Drugmakers need code of conduct in China

PUBLISHED : Wednesday, 31 July, 2013, 12:00am
UPDATED : Wednesday, 31 July, 2013, 4:23am

Beijing has cast doubt on GlaxoSmithKline's claim that a few "bad apples" - or local Chinese executives - were responsible for dragging it into a 3 billion yuan, cash-and-sex bribery racket on the mainland to boost sales. State media quoted a saleswoman as saying it was systematic and nationwide. Sadly, since corruption is the rule rather than the exception in relationships between hospitals and local and foreign drugmakers, officials appear to be on safe ground.

That is not to say drug companies are solely to blame. Corruption became chronic after free-market reforms forced most hospitals to become profit-making enterprises. This gave administrators and doctors an incentive to accept kickbacks.

Drugmakers may argue they were forced to do business in this way in China to compete. But the proverb, when in Rome do as the Romans do, applies to custom, not crime. There is little evidence of organised resistance to demands for kickbacks, something that would make their drugs more affordable and accessible. This is a chance for drug companies to make amends, given GSK's troubles reflect on all of them.

China is a huge growth market for pharmaceuticals. Now that the authorities have called a big foreign company to account, and signalled a crackdown on cosy, corrupt relationships with health sector clients, multinationals should take the initiative by formulating their own code of conduct - a kind of anti-corruption charter. One company may not be enough to make a difference to systemic graft by holding out against it. But if they unite behind a code that upholds proper ethical standards of drug marketing, they will not only be helping themselves and putting the ball back in the government's court, but also making a meaningful contribution to efforts to improve delivery of health care.

Of course, a crackdown on the kickback culture would raise the pressure on health care financing - a big-ticket budget item. But Beijing must have known that when it decided to name and shame GSK.