giving of massive levels of bribes/kickbacks to institutions and hospitals in China to promote the  use of GSK's drugs. The company was also found guilty of transfer pricing - dodgy accounting to transfer profits out of China via pricing mechanisms that favoured the revenues of the parent company over the China subsidiary.

Most of the western reports have focused on the implications for GSK and for the prospects of western businesses in China. Surprisingly few have questioned the ethics of what GSK was doing - except to suggest that "Chinese companies were all doing it, it's the way of doing business in China."
I have been reading some of the Chinese language media reports, and they give a lot more detail of the practices GSK was found guilty of. Very few western media reports have focused on the actual bribery methods used by GSK or the specifics of the transfer pricing arrangements (which I presume are not confined to China).

Here are a few examples reported in the Chinese media:

1. According to Chinese prosecutors the bribery was systematic and on a huge scale. Drug reps bribed doctors. Area managers bribed hospitals and 'VIP clients'. Country managers bribed officials in charge of distribution and purchasing. Bribery was done via travel agencies, gifts, sponsorship and through entertainment budgets and PR agencies. There were separate promotional teams for different product groups - the cold chain (vaccine) group is said to have spent 130 million yuan bribing officials in the regional Communicable Diseases Centres with everything from cameras and electronic equipment to cars.

2. How were individual doctors bribed? One liver specialist physician in Hunan called Dr Lee told the court how it worked. For every lamivudine prescription he wrote he was paid 20 yuan by GSK rep. For every new patient he got a bonus of 100 yuan. Dr Lee said every month he wrote about 150-200 prescriptions for lamivudine and started 5-8 new patients on the drug. Do the maths - that 12,000 yuan ($2000) a month, or 144,000 yuan ($23,400) a year.  Dr Lee said the GSK rep arranged to pay him his commission every month at a special meeting when he would be paid for 'lecture fees' and travel expenses for the company. He received these fees 12 time a year but only did 3-4 lectures for GSK each year.

3. It wasn't just individual doctors who were bribed - the court heard how professional 'medical associations' also had huge sums of money transferred to their accounts from GSK to promote the endorsement and use of their products. Medical groups also received millions of yuan in material bribes such as non-medical items like fridges, cars and TVs. Hospital managers were also bribed millions to influence their purchasing policies - sales reps were given a 'Great Wall Plan' and a 'Dragon Plan' of incentives to persuade hospitals to abolish their 'Chinese-made generic drugs only' policies.

The end result was that Chinese consumers paid more for their medicines. Drugs such as Contac, Fenbid and lamivudine were overpriced up to seven-fold compared to other countries. The unit cost of lamivudine was said to be 142 yuan in China compared to 18 yuan in South Korea and 30 yuan in the EU, Japan and Hong Kong. Drug prices were padded to pay for kickbacks. About a third of the cost of GSK pharmaceuticals was said to have been to cover 'commissions', according to a financial controller. This meant Chinese consumers paid 30% extra for drugs  just to cover the cost of bribes.

GSK was driven by high pressure sales tactics for pharmaceuticals: GSK's revenue in China rose from 3.9 billion to 7 billion yuan between 2009 and 2012. The sales workforce increased from 1000 to 5500 people over that period, and each rep was given a budget of 3000-5000 yuan per month to influence prescribing - presumably though officials, doctors and health institutions. Sales reps were promised unlimited bonuses and membership of an 'Elite Club' with foreign travel if they met their targets

Cooking the books: from 2009-2013 GSK had almost 22 billion in revenue from drug sales in China and yet recorded a profits of only 100 million yuan. Investigators found this was due to a 'Five Step' transfer pricing system, by which the costs of products such as the antibiotic Zinacef were inflated at various stages of production in Italy and Cyprus until eventually 'sold' to the China subsidiary. This was a way of repatriating profits back to the US, but again meant that Chinese patients paid far more than they needed to for drugs.

The overall picture is not pretty - call it what you want - commissions, kickbacks, bribes, - GSK was guilty of them but they were by no means the only pharma company in China  doing it. Commissions and kickbacks are obviously widespread in the Chinese health system, and others have been caught out - such as in the Zhangzhou, Fujian case last year where 73 hospitals were found to be guilty of accepting bribes.

