Report: Lilly paid kickbacks to Chinese doctorsBy TOM MURPHY , Associated Press
Aug. 22, 2013 11:02 AM ET
INDIANAPOLIS (AP) — Eli Lilly and Co. has spent millions of dollars on kickbacks to doctors in China for new patients who started using the drugmaker's insulin products, according to a report from a Chinese newspaper.
The 21st Century Business Herald reported that the Indianapolis company spent at least 30 million yuan, or about $4.9 million, in direct kickbacks to doctors. The paper cites a former Lilly executive it identified using the pseudonym Wang Wei.
A Lilly spokeswoman said in an email the company is "deeply concerned" about the allegations, and it is still investigating very similar accusations from a former sales manager that it learned about last year.
The company said it interviewed employees, audited expense reports and checked emails as part of an "exhaustive investigation" for any sign of kickbacks. Lilly said it has not been able to verify the allegations.
The newspaper reported that doctors received payments from Lilly representatives as high as $130 in some cases for each new patient. The doctors were asked to fill out cards on each patient after they prescribed the medication. Lilly representatives then collected the cards and paid the doctors, the paper said.
The paper also reported that Lilly representatives were evaluated on the number of returned cards. Those with the highest totals received rewards. Reps who failed to meet set totals were eliminated from the team.
The paper said documents it obtained provided by the source showed that Lilly made the payments in 2011 and planned to do so last year as well.
Insulin is used treat diabetes, a chronic condition in which the body either does not make enough insulin to break down the sugar in foods or uses insulin inefficiently. Over time, diabetics are at higher risk for heart attacks, kidney problems, blindness and other serious complications.
Lilly has made a big push to expand its presence in China, in part to provide treatments for diabetes, a disease that has grown rapidly in recent years. In late 2010, it announced that it would open a diabetes research center in China to develop treatments.
Chinese authorities have been cracking down on pharmaceutical misconduct. They've launched an investigation against French drugmaker Sanofi after the state-owned 21st Century Business Herald also reported that an unnamed whistleblower said Sanofi paid 503 doctors a total of $274,000 to prescribe Sanofi products. The paper said the payments were disguised as grants for research programs.
Government officials also detained last month some employees of British pharmaceutical company GlaxoSmithKline on bribery suspicions.
In China's 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. The practice has long been common knowledge.
Late last year, Lilly agreed to pay $29.4 million to resolve federal allegations of possible corrupt business practices by the company's overseas partners. The settlement dealt with a U.S. Securities and Exchange Commission investigation launched in 2003 of four Lilly affiliates in Brazil, China, Poland and Russia. The SEC investigated their business practices between 1994 and 2009 for possible violations of the Foreign Corrupt Practices Act, which bars publicly traded companies from bribing officials in other countries to get or retain business.
Lilly did not admit or deny the allegations. Under the terms of the agreement, Lilly agreed to have an independent compliance consultant review the company's internal controls.
Shares of Lilly climbed 14 cents to $52.56 in Thursday morning trading, while broader U.S. trading indexes also rose slightly.
AP reporter Didi Tang contributed to this report from Beijing.