Swiss drugmaker Novartis faces bribery allegations in China

A foreign pharmaceutical company has become entangled in bribery allegations in China, in spite of efforts in fighting rampant commercial corruption in the medical sector, industry representatives said on Tuesday. 

An employee at Swiss multinational pharmaceutical company Novartis International AG’s affiliate in China accused the drugmaker of money laundering via funding fake academic activities in a post published on Zhihu, China’s Quora-like platform, on Monday, according to a report by domestic financial news site eeo.com.cn. 

To promote the company’s new drugs such as benazepril and DIOVAN (valsartan) tablets, the company held fake academic activities and paid clinical doctors kickbacks, according to eeo.com.cn. 

It was not the first time that the Swiss drugmaker was involved in bribery allegations in China. 

Novartis, listed on New York Stock Exchange, agreed to pay $25 million in 2016 to settle charges that it violated the US Foreign Corrupt Practices Act (FCPA) when its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales, according to a statement on the website of the US Securities and Exchange Commission.

Enacted in 1977, the FCPA prohibits companies listed in the US from bribing foreign officials for government contracts and other business. 

Novartis said in a post published on its Weibo account Monday that the company has launched an investigation into the claim, and promised to take serious measures against any practices that violate rules and regulations. 

“It’s a open secret that pharmaceutical companies pay doctors to prescribe their drugs or buy their medical equipment in China,” a doctor surnamed Liu based in East China’s Shandong Province told the Global Times on Tuesday. 

“Doctors in public hospitals are paid low salaries. Without so-called gray revenues, it’s pretty hard to support life,” he said, commenting on Novartis’ alleged bribery. 

Foreign pharmaceutical companies have been rushing into the second-largest economy in the world, which is also one of the most promising given its aging population, greater access to healthcare and regulatory reform. 

But some of them have been caught up in bribery allegations in recent years. 

“As Chinese authorities have been cracking down on bribery, some [foreign drugmakers] have commissioned some sales work to their franchisees or sales representatives,” Hao Junbo, a lawyer at Beijing-based Hao Law Firm, told the Global Times on Tuesday. 

China is the second-largest pharmaceutical market in the world, and it is forecast to grow from $108 billion in 2015 to $167 billion by 2020, representing an annual growth rate of 9.1 percent, according to the US International Trade Administration. 

Under the FCPA, 16 life sciences companies have paid multi-million dollar penalties to settle charges related to FCPA violations since 2012, and seven involved actions taking place in China. 

New Novartis CEO Vas Narasimhan told Bloomberg Television in March that the company aims to double its sales in China in the next five years, Bloomberg reported on March 27.

Global Times | Tuesday, 3 April, 2018
http://www.globaltimes.cn/content/1096505.shtml