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Drug companies involved in bribery and tax evasion

A PARMACEUTICAL industry insider has called on the government to crack down on the industry, which he says is rife with bribery, money laundering and tax evasion, resulting in higher costs of medicines.

Lu Tao, who has worked 10 years in the industry, with four as a drug sales representative, disclosed it in today's China Youth Daily.

Under Chiona's rules governing drug sales, companies must tell the drug authority the cost of making the drugs before supplying them to hospitals and other businesses. Hospitals then sell them to patients for no more than 15 percent more than their supply prices.

But in practice, drug companies quote much higher costs to make more profit, Lu said.

Lu cited an unnamed drug as an example, saying it cost 26 yuan (US$3.80) a bottle to produce but told the authority it cost 189 yuan.

To get hospitals to use their drugs, sales representatives usually bribe hospital staff, from the principal to the frontline doctors, Lu added.

It has become normal practice for sales people to give money equivalent to 20-35 percent of the drug prices to doctors to encourage them to use their products, he disclosed.

Hospitals would suspend buying a drug if it is not prescribed for three months, according to the drug management rule. To make a suspended drug re-enter a hospital is nearly impossible, he explained.

The industry is also involved in tax evasion, Lu claimed.

Some companies sell drugs to a third party at higher prices before forwarding them to hospitals to get higher tax rebates, he said.


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