If China's pharma corruption probe hasn't spooked drugmakers enough, a new promise of punishment might. Chinese authorities say they will blacklist drugmakers caught bribing doctors and other health authorities--and those companies will be barred from selling their products, at first regionally, and then nationally for a second offense.
As Reuters initially reported, China's National Health and Family Planning Commission is requiring regional health departments to compile lists of offending manufacturers. Officials will cast a relatively broad net: companies already punished by pharma regulators and financial watchdogs, those charged with corruption in Chinese courts, as well as companies found guilty of more minor infractions.
It's the latest development in a high-profile crackdown on corruption in China. The government has zeroed in on the pharma business--as well as makers of medical devices and nutritional products--as its leading target.
In July, investigators rounded up more than a dozen GlaxoSmithKline ($GSK) employees, alleging that they had masterminded a scheme to bribe doctors by funneling payments through travel agencies. Since then, the company has said some of its Chinese executives apparently broke the law and promised to cut drug prices in China.
Other foreign drugmakers, including Eli Lilly ($LLY), Novartis ($NVS), and Sanofi ($SNY), have been roped into the scandal, some by whistleblowers who took their allegations to the Chinese media. Some drug marketing in China has ground to a halt, with doctors wary of visiting reps and companies reluctant to attract notice. Glaxo suffered a 61% drop in its China sales during the third quarter as the scandal unfolded.
Under China's new rules, regional healthcare departments must forward their lists of offenders to the central government by the end of this month. The companies listed must be notified and given an opportunity to refute the decision, Reuters notes. The final list will be posted online in March.
The companies listed will be barred from selling their drugs, first in the regions where they were caught offering bribes. If a company makes the list twice within 5 years, the ban will go national. In both cases, the ban would last for two years.
Blacklisting could seriously crimp Big Pharma's ambitions for growth in China. That pharma market, among the fastest-growing in the world, has lured the world's biggest drugmakers, all intent on reaping new sales as the government expands healthcare nationwide.
- read the Reuters coverage
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