In Chinese media reports on the GSK case, most commentators have concluded that the massive fine and the jail sentences will be a lesson to the pharma industry - and the stamping out of bribes will result in lower medicine prices for Chinese consumers.

However, one leading financial commentator has said the GSK case is a prime example of China's tactic of "killing the rooster to scare the monkey"  - but it would not work. Cai Shen Kun says corrupt practices are so entrenched in China's pharmaceutical industry and are so much a part of the healthcare system that even a major case like the GSK one will not put a stop to them. He says kickbacks have become an unwritten rule in the industry that all insiders believe that nobody can ignore if they want to make sales - even a major international company like GSK.

Cai Shen Kun says the long term solution is to reform the health and pharmaceutical system to make it transparent and remove the incentives for commissions. He also says nothing will change until those who accept the bribes are brought to justice - and that means prosecuting the  government officials and senior doctors who accept the 'crazy money'.

The anti-corruption crackdown gets serious in Guangdong's health system, yields 7 million yuan

by Michael Woodhead  
The effects of Xi Jinping's anti-corruption crackdown are being seen in Guangdong's health system, with health department leaders using stern words and making grave threats against wrongdoers. A report in Guangming Daily says the crackdown on Hong Bao (red envelope bribes) and commissions has already uncovered 7 million yuan and exposed thousands of corrupt staff. The provincial health department head Chen Yuanshang has made dire threats of punishment to any health staff who continue to accept bribes or kickbacks for services. He told the newspaper that Discipline Inspection teams would be renewing their efforts to expose corruption in the health services and would be making unannounced visits to health institutions and looking into the books. He made a speech using all the most stern warnings typically used by officials such as "severe punishment without exceptions" for malpractice and unethical behaviour by public hospital staff. He also noted that many health managers and clinical staff were not taking the anti-corruption drive seriously and were only paying lip service to it. He singled out the relatives of high officials and doctors, saying they would not escape punishment if found to be involved in financial irregularities such as receiving bribes and commissions or overservicing. He reeled off some figures of corrupt practices exposed already including 1362 cases of kickbacks/commissions to the value of 3.4 million yuan involving 3142 individuals. There have also been 5248 cases of bribery (red envelopes) involving 3.74 million yuan. Chen vowed there would be 40 teams of 'secret shoppers' visiting hospitals and health departments to see if staff were still accepting bribes. He also expected all health units to organise their own inspections and to report back on the findings and the disciplinary action taken. He reminded health staff of the "Nine Forbiddens" - the nine kinds of corrupt and inappropriate behaviour (such as overservicing) that should be avoided by health service institutions.

One Country, Two Health Systems: or how Hong Kong has a socialist health system while China has a capitalist one

by Michael Woodhead
It is seldom remarked, but capitalist Hong Kong has a socialist health system while 'communist' China has a capitalist one. 
Hong Kong has a British NHS-inspired publicly-funded health service that remains efficient, good value for money and corruption free. China, on the other hand, has ditched its Soviet-era state-run 'health for the masses' system and replaced it with a state-owned user-pays system that is run on private lines. Don't take my word for it - there is an excellent article illustrating this in the obscure medical journal the International Journal of Radiation Oncology. It makes an interesting comparison of the Hong Kong and Chinese health systems through the eyes of oncologists who work in a cross-border co-operation clinic in Shenzhen.

Health systems
The oncologists note that Hong Kong's health system is based on heavily-subsidised public hospitals that provide treatment at no cost or only minor cost to all Hong Kong residents. It is an efficient system that accounts for only a modest 5.2% of GDP (compared to around 9% for many western  countries and 17% for the US). The Hong Kong public health system is perhaps a little too successful for some interest groups, as it means there is a very low uptake (27%) of private health insurance.
In contrast, China has a capitalist health system (where “money follows the patient') that is struggling to meet the needs of many citizens. Although China has a high rate of health insurance (often funded by employers), this does not cover expensive drugs or medical treatments. There is no safety net system provided by the state, and medical bills are a major burden, especially for low-income families. Initial consultation charges are a modest $2-3, but all Chinese hospitals have to be financial sustainable and thus doctors are encouraged to prescribe expensive drugs, order tests and even promote nutritional products, none of which may be justified by the patient's condition. As the oncologists say with some understatement: "there are serious concerns about the cost effectiveness and quality of services." 

