Glaxo case shines light on China's medical bribery

Saturday - 8/3/2013, 8:34am EDT

AP Business Writer

BEIJING (AP) -- Huang Dongliang says his uncle was being ignored by his low-paid cancer specialist at a Chinese government hospital. So the family gave the doctor a "hongbao," the traditional red envelope used for gifts, with 3,000 yuan ($480).

"We could feel an obvious difference" after that, said Huang, who lives in the southeastern city of Quanzhou. "The doctor started to do more checkups, to give suggestions and advice and offered a detailed chemotherapy plan."

Such informal payments pervade China's dysfunctional health system. Low salaries and skimpy budgets drive doctors, nurses and administrators to make ends meet by accepting money from patients, drug suppliers and others. Accusations last month that GlaxoSmithKline employees bribed Chinese doctors to prescribe its drugs brought international attention to the flow of illicit money. But to China's public, the practice has long been common knowledge.

Many blame a system in which the country's hospitals nearly all are state-run but get too little money from Beijing. Most of China's 2.3 million doctors are hospital employees and are barred from adding to their income by taking on second jobs.

"Physicians are way underpaid and they need to find a way to survive," said Gordon Liu, a health care economist at Peking University's Guanghua School of Management.

The ruling Communist Party has promised higher health spending as part of efforts to spread more of China's prosperity to its poor majority. But with a population of 1.3 billion, the cost of a full-scale overhaul will be daunting for Beijing. The government faces other financial demands while economic growth is slowing.

Under the current system, the state-set price to see an oncologist or other specialist is as little as 8 yuan ($1.25) -- less than the cost of a hamburger and too little to cover a hospital's expenses.

An experienced physician might earn 6,000 yuan ($980) a month. That top level is about average for an urban Chinese worker at a time when a 100-square-meter (1,000-square-foot) apartment in Beijing can cost more than 6 million yuan ($1 million).

To fill the gap, hospitals add surcharges to drug prices and assign employees sales quotas. Doctors and other employees accept money to move patients up waiting lists for surgery or to let them see the physician they prefer. Doctors, administrators and others take kickbacks from pharmaceutical companies to use more expensive drugs or use them more often. Bribes can also distort treatment by encouraging overuse of expensive drugs or procedures.

"There are many farmers and people without medical insurance, and it's they who suffer greatly," said Liu Junhai, head of the Commercial Law Research Institute of the ruling party's Renmin University.

Huang said that after his uncle was diagnosed with lung cancer last October, he went to the bigger nearby city of Xiamen, which had a reputation for "better medical ability and attitude."

"The doctor barely said anything useful after 12 or 13 days in the hospital," he said. "Then my cousin sent 3,000 yuan to get the doctor to pay more attention to my uncle."

Complaints about medical corruption have fueled public frustration at doctors, nurses and hospitals. Distraught families that pay extra are dismayed if a patient sickens or dies. That has erupted in a spate of stabbings and other violence against hospital employees.

Last year, 39 staff members of a hospital in the southern city of Gaozhou and five salespeople for drug companies were implicated in a kickback scheme that inflated medicine costs for patients, according to the newspaper Shanghai Evening Post.

The hospital director was fired and 382 employees returned 5.8 million yuan ($950,000) in improper payments, the report said.

"For the hospital's 35 drug suppliers, no matter which is selected, in order to give the hospital an incentive to sell more drugs, they will all find ways to make contact with doctors," the hospital director, Ye Guanrui, was quoted as saying. "In a hospital with 1,000 staff members, one-third will take kickbacks."

A half-dozen physicians and hospital employees approached by The Associated Press declined to talk about medical bribery, even on condition of anonymity, due to its sensitivity.

In the GlaxoSmithKline PLC case, police say employees of the British company paid doctors, hospital administrators and officials of the government and medical groups to encourage use of its medications.

Four employees have been detained. Police say they are suspected of laundering money through travel agencies to conceal the payments and evade Glaxo's internal anti-bribery controls.

Glaxo has tried to distance itself from the scandal, saying the employees acted without its knowledge and violated its policy.