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First U.S. citizen detained as China pharma probe spreads

By Michael Martina

BEIJING |         Tue Jul 23, 2013 11:15am EDT

BEIJING (Reuters) – The first U.S. citizen has been detained in China in connection with probes sparked by an unfolding corruption scandal in the drugs industry, as China widens the range of international firms and staff under the spotlight.

Police have also questioned two further Chinese employees from drug maker AstraZeneca in Shanghai, after a local sales representative was taken away for questioning earlier.

And China’s health ministry said 39 hospital staff would be punished for taking bribes from drug companies.

The unnamed American is the first U.S. citizen to be detained in connection with the investigations, and the second foreign national, after a British risk consultant linked with GlaxoSmithKline was held last week.

GSK has been accused by China of funneling up to 3 billion yuan ($489 million) to travel agencies to facilitate bribes to doctors and officials.

“We are aware that a U.S. citizen has been detained in Shanghai. We are in contact with the individual and are providing all appropriate consular assistance,” U.S. embassy spokesman Nolan Barkhouse said on Tuesday, when asked about the involvement of U.S. citizens in the widening probe.

He declined to say which company the individual was associated with.

The latest moves by Chinese officials underline the country’s tough stance on corruption and high prices in the pharmaceutical industry, as it unrolls wider healthcare access and faces an estimated $1 trillion healthcare bill by 2020.

“Momentum is gathering and if you are a big international firm, then you’re a good example to be held up. This is a wake-up call for the rest of the industry,” said Jeremy Gordon, director of China Business Services, a risk management company focusing on China.

AstraZeneca said that the Shanghai Public Security Bureau had asked on Tuesday to speak with two line managers linked to the sales representative questioned earlier.

“The Public Security Bureau is describing this as an individual case. We have no reason to believe it is related to other investigations,” the company said in the statement.

DOCTORS DISMISSED

Meanwhile, Chinese doctors and officials at the receiving end of bribes are also feeling the wrath of the authorities.

The official Xinhua news agency, citing a statement from the Health Ministry on Tuesday, said 39 employees at a hospital in southern Guangdong Province would be punished for taking illegal kickbacks, totaling 2.82 million yuan ($460,367), from two drug makers between January 2010 and December 2012.

“The vice chairman of the hospital’s trade union and two people in charge of the two pharmaceutical companies involved have had their cases transferred to judicial organs, while nine doctors who directly received kickbacks were dismissed, suspended or had their licenses revoked,” the report said.

The companies involved were not identified.

Shanghai police detained British man Peter Humphrey earlier this month. Humphrey runs an international business risk advisory firm, ChinaWhys, that has worked with drug companies, including GSK, two people familiar with the situation said at the weekend.

Chinese police have detained four Chinese executives from GSK and the company’s head of finance for China has also been prevented from leaving China since the end of June.

Authorities have also visited the offices of Belgian drug maker UCB.

($1 = 6.1413 Chinese yuan)

(Additional reporting by Ben Hirschler, Adam Jourdan and Ben Blanchard; Writing by Adam Jourdan and Ben Hirschler; Editing by David Cowell)

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