GSK scandal triggers debate on high drug prices in China

The bribery scandal involving British pharmaceutical giant GlaxoSmithKline’s Chinese subsidiary GlaxoSmithKline (China) Investment (GKSCI) first came to light 11 months ago.

GSK China's office building in Shanghai. (Photo/Xinhua)

GSK China’s office building in Shanghai. (Photo/Xinhua)

The police found that the British drugmaker offered bribes to boost sales and inflated drug prices to make up for the bribery expenses and help the firm earn huge profits.

Among the irregularities cited was the domestic price of Heptodin — a drug used to fight hepatitis — being quoted as seven times higher than what was being charged in some countries.

Heptodin was being sold for 142 yuan (US$22.76) in China, compared with only 18 yuan (US$2.87) in South Korea, less than 26 yuan (US$4.17) in Canada and less than 30 yuan (US$4.8) in the United Kingdom.

The news agency added that this meant that Chinese patients had to pay much more to buy a box of Heptodin and that “the price of the drug sold in China could be seven times higher than in other countries.”

But the price gap was not valid, as this comparison involved comparing the price of a box of Heptodin in China with a tablet overseas.

Although the error was quickly pointed out by the media and other websites, GSK made no further clarifications on the price differences. But the controversy surrounding the case has triggered a hot debate about the prohibitive high prices enjoyed by the original drugs of the multinational pharmaceutical companies.

“Although the basis for calculation in GSK’s case was wrong, it is a fact that the British company has violated the law,” an insider from the Pharmaceutical Industry Association stated, adding that “maybe we could use the case to solve the long-stalled issue of allowing original drugs to set their own prices.”

The original drugs refer to imported drugs that have passed the patent protection period, but still enjoy the unique treatment of setting their own prices so that price differentials between the original drugs can be more than 10 times that of domestic generic drugs.

“There is no such a thing as original drugs in the international community; there are only patent drugs and generic drugs. Patent drugs enjoy high prices and market status for a short period of time, but after that period, there will be generic drugs. Only in China, these multinational companies continue to set high prices after the patent protection period and enjoy higher than national treatment,” Yu Mingde, president of the China Pharmaceutical Enterprises Association, pointed out.

Yu has been dedicated to the scrapping of such treatment for years. Some are also of the view that this is one of the major factors for high drug prices in China.

Source: WantChinaTimes

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