Disease trends
In terms of cancer, Hong Kong and China are also poles apart. Due to preventive health and better treatment programs, cancer rates have decreased by 22% in Hong Kong in the last 25 years and cancer death rates have decreased by 29%. In China, however, rates of cancer have increased dramatically in the last decade as Chinese people have become wealthier and adopted unhealthy lifestyles and persist in smoking. In Shenzhen, cancer rates increased  from 37 per 100,000 people to 100 per 100,000 in the last 10 years. Many of the common cancers could have been prevented through screening and early detection- such as cervical cancer in women, rates of which have been decreasing in Hong Kong. Hepatitis B vaccination is another intervention that should reduce liver cancer rates. 

Doctor training
For oncologist training, Hong Kong follows the UK system of requiring several years postgraduate training regulated by peer group 'colleges' during which clinicians must demonstrate practical expertise in medical oncology, radiation oncology and palliative care, rather than being single branch specialists. Thus patients are treated by a team of oncologists in a 'one stop shop' model. In China there is no formal training program for oncologists, most specialise in one branch of oncology by doing written exams and there is no palliative care training. In China the work of oncologists is governed by 'standard operating procedures' in which the emphasis is on compliance rather than quality or outcomes. 

Access to treatment
When it comes to treatment, cancer patients in Hong Kong have access via public hospitals to the latest technology such as linear accelerators, at modest cost (US10 per attendance). Access is based on clinical need, not financial status or connections. Thus a full course of radiotherapy would be about $400 for a public patient, whereas it would cost $36,000 for a private patient. Across the border in Shenzhen, access to the latest radiotherapy equipment is - in the words of the authors - "appalling". There are only a handful of poor-quality liner accelerators and they are scattered across various hospitals - most patients and doctors do not know how to access them, and even those who do are often reluctant to use them because of fears about toxicity, not to mention the high cost. Shenzhen needs at least 16 such machines (Hong Kong has 37) but hospitals find it extremely difficult to buy such major items because of red tape from the Ministry of Health and the inflated costs of middlemen and the 'commissions' needed to import high-tech equipment into China. 

Drugs - if you can afford them
Access to chemotherapy drugs also differs markedly between Hong Kong and China. In Hong Kong, drugs are approved for use if they can be shown to be cost effective. Regulators model their the drug approval processes on those of western countries.
Patients pay US $13 per oncologist consultation and US $1.30 per drug prescribed. Some high cost drugs are not publicly funded but some costs may be covered by the public safety net or by charities.
In China, many chemotherapy drugs are not available or are long delayed in gaining approval from the China FDA. Drugs that are approved are available on a user-pays basis and can be very expensive. Pemetrexed, for example, costs US $1155 for the genuine drug in Shenzhen although a Chinese generic version is available for US $353. However, the quality of generic drugs is often poor. There are no programs for low income patients. 

Opium wars left their mark?
For palliative care, Hong Kong has developed an integrated  multidisciplinary system based in public hospitals and with hospices. In China, palliative care services are limited or non-existent. There are no palliative care specialists, and so treatment is provided - if at all - by anaesthetists. Pain relief is hampered by draconian regulations over the use of opioids. Most doctors are not allowed to prescribe them, and those who are authorised can only provide a week's supply. Many terminally-ill cancer patients are too weak to return to the hospital every week. This means that cancer pain is under-treated in China.

Looking to the future, on the positive side, health services in China are now evolving rapidly and there is a huge demand for good-quality clinical services. The authors say their Hong Kong-Shenzhen hospital has been operating for only a year but is already providing valuable lessons and experience. It has established a strict 'no-bribery' rule and has also become the first hospital in China to gain international certification for quality of management.

[Editor's note: This story is based on an article by Drs Anne Lee, Henry Sze, Lam Ka-On and Chen Xian of the Clinical Oncology Center, University of Hong Kong – Shenzhen Hospital.]

