Eli Lilly says "deeply concerned" by bribery allegations in China

Thu Aug 22, 2013 2:49am EDT

* Whistleblower tells newspaper Eli Lilly bribes "widespread" in China

* U.S. drugmaker says taking allegations seriously

* Foreign pharmaceutical firms under scrutiny in China

SHANGHAI, Aug 22 (Reuters) - U.S. drugmaker Eli Lilly and Co said it was "deeply concerned" about allegations published in a Chinese newspaper that it spent more than 30 million yuan ($4.90 million) to bribe doctors in China to prescribe the firm's medicines instead of rival products.

A former senior manager for the company, identified by the pseudonym Wang Wei, told the 21st Century Business Herald that bribery and illegal payments at Eli Lilly's China operations were widespread, the paper reported on Thursday.

Eli Lilly is the third foreign drugmaker to face whistleblower accusations in the newspaper this month. The reports coincide with multiple Chinese investigations into the pharmaceutical sector, spanning alleged corruption to how drugs are priced.

"In order to hit sales at rival companies and push the company's own products, bribes and special payments of all sorts were extremely common at the company. The level of the problem was just as bad as at GlaxoSmithKline," Wang was quoted as saying.

The report said the 30 million yuan in bribes were handed out over a period of around one year from 2011 to 2012.

Police have detained four Chinese executives at British drugmaker GlaxoSmithKline over allegations it funnelled up to 3 billion yuan ($489.92 million) to travel agencies to facilitate bribes to doctors to boost the sale of its medicines. GSK has said some of its senior Chinese executives appear to have broken the law.

Eli Lilly said in an emailed statement to Reuters that it was looking into the matter.

"Although we have not been able to verify these allegations, we take them seriously, and we are continuing our investigation," the statement said.

The U.S. firm said it had been made aware of "similar allegations" of kickbacks in 2012 by a former sales manager. It said the firm had opened an investigation at that time involving staff interviews, e-mail monitoring and expense report audits.

Wang told the newspaper that company employees paid the bribes to promote two of the company's key insulin products in Shanghai and neighbouring Anhui province.

Further kickbacks in the form of paid talks, conferences and other contributions were also made, he said.

Last week the 21st Century Business Herald quoted an unnamed whistleblower as saying Novartis AG had paid bribes to doctors to boost drug sales, prompting the Swiss company to launch an internal investigation.

Health Ministry officials are also investigating Sanofi SA over bribery allegations after the newspaper said staff paid bribes totalling about 1.7 million yuan to more than 500 doctors in late 2007 to boost sales. The French company has said it is taking the claims "very seriously".

Corruption in China's pharmaceutical industry is widespread, fuelled in part by the low base salaries for doctors at the country's 13,500 public hospitals.

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