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Lilly cites 'deep concerns' over China kickback allegations

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Indianapolis-based drugmaker Eli Lilly and Co. said it is investigating allegations its employees paid Chinese doctors at least $4.9 million in bribes and kickbacks.

 The employees allegedly gave bribes to Chinese doctors to promote the sales of two diabetes drugs in Shanghai and the eastern Chinese province of Anhui, the 21st Century Business Herald reported Thursday, citing a former senior manager of the company identified by the pseudonym Wang Wei. Bribes and special payments are common practice for selling products, the person was cited as saying.

The allegations make Lilly the third major multi-national drugmaker accused of bribing doctors in return for prescribing drugs. GlaxoSmithKline Plc, based in London, and Paris-based Sanofi face similar investigations. Four Glaxo employees having been detained over allegations that the company paid $490 million in spurious travel and meeting expenses as well as trading in sexual favors.

“We are deeply concerned about the allegations made against Lilly China,” Yan Connie Li, a Lilly spokeswoman, said in an e-mail Thursday. “Although we have not been able to verify these allegations, we take them seriously, and we are continuing our investigation.”

The 21st Century Business Herald is a newspaper based in the southern Chinese city of Guangzhou.

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.

In Sanofi’s case, a whistle-blower said the drugmaker paid about $280,000 in bribes to 503 doctors in the country, the 21st Century Business Herald reported on Aug. 8. Government scrutiny has extended to other foreign drugmakers and local hospitals since China’s Ministry of Public Security detailed the Glaxo allegations on July 15.

Lilly said it was aware of similar allegations last year, and did an investigation that failed to verify them.

“We were made aware of very similar allegations in 2012 by a former sales manager from the region that was mentioned in the article,” Li said. “At the time of the allegations, we did an exhaustive investigation to search for any evidence of kickbacks. The investigation was very thorough and included employee interviews, e-mail monitoring, and expense report audits.”

Lilly has been in trouble over bribery in the past. In 2012, the company agreed to pay $29.4 million to the U.S. Securities and Exchange Commission to settle charges that it paid off government officials to obtain government contracts in Brazil, China, Russia and Poland from 1994 to 2009.

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