China Acts to Stop Bribes in Drug Supply Chain

Chinese leaders want drugmakers to stop using third-party distributors and sell directly to hospitals in an effort to curb corruption in the supply chain.

The State Council, which recently issued guidance on improving centralized procurement of drugs by government-run hospitals, also plans to cut the number of potential buyers for a specific drug by moving purchasing power from the local to the provincial level.
The move is only the latest sign that China is getting tougher on corruption. In September, the government fined GlaxoSmithKline roughly $490 million after a court found the company guilty of bribing doctors and hospitals in three large cities to boost drug sales.

It appears now China is trying to reduce corruption by reducing the number of potential people that may be looking for a bribe, says Michael Burke, a partner at law firm Arnall Golden Gregory. How effective this is depends on whether the government is willing to actually enforce anticorruption laws against the actors who remain in the system, he adds.

Having fewer people making procurement decisions could actually increase corruption, Burke warns, since they will have authority over a larger geographic area.

The guideline also aims to standardize procurement practices and improve information sharing about purchased drugs.

Read the guideline, in Chinese, at www.fdanews.com/03-15-China-Guideline.pdf. — Jonathon Shacat