A travel agency in east China's Shanghai has been closed, so that a probe can be carried out over its role in suspected bribery and tax-related violations of GlaxoSmithKline or GSK.

 

　　Meanwhile, it is being reported that the China branch of Belgian drug maker UCB has been visited by authorities as China widens its probe into the drug industry.

 

　　Industry insiders say that aside from cracking down on commercial bribery, the investigation may work to curb sky high drug prices in the country.

 

　　CRI's Zhang Shuangfeng has more.

 

　　Li Ling is a professor from the National School of Development of Peking University. She says the current investigation into GSK only reveals the tip of the iceberg in relation to drug pricing.

 

　　"Over the years, hospitals have depended heavily on drug sales for revenue. From drug production to sales, there is a comprehensive industrial chain. The latest round of medical reform only touched on the drug sales in hospitals, but in the drug production and distribution process, there is huge room for overpricing. But the authority hasn't probed into this sector until now. So, I think the investigation will be very helpful to bring in further reforms in drug pricing."

 

　　GSK China has been accused of transferring up to 3 billion yuan or 489 million US dollars to 700 travel agencies and consultancies since 2007 to facilitate bribes.

 

　　Wen Jianyong, the owner of the Shanghai-based travel agency, says the falsely claimed money is used to bribe GSK's interested parties.

 

　　"Liang Hong would tell me that he is going to visit an expert or official. But according to their company rules, the employee can't spend over 200 yuan on a gift. That will not be enough. Then he would ask me to prepare more cash for him. Sometimes it could be 40 to 50,000 yuan and sometimes it could be 500,000."

 

　　Liang Hong was the operations manager for GSK China. He adds the money spent on bribery will be shifted on to product costs, which eventually pushes up the drug prices.

 

　　"Each procedure comes with costs, and all of them will be added to the drug price. This sort of operational cost will take up around 20 to 30 percent of the product price."

 

　　Liang says the company's antidote for hepatitis B originally costs less than 84 yuan, but with operational costs taken into account, the ex-factory price of the drug can reach over 140 yuan.

 

　　Earlier this month, the National Development and Reform Commission started a separate investigation against 60 pharmaceutical companies for their drug pricing.

 

　　Meanwhile, Cheng Wenhao, a professor with Tsinghua University, is calling for further investigation over the parties and personnel who receive bribes.

 

　　"In my opinion, a balanced commercial bribery investigation should look into both parties; the provider and the receiver. Those who receive bribes should also face harsh penalties. Only by doing so can the authorities crack down on the supply and demand of commercial bribery."

 

　　The investigation is currently ongoing and a British executive of GSK China has been barred from leaving the country.

 

　　For CRI, I'm Zhang Shuangfeng.