China Pharma Bribery Inconsistent Law Enforcement Weakens China's Pharma–Blacklist

Editor: Dominik Stephan

China has had more than its fair share of high-profile bribery scandals lately. The local authorities now announced plans to 'blacklist' companies and agents guilty of bribery, but analysts are sceptical about the effects of such methods. In the past, enforcement problems have already undermined several similar initiatives.

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What effects will Cha's proposed pharam blacklist have for multinational companies?
What effects will Cha's proposed pharam blacklist have for multinational companies?
(Picture: PROCESS)

The National Health and Family Planning Commission of China (NHFPC) has announced plans for new guidelines that would effectively blacklist pharmaceutical companies and agents involved in bribery and corruption in China's healthcare sector. This new regulation could be in force as early as March 1. Now multinationals, such as Glaxo Smith Kline, currently charged with an extensive bribery probe, are facing intense scrutiny. Yet, the effectiveness of such measures controversial: It is expected that several provinces and hospital would not follow a blanket ban, Mergermarket's 'Policy and Regulatory Report' (PaRR) states.

Simply putting a drug company or distributor on a blacklist is not a magic bullet to solve corruption: An official from the Shanghai Food and Drug Administration (SFDA) told PaRR that in the past, similar blacklists were usually enforced differently at a local level, adding that some provinces in China did not faithfully comply with such blacklists.

Blacklist Law and its Effects on Particular Drugs

“One or two regions” might adhere to a blacklist but hospitals could still buy a drug regardless of a government directive, especially if access to an important drug still under patent without an obvious generic replacement was cut off, Andrew Henderson, a vice president with the compliance advisory firm the Red Flag Group, told PaRR.

Companies should nevertheless not overestimate the importance of one particular drug: “When we say some medicine is irreplaceable we are actually talking about the ‘best treatment effect’ it will bring about. If a certain company is put in the blacklist, the message is clear that their medicine is not deemed as irreplaceable,” the SFDA official said.