Lack of unions in China’s healthcare system leads to corruption

by Michael Woodhead
One of the main aims of the current wave of health reforms in China is to curb corruption by de-linking doctors’ income from sales of drugs and the numbers of tests they order.
It is widely acknowledged by Chinese authorities that many of the problems in the current Chinese healthcare system stem from overservicing. Hospitals obtain about half their income from sales of drugs and also rely for income on the use of expensive and often unnecessary tests and procedures. Doctors in turn are given incentives in the form of bonuses and quotas to prescribe more drugs and more expensive drugs. The end result is waste, inappropriate treatment and high costs to the patient. The widespread and institutionalised bribery and corruption also means that the public mistrust doctors and the healthcare system - and they often turn to violence when they believe they have been cheated or not received adequate treatment.
One of the main reasons why doctors in China are so amenable to accepting commissions/bribes to prescribe drugs is their low income. The basic income of a Chinese doctor is less than that of a teacher or a civil servant. As I have previously reported, this encourages doctors to look to ‘grey channels’ for income – including the infamous red envelopes (bribes) and sales commissions. One of China’s leading physicians Professor Zhong Nanshan highlighted this problem earlier this year when he reported the huge discrepancies between official and actual incomes of doctors at his hospital in Guangzhou.
This week sees the publication of an interesting analysis of Chinese doctors’ incomes by Chinese healthcare analyst, Cao Xuebing.
He says that despite hospitals being opened up to the market, the ‘market has failed’ China’s doctors, who remain underpaid for their services. As a result, they turn to ‘informal’ income streams to make up for that. His paper also highlights the discrepancies - and resentments - between different branches of medicine within a hospital. Surgeons and cardiologists can earn much more than their counterparts in specialties such as paediatrics because they do a lot of procedural work and prescribe more expensive drugs, he notes. The poor income means that China’s doctors are demotivated and have no incentive to be efficient or productive. Income differentials also explain why China has huge shortages of doctors in the poorly paid specialities.
The study shows that most doctors in China are dissatisfied with their income, but unlike doctors in western countries, they have no way of acting on this. There are no medical unions to lobby for pay and conditions and doctors have no power in their relationships with hospital managers, who are backed by local governments. And unlike in other jurisdictions such as Taiwan and Hong Kong, doctors do not have the option of leaving the public system to work for better pay in private practice.
Cao Xuebing observes that if China is to have significant healthcare reform, it will need to tackle the central issue of doctors’ income. And to do that doctors need to have a meaningful voice in such discussions – regardless of whether you call it a union or not. At present the only group speaking on behalf of doctors in China is the China Medical Doctors Association (not to be confused with the official Chinese Medical Association). Currently the CMDA is a weak and unofficial -but tolerated - voice on medical issues such as violence against doctors. The CMDA has the potential to speak on behalf of doctors on remuneration as well as on other issues such as the level of control in doctors' training, education and the supply of the profession. These are the 'bread and butter’ work of medical ‘unions’ such as the AMA and BMA in western counties.
However, Cao Xuebing notes that the Party in China has always aggressively suppressed independent union activity, and exerts strong political control over the tame official unions. If doctors in China see no scope for improving their conditions through official unions they will continue to look to ‘unofficial’ ways of boosting their income. Or as the author puts it:
“If the market opens a window of informal payment that can lead to substantial pay rise, they may not have strong feeling to pursue an empowered professional body or union.”
And he concludes:
“It will … be interesting to follow the development of the CMDA in organising the biggest group of medical practitioners in the world. Professional organisations in China … are important for the party-state to incorporate the interests of key professionals. If regular socialisation can consolidate Chinese doctors with political representation, then these practitioners may be able to gain traction over hospital management issues through leveraging the social capital of their professional body.”

Red envelopes or red tape? Hospital doctors feel insulted by the new 'no bribes' contract they are forced to sign

