GlaxoSmithKline's bribery scandal highlights China's corrupt health care system

An employee of British drug firm GlaxoSmithKline (GSK) enters their office headquarters in Shanghai on July 1, 2013.

Chinese police allege GlaxoSmithKline bribed doctors in China with money and trips, using a tax receipt scam to hide the wrongdoing. It may sound like a most nefarious plot, but those in the know say it’s par for the course in China.

"It’s a systemic problem. It’s certainly not a GlaxoSmithKline problem," says Shaun Rein, author of The End of Cheap China.

Salaries for doctors in China average less than a thousand dollars a month. As a result, bribes are an integral part of China’s healthcare system.

"Foreign pharmaceutical brands are caught in a conundrum," says Rein. "In order for them to sell into China, they have to give bribes. Because that’s what the Ministry of Health and that’s what hospital administrators and doctors are forcing them to do. If you don’t give a bribe, you can’t expand here."

Rein suspects the government is singling out GlaxoSmithKline because it wants to put an end to the corruption in China’s healthcare system and it’s easier to target foreign companies to scare the entire industry.

 

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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