Internal Memo Reveals Bristol-Myers Squibb to Stop Paying Speaker Fees to Doctors in China Due to Possible Violations of Company Policies

Published: Mar 09, 2016

Internal Memo Reveals Bristol-Myers Squibb to Stop Paying Speaker Fees to Doctors in China Due to Possible Violations of Company Policies
March 9, 2016
By Alex Keown, Breaking News Staff

NEW YORK – After discovering possible violations of company policies, Bristol-Myers Squibb will cease the sponsorship of medical associations in China and stop paying speaker fees, Bloomberg reported yesterday, citing an internal company document.

Although no company violations were specified in the document, Bloomberg said Karl Lintel, president of Bristol-Myers’ China division, said in the memo the company would immediately cease sponsoring those activities. In addition to banning the sponsorship of medical associations and ending paying speaker fees, Bristol-Myers will also no longer provide food and refreshments to clients in China, Bloomberg said. Ken Dominski, a spokesman for Bristol-Myers, told Bloomberg the company had voluntarily stopped those initiatives in China “as the company continues to review its activities and build upon its business model.”

With its large population, China is seen as one of the biggest potential markets in the pharmaceutical industry. Currently it is the world’s second largest pharmaceutical market, according to data from the IMS Institute for Healthcare Informatics, Bloomberg said. The current Chinese market is worth about $105 billion, but is expected to grow to $200 billion by 2020. Not only is the market for products expected to grow, according to the Institute of Medicine, China, along with India, is one of the top producers of base ingredients for drug manufacturing. In October 2015, Bristol-Myers agreed to a $14 million settlement with the U.S. Securities and Exchange Commission to settle claims that its “joint venture in China made cash payments and provided other benefits to healthcare providers in China in exchange for prescription sales,” Reuters reported this morning.

Pharmaceutical companies are toeing the line with Chinese officials since 2014 when GlaxoSmithKline was fined nearly $500 million by the Chinese government after it was revealed that some employees of the pharmaceutical company were bribing doctors with extravagant gifts to prescribe Glaxo’s medications to their patients. Although GlaxoSmithKline was slapped with such a large fine, the company still maintains a large presence in the region. Last year, the company announced it would establish a new headquarters in Singapore following the termination of 110 employees associated with the bribery scandal. Currently GlaxoSmithKline has more than 700 office-based employees in Singapore and expects an additional 100 roles to move into the country as the headquarters nears completion. Construction is expected to be finished by the end of 2016 and the office will be up and running in 2017. All Singapore-based employees will move into the 30,000 square-foot site by the second half of 2017. The eight-story building will be able to hold 1,000 employees.

Other pharmaceutical companies are also securing toeholds in China. Last year Israel-based Oramed struck a $52 million deal with the Chinese investment firm Wuzhou Zhongheng Group Co Ltd. that will grant Oramed exclusive rights to distribute the company’s insulin products in China. Diagnoses of type 2 diabetes have increased substantially in China over the past three decades. There is an estimated 100 million people in China living with diabetes, Medscape reported. Eleven percent of adults in China have diabetes, while 50 percent have prediabetes, which means there is a ripe market for diabetes products.

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