Let’s see… That was July 6, 2013, and today is July 18, 2013, and the head of Glaxo North America was telling the New York Times on July 6 that her company was definitely going to avoid the massive corruption (her dainty description of what Glaxo did wrong doesn’t quite cover the matter – unless you think three billion dollars in fines for failure to report the status of a couple of studies sounds about right) for which Glaxo has long been renowned.
And maybe Glaxo will avoid that form of corruption – I mean, the form that involves paying American university professors to put their names on bogus studies your advertising people have written and thereby endangering, well, basically endangering the entire population of the world… While ripping the world off to buy the drugs that will kill it…
Anyway, that was then. This is now, several days later, and now this humongous story about Glaxo using whores and bribes to take over the Chinese market is breaking all over the place, and I’m sure Glaxo is again shocked shocked that hundreds of millions of impoverished Chinese people are unable to afford medicine because the price of pills has been jacked up by Glaxo paying prescribing doctors to jack off.
“Each doctor had a credit card from the company. The kickbacks were transferred to the cards the day after drugs were prescribed,” [one] newspaper claimed.
[An investigator] said consumers were being defrauded. The official Xinhua news agency, which was given access to [a Glaxo executive] in detention, quoted him allegedly saying medicine that cost 30 yuan to make could be sold for 300 yuan.
The sums quoted by the police, if correct, suggest GSK was spending a significant proportion of its annual sales revenue on bribing doctors. In 2012, the company’s sales in China rose 17pc, to nearly £759m, from 2011, according to its annual report.
I wonder if Glaxo is also offering sexual relief to UCLA professors.
You know, lots of university professors are walking around with Glaxo in their name. Take this one, at today’s scandal-plagued darling, Rutgers University: Ah-Ng Tony Kong, Professor II and Glaxo Professor of Pharmaceutics. When does the name of a person (the Paterno Chair, the Ira Rennert Professor) or a company get so yucky you kind of think you might want to refuse it?
A company like Glaxo – could its vileness become so generally known that universities would begin turning down naming rights for their faculty?
Nah.
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Update: The Yellow Peril made us do it!
We don’t do this sort of thing.
July 20th, 2013 at 3:22AM
Dr. Soltan–as much as I appreciate your endearingly snarky approach to this topic as well as my other favorite things you write about–frats, sports, and corrupt trustees–I have to call some BS here. What Glaxo did was absolutely wrong, but qualification is needed. The only reasons this is even newsworthy are:
1. Glaxo is a western company that we hold to higher standards than Chinese companies, or at the very least pay more attention to: if it was a Chinese pharma company doing this–one with no history of unethical politicking of the research enterprise in the west–you probably would not have posted this.
2. The Chinese media-governmental complex brought this story to (or allowed it to come to) light, whereas a million billion similar crimes committed by domestic Chinese companies will never be told, or will be buried deep in the bowels of Chinese blogosphere, never to be translated for western audiences.
Now on that second note, as much as I appreciate your witty way of dealing with corruption in academe, it is not fair to dismissively characterize Minxin Pei’s piece as “the yellow scare did it.” It almost seems like you didn’t even read the piece. The Bloomberg article mentions that the four Glaxo execs facing heat for this are Chinese nationals, which is not surprising at all. Would they have been westerners, well, they wouldn’t have even known how to turn a profit for their company in the Chinese medical/pharm system. What Glaxo’s China arm was doing is unethical to be sure, but fully within the rules of the game in China, as long as your bribes have been properly paid (you have to pay the right bribes first to be able to make the truly profitable bribes). You don’t have to read too far between the lines to see that what Pei (rather modestly) argues is probably true–this was motivated by protectionist concerns.
China’s doctors collude with pharmaceutical reps and take kickbacks to push faulty drugs–some merely sugar pills, others that are potentially dangerous. Pei is correct that hospitals, which offer sometimes staggeringly cheap (albeit shitty) medical care are largely financed by expensive drugs. It is not possible to profitably do business in this context without resorting to the same midstream tactics (high level bribery, whores, etc.) to make the downstream sales possible.
This story isn’t about Glaxo. It’s about China, and perhaps the subtext is really that Glaxo hasn’t properly paid its dues, literally and figuratively, to successfully do business in China. If Pei’s suggestion of protectionist motivations is correct–which I strongly suspect–there’s a chance that Glaxo and other MNC pharma companies might be shut out of this fantastic pharma cash grab subsidized by Chinese patients unless they not only play the game, but more importantly play the long game, seeking to simply increase their presence in the market (and grow their Chinese labor force as well as bribery and tax base) before attempting such aggressive profitmaking as Glaxo attempted in the last few years.
Your indignation is indeed righteous, but when we talk about China, we ought to simply expect a great deal less. The greater consensus among people who watch and write about China is much closer to Pei’s perspective than what yours seems to be. The Chinese government is holding foreign companies to a higher standard than domestic ones.
It is frustrating–reading what I just wrote, I feel like I sound like a flack for companies I really hate, which I normally enjoy watching you condemn. But in this case, you’d do well to hate on the game a bit more than the player.
July 20th, 2013 at 8:46AM
tamade: Many thanks for the thoughtful comment. A few comments in response:
It is of course the nature of multinational businesses to be difficult to parse as purely Chinese, purely Indian, purely American. Most Americans are now aware that their “American” cars are highly unlikely to be exclusively American, for instance, and the big pharma players – as with Glaxo England, Glaxo America, Glaxo China – are largely multinational in the same way. So apportioning national blame in a matter like this one – the Chinese did this, the Brits this, the Americans this – is very difficult.
I do indeed post on “foreign” pharma companies and activities on my blog. Here’s an example, from India.
That the Chinese are also incredibly corrupt (Glaxo is incredibly corrupt, and routinely pays incredible monetary fines as the price of doing corrupt business) is certainly true but irrelevant. Two wrongs do not make a right.
In a similar vein, you write that four Chinese nationals are facing heat. Yes, but China is holding a western Glaxo executive; other western Glaxo people are also in trouble.
You write: “Your indignation is indeed righteous, but when we talk about China, we ought to simply expect a great deal less.”
What I expect from China is that it will behave like what it is: A less sophisticatedly corrupt country than England or the United States. It learned everything it knows about how to run corrupt pharma enterprises from us.
After all, it’s arrived at this particular game very late indeed. Yet its ambitions are every bit as global as ours are.
What I expect from China is not “less.” What I expect is that it will do exactly what most of the massive western pharma corporations (with profits, typically, in the many billions) do – use all private and public means to make money off of this particular enterprise. Whatever one’s government is willing to do to help one make money, and whatever private individuals are willing to do to help one make money — it will be done. I expect, in other words, exactly the same level of global ambition and amoral self-serving from east and west.