First U.S. citizen detained as China pharma probe spreads

BEIJING Tue Jul 23, 2013 11:15am EDT

A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai July 12, 2013. REUTERS/Aly Song

A Chinese national flag flutters in front of a GlaxoSmithKline (GSK) office building in Shanghai July 12, 2013.

Credit: Reuters/Aly Song

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BEIJING (Reuters) - The first U.S. citizen has been detained in China in connection with probes sparked by an unfolding corruption scandal in the drugs industry, as China widens the range of international firms and staff under the spotlight.

Police have also questioned two further Chinese employees from drug maker AstraZeneca in Shanghai, after a local sales representative was taken away for questioning earlier.

And China's health ministry said 39 hospital staff would be punished for taking bribes from drug companies.

The unnamed American is the first U.S. citizen to be detained in connection with the investigations, and the second foreign national, after a British risk consultant linked with GlaxoSmithKline was held last week.

GSK has been accused by China of funneling up to 3 billion yuan ($489 million) to travel agencies to facilitate bribes to doctors and officials.

"We are aware that a U.S. citizen has been detained in Shanghai. We are in contact with the individual and are providing all appropriate consular assistance," U.S. embassy spokesman Nolan Barkhouse said on Tuesday, when asked about the involvement of U.S. citizens in the widening probe.

He declined to say which company the individual was associated with.

The latest moves by Chinese officials underline the country's tough stance on corruption and high prices in the pharmaceutical industry, as it unrolls wider healthcare access and faces an estimated $1 trillion healthcare bill by 2020.

"Momentum is gathering and if you are a big international firm, then you're a good example to be held up. This is a wake-up call for the rest of the industry," said Jeremy Gordon, director of China Business Services, a risk management company focusing on China.

AstraZeneca said that the Shanghai Public Security Bureau had asked on Tuesday to speak with two line managers linked to the sales representative questioned earlier.

"The Public Security Bureau is describing this as an individual case. We have no reason to believe it is related to other investigations," the company said in the statement.


Meanwhile, Chinese doctors and officials at the receiving end of bribes are also feeling the wrath of the authorities.

The official Xinhua news agency, citing a statement from the Health Ministry on Tuesday, said 39 employees at a hospital in southern Guangdong Province would be punished for taking illegal kickbacks, totaling 2.82 million yuan ($460,367), from two drug makers between January 2010 and December 2012.

"The vice chairman of the hospital's trade union and two people in charge of the two pharmaceutical companies involved have had their cases transferred to judicial organs, while nine doctors who directly received kickbacks were dismissed, suspended or had their licenses revoked," the report said.

The companies involved were not identified.

Shanghai police detained British man Peter Humphrey earlier this month. Humphrey runs an international business risk advisory firm, ChinaWhys, that has worked with drug companies, including GSK, two people familiar with the situation said at the weekend.

Chinese police have detained four Chinese executives from GSK and the company's head of finance for China has also been prevented from leaving China since the end of June.

Authorities have also visited the offices of Belgian drug maker UCB.

($1 = 6.1413 Chinese yuan)

(Additional reporting by Ben Hirschler, Adam Jourdan and Ben Blanchard; Writing by Adam Jourdan and Ben Hirschler; Editing by David Cowell)

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Comments (16)
accbar wrote:
When young prisoners of conscience are tissue matched at arrest by communist Chinese authorities and their persons disappear into the pit of communist justice one wonders what can be considered to be corruption?
Many are now finding the siren song of cheap manufacturing to be a lure to the shoals. For in the end it is a communist government, as have other communist regimes, which attempts to harvest the soul, not just the body. Yet there is a way a truth and a life which is given to us that allows our eyes to be open and our ears to hear the discordant notes that is that siren song.

Jul 23, 2013 9:58am EDT  --  Report as abuse
niche wrote:
What the big pharma does in China is also common in the US. The difference is that the Chinese call it corruption, we call it business as usual.

Jul 23, 2013 10:32am EDT  --  Report as abuse
TastySalmon wrote:
niche wrote:

“What the big pharma does in China is also common in the US. The difference is that the Chinese call it corruption, we call it business as usual.”

Couldn’t have said it better myself.

This is how big-pharma operates at every level. From the pharm representative peddling pills at the doctor’s office to the high-pay lobbyist golfing with the Senator, they must have some form of bribery to get what the want.

There is so much money involved with the healthcare system it is astonishing.

Jul 23, 2013 11:16am EDT  --  Report as abuse
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