by Michael Woodhead
In an effort to clean up hospitals and crack down on bribery,  patients and doctors will be required from 1 May to sign mutually-agreed contracts forbidding the giving or receiving of' red envelopes'. The new contracts, ordered by the National Health and Family Planning Commission, will be an extra step of the hospital registration process and are intended to reinforce the message that doctors can no longer rely on 'grey channels' for their income. However, a survey carried out at one Beijing hospital that has trialled the system raises the question of whether it is all just for show - and whether it is perhaps just another bit of bureaucracy to contend with. An anonymous survey carried out at the Meitan Hospital in Beijing asked 122 patients and 55 doctors what they thought about the giving of 'red envelopes' or gifts to medical staff and whether they accepted the new 'no red envelope' contract system - which has been operating at the hospital for two months.  Interestingly, about a quarter of patients said they had been prepared to give a red envelope before signing the contract, whereas two thirds of patients said they hadn't thought about it. The remainder 10% were 'definitely not' prepared to give a red envelope. About 57% of patients said they agreed with the red envelope contract, whereas about 35% said they thought it was not necessary. Of the doctors, 100% said they would not accept a red envelope or gifts from patients. Despite this, 40% of the doctors said they were not happy about signing the new contracts, and 20% said they were strongly opposed to the contracts. When asked why, doctors said they had already agreed to the Hippocratic Oath when they first donned their white coat, and they believed this was already  a contract not to accept bribes.
However, hospital manager Wang Mingxiao said that the new contract system was a visible way of showing patients and their families that the hospital staff were "clean and incorruptible".  Mr Wang said the contract system was an essential step in the hospital's setting up of an 'honest and clean' checking and monitoring mechanism to ensure ethical medical practice.

Seven doctors jailed for accepting drug company commissions

by Michael Woodhead
Seven doctors from Baotou in Inner Mongolia have been found guilty and jailed for accepting sales commissions from pharmaceutical companies and other bribes.
The seven doctors are  heads of various medical departments at the Baotou No 6 Hospital and also include the chief physician for the hospital. They are accused of accepting commissions from pharmaceutical company representatives for amounts between 80,000 yuan and 710,000 yuan. The commissions were illegal and constituted bribes according to the law, the court heard.
Five of the doctors are also accused of accepting bribes for providing favourable medical and psychiatric reports in legal cases to help people get lighter sentences or avoid financial penalties in court cases.
The doctors were found guilty and sentenced to terms of imprisonment ranging from  18 months to seven and a half years, suspended for two years.
The doctors have appealed the severity of their sentences, disputing the amount of prescribing that was claimed in court.
A representative from Jiangsu Enhua pharmaceuticals was also tried for giving bribes of more than 240,000 yuan to doctors at the hospital in return for writing prescriptions. He was sentenced to three years in prison, suspended for four years, and fined 10,000 yuan.

What are the new "The Nine Forbiddens" for China's hospitals and medical staff?

The National Health and Family Planning Commission has issued a list of "Nine Forbiddens" (“九不准”) outlining nine prohibited activities for hospitals and medical staff, in an effort to stamp out bribery, corruption and unhealthy commercial activities in the healthcare sector.

Under the rules, medical and hospital staff are:

1. Not allowed to have individual salaries linked to income from pharmaceutical products or medical tests.

2. Not allowed to receive percentages of medical billing.

3. Not allowed to charge unauthorised fees.

4. Not allowed to accept unauthorised community charitable donations or subsidies from community.

5. Not allowed to participate in sales and marketing activities or put out unauthorised medical adverts.

6. Not allowed to be involved in business cartels

7. Not allowed to be involved in unauthorised private procurement of medical and drug supplies

8. Not allowed to accept kickbacks

9. Not allowed to accept red envelopes and other inducements from patients

Blacklisting for healthcare firms involved in bribery

by Laurie Burkitt
China's health regulators are rolling out a corporate blacklist for drug and medical-device companies implicated in commercial bribery, a move aimed at stamping out corruption in the country's graft-ridden health-care sector.
Beginning in March, the National Health and Family Planning Commission will publish on its website a record of medical-related manufacturers, agencies and individuals charged with bribery by courts, and sued, punished or investigated for bribery, the commission said in a statement on its website Friday. The statement also said that the agency reserved the right to place any company on the list for legal and regulatory violations.
Listed companies will be barred for two years from selling their products within the province in which they are implicated, the statement said. It said companies can apply as usual to sell their products in other provinces but will be at a disadvantage.Companies listed twice in a five-year period will be banned nationally for two years, the statement said.

Doctors now banned from accepting kickbacks and commissions

Doctors who take kickbacks from pharmaceutical companies or accept "red envelopes" from patients will face punishments ranging from reproach to dismissal.
The National Health and Family Planning Commission and the State Administration of Traditional Chinese Medicine said in a joint circular on Thursday that doctors are banned from promoting medical ads and taking commissions from the prescription of drugs.
Doctors are not allowed to accept illegal donations, nor are they allowed to purchase or use medical products, according to the circular.
The move to promote clean work styles among doctors came as part of a more comprehensive campaign against corruption launched by the Communist Party of China at the end of 2012.

