echemi logo
Product
  • Product
  • Supplier
  • Inquiry
    Home > Active Ingredient News > Drugs Articles > "Operation cost" accounts for 20-30% of the drug price, which boosts the inflated drug price

    "Operation cost" accounts for 20-30% of the drug price, which boosts the inflated drug price

    • Last Update: 2013-07-15
    • Source: Internet
    • Author: User
    Search more information of high quality chemicals, good prices and reliable suppliers, visit www.echemi.com
    July 15, 2013 source: according to a recent notice from the Ministry of public security, some executives of GlaxoSmithKline (China) Investment Co., Ltd were put on file for investigation in accordance with the law on suspicion of serious economic crimes The public security organ found out that in recent years, GlaxoSmithKline (China) Investment Co., Ltd used travel agencies and other channels to bribe individual government officials, a small number of pharmaceutical industry associations and foundations, hospitals, doctors and so on in order to open up drug sales channels and improve drug prices during its operation in China People are particularly concerned about drug prices; commercial bribery in the field of medicine has been criticized for a long time How serious is the phenomenon of commercial bribery in the field of medicine? How do they operate in an attempt to circumvent the law? How does it lead to the inflated drug price? On July 12, reporters rushed to Changsha to interview some of GlaxoSmithKline's senior executives and some of the suspects involved in economic crimes such as commercial bribery The travel agency involved in the bribery case A small travel agency did not provide travel services and conference services Its annual turnover was several hundred million yuan "GlaxoSmithKline had an accident, and its Chinese company's four carriages were taken away by the public security organs." On July 11, when the Ministry of Public Security reported that some of GlaxoSmithKline's executives had been put on file for investigation due to suspected commercial bribery and other crimes, it attracted world attention and shocked the industry Some people may be unfamiliar with GlaxoSmithKline, but when it comes to the new Kangtaike, fenbide and other drugs produced by the company in China, I believe many people have some understanding It is a multinational pharmaceutical company with a history of more than 300 years At present, it has an annual output of 4 billion boxes of drugs and its products are all over the global market But in recent years, the company has been punished by the United States, Italy and New Zealand for its "scandals" How was the commercial bribery case exposed in China? It starts with a travel agency At the beginning of this year, the Ministry of public security found in its work that some travel agencies, such as Shanghai Linjiang international travel agency, operated abnormally, and immediately organized an investigation Linjiang travel agency is a small travel agency founded in 2006, and also a "husband and wife shop" with few personal hands It's strange that this travel agency doesn't do tourism business at all, but only provides conference services However, its annual turnover has quickly reached hundreds of millions of yuan from the initial millions What's the secret of this travel agency? Why is there so much Conference business? The Ministry of public security has deployed the local public security organs to investigate the conference business of the travel agency after many times, most of which are entrusted by some foreign pharmaceutical companies, especially with a pharmaceutical company, which has frequent business contacts, and numerous training conferences of various sizes are to be held in a year This pharmaceutical company is GlaxoSmithKline Along the way, the police soon got the conclusive evidence that some executives of the pharmaceutical company were suspected of committing crimes: they colluded with company personnel such as Linjiang travel agency, and used meetings and other forms to get cash, some of which were owned by themselves and some of which were used for commercial bribery In view of the ability and level of Changsha public security organs to investigate and handle commercial bribery cases in the field of medicine, the Ministry of public security designated Changsha public security organs to administer the case in different places On June 27 and July 10, under the unified organization and command of the Ministry of public security, Changsha public security organs cooperated with Beijing, Shanghai, Zhengzhou and other local public security organs to arrest the criminal suspect twice Four senior executives of GlaxoSmithKline, Zhao Hongyan, Liang Hong, Huang Hong and Zhang Guowei, were subject to criminal coercive measures It's hard to associate "hosting meetings" with "commercial bribery", or believe that it's a common practice for foreign pharmaceutical companies to use conference fees as articles to evade laws "Originally, there were only 100 people in the meeting, with a budget of 150 people; some small meetings with a budget could not be held at all." Liang Hong, vice president of GlaxoSmithKline and general manager of operation, gave an example to introduce how to make a living on conference expenses It is understood that foreign pharmaceutical companies have relatively strict financial regulations In order to improve the sales volume and price of drugs, it is often necessary to bribe all parties Some personnel of pharmaceutical companies have made suggestions on the conference fee Weng, the legal representative of Linjiang travel agency, confessed that his "cooperation" with Liang Hong began in 2010, mainly under the instruction of Liang Hong to increase the conference scale The benefits he paid back to Liang Hong are mainly reflected in three aspects: first, he returned the money directly to Liang Hong, with a