Pharma company bribery of doctors: US vs China

Excerpt from an article by Prof  Zhang Weidong, Tianjin First Central Hospital, in the Journal of Thoracic Diseases:

In China, it takes a compulsory five years for a medical student to complete his/her undergraduate education, compared with only four years for other training programs for professionals in financing, marketing, or managerial posts. Thereafter, they find that the 5-year undergraduate training in medical sciences is not sufficient to provide a promising future for their career given the ever-developing medical technology and improving methodology in the medical community; nor would it even qualify them for an opportunity to get a job in a hospital, given the more than one million medical undergraduates nowadays surging out of university gates each year in China. To improve their chances they need to obtain an MD or PhD degree, spending six more years of their lives for the whole process, probably with their aged parents striving in the faraway countryside to earn the hefty tuition they have to pay.

Still, after these arduous years of examinations, probations and training, as well as the life-long learning in their careers, all their work does not translate into a reasonable income and acceptable social position in contrast with their friends with non-medical occupations. Few physicians in China can earn an income greater than $40,000 USD per year. Even salespersons who sell a popular brand of Chinese Dim Sum or tea-pickled eggs can be much richer than you. One may loudly declare that they think nothing of this disparity, always being proud of themselves as an erudite scholar and physician, but when it comes to the travel expense and registration fee for international or domestic meetings, most physicians can’t afford such expenses out of their own pocket and the offer from Pharma who are “honored to sponsor” them is very attractive. What follows? It is an established conception among Chinese people that one has to do “something” for “something” you receive—you know it.

In an extreme case unraveled recently in China, Pharma representatives were found to stay in the physicians’ office, sitting unscrupulously beside the physicians as the latter interviewed and examined their patients and served as the latter’s “assistant” who “helped” by typing electronic prescriptions. Very likely, this role made their sales assignment easier and probably succeeded in obtaining a large bonus from their company for over-fulfillment. For allowing the representative to be their “assistant” the physicians received some benefit.

US medical companies find that selling in China requires bribes

For more than a decade, Diagnostic Products Corp.'s employees in China bribed doctors to buy laboratory-testing kits from the Los Angeles company. In May the company paid the price: U.S. authorities fined Diagnostic Products $2 million for violating U.S. antibribery laws.

It's an example of the danger lurking behind China's booming health-care business. As the Chinese middle class expands, the nation is spending nearly $100 billion a year on health care. Medical devices and hospital products are a particularly fast-growing market, spurring top names such as Johnson & Johnson and Medtronic Inc to expand in China.

But foreigners seeking to cash in are discovering rampant corruption and questionable ethical practices. China's health system encourages doctors to push expensive procedures on patients, many of whom pay out of pocket for health care.

In a system lubricated by money, U.S. companies often face pressure to play along. Boston Scientific Corp, a Natick, Mass., medical-devices company, used outside distributors for years even though it suspected them of providing unethical incentives to doctors. Fearful of getting into trouble, "we really blew up the entire business," says China country manager Shankar Kaul. Boston Scientific dropped all its distributors at the same time and switched to direct sales.

Read the full article: WSJ

Bribing of Chinese doctors costs Eli Lilly a $29 million fine

In the latest instance in which a drugmaker was caught making bribes overseas, Eli Lilly was charged by the US Securities and Exchange Commission with violating the Foreign Corrupt Practices Act because its subsidiaries made improper payments to foreign government officials to win millions of dollars of business in China as well as Russia, Brazil, and Poland.
The FCPA forbids US companies from bribing foreign government officials. However, in China, employees at the Lilly falsified expense reports in order to provide spa treatments, jewelry, and other improper gifts and cash payments to government-employed physicians.
A Lilly subsidiary in Russia used offshore “marketing agreements” to pay more than $7 millions to third parties chosen by government customers or distributors, despite knowing little or nothing about the third parties beyond their offshore address and bank account information, according to an SEC statement.
The SEC alleges Lilly became aware of possible FCPA violations, but did not curtail the use of marketing agreements for more than five years. Lilly subsidiaries in Brazil, China, and Poland also made improper payments to government officials or third-party entities associated with government officials. Lilly agreed to pay more than $29 million to settle the SEC’s charges.
Read more: Pharmalot