total cash return of more than one million yuan in three years; second, he provided Liang Hong with high consumption such as tourism, including two foreign tourism Although Liang Hong paid a little money symbolically, he went back and forth to take business class and stay in high-end hotels, and Weng paid nearly 50 yuan Third, Weng wants to buy a gift for Liang Hong According to Weng's recollection, in the past three years, Linjiang travel agency has only received more than 30 million yuan from Liang Hong in the amount of the conference contract, mainly the company's internal training meeting, which is a small part of the conference fee controlled by Liang Hong, while Weng returned almost 34 million yuan to Liang Hong and his subordinates in various forms "That's the rule It's common." Liang Hong admitted some of his criminal facts, and the "cooperation" mode and the amount of money returned were also in line with Weng's account However, according to Liang Hong himself, the conference fee he has is several hundred million yuan a year How much money Liang Hong got from it, how much money he spent, and how much money he used to bribe remain to be investigated A pharmaceutical company "cooperates" with more than one travel agency, and a travel agency "cooperates" with more than one pharmaceutical company According to the police involved in the investigation, the "cooperation" between Liang Hong and Weng is just the tip of the iceberg of commercial bribery in the field of medicine It is understood that some travel agencies, in order to undertake more Conference business, in addition to returning the false amount, will generally give the relevant staff "generous" benefit fee, which is more than one million yuan Even some travel agencies in order to achieve the purpose of long-term meeting, not hesitate to take the way of sexual bribery According to the estimate of the executives of the pharmaceutical company whose drug price is inflated by bribery, "operation cost" accounts for 20-30% of the drug price, according to the police, Linjiang travel agency provides Liang Hong and others with a reserve fund for bribery based on the preliminary information and preliminary interrogation Weng mainly committed bribery and assisting Liang Hong in his occupation, while Liang Hong and other senior executives committed bribery, bribery and occupation When asked about the impact of commercial bribery on drug prices, Liang didn't answer positively, but he said frankly: without these messy operating costs, drug prices will be reduced by at least 20% According to Liang Hong, GlaxoSmithKline's business volume in 2012 was about 4 billion yuan, and the conference fee he held by himself was several hundred million yuan per year Their company has three general managers like him Let alone other business departments, they also need to get through all kinds of "joints" and "immortals" He roughly estimated that the operating cost of his company accounted for 20% - 30% of the drug price Liang Hong's statement was supported by Jin Mou, head of GlaxoSmithKline Financial Sharing Service Center Although she would not say the budget amount of the company's annual meeting expenses, she said that the meeting expenses accounted for the majority of the company's expenses Where is the money used as commercial bribe after using travel agency to cash out some conference expenses? According to the previous public authoritative information, some personnel of pharmaceutical companies bribed individual government officials, a few pharmaceutical industry associations and foundations, hospitals, doctors, etc in the form of direct bribery or sponsorship projects Wool comes out of sheep Liang Hong has no secret to say that the money sent out can only be spread out in the cost, and the final bill can only be paid by patients In this way, it's not surprising that the price of 30 Yuan medicine is 10 times or even dozens of times higher than the real cost It's inevitable that the price of medicine is too high The police of Changsha Public Security Bureau said that commercial bribery is undoubtedly the "black hand" to boost the drug price Commercial bribery is a crime that destroys fair competition and breeds corruption In order to punish commercial bribery, we need many departments to cooperate The head of the relevant department of the Ministry of Public Security said that the heavy blow against commercial bribery in the field of medicine is intended to find out the characteristics of such crimes, so that the relevant departments of the state can form a joint effort to further rectify and standardize the pharmaceutical industry At the same time, we hope to deter such crimes through investigation, and advise those who act in accordance with the so-called "code of conduct" to stop, put their energy and funds on drug research and development, produce and sell better and cheaper drugs, and truly benefit the people  
    This article is an English version of an article which is originally in the Chinese language on echemi.com and is provided for information purposes only. This website makes no representation or warranty of any kind, either expressed or implied, as to the accuracy, completeness ownership or reliability of the article or any translations thereof. If you have any concerns or complaints relating to the article, please send an email, providing a detailed description of the concern or complaint, to service@echemi.com. A staff member will contact you within 5 working days. Once verified, infringing content will be removed immediately.

    Contact Us

    The source of this page with content of products and services is from Internet, which doesn't represent ECHEMI's opinion. If you have any queries, please write to service@echemi.com. It will be replied within 5 days.

    Moreover, if you find any instances of plagiarism from the page, please send email to service@echemi.com with relevant evidence.