China tackles emerging health care fraud

 


al-scott-80x80   Rx for Fraud: Health care fraud issues

The opinions expressed in this column aren't necessarily those of the ACFE, executives or employees. — ed. 

 

JanFeb-china-pills    
 

In part 1 of two parts in the November/December issue, I described lesser-known emerging health care frauds and U.S. efforts to combat them. In this second part, I describe some of China's plans to tackle similar frauds and joint U.S.-China efforts. 

WHY CHINA MATTERS

Many have postulated that China is at a crossroads on many levels: politically, economically and socially. This juncture coincides with last year's once-a-decade change in leadership. In recent times, social media users increasingly have uncovered fraudulent activities, which China's government-owned media outlets subsequently reported on. Corruption and other varieties of fraud are now part of an intense national dialogue. 

In the aftermath of the U.S.-induced global financial crisis, some in the international community believe China is the world's top economy based on particular metrics, though many in the West adamantly disagree.1 Regardless, China is the major global supplier of active pharmaceutical ingredients used in drugs, a rising player in the production of finished drugs, a hotbed of research and development for the pharmaceutical industry and an increasingly important source for biological/biomedical innovations and treatments.2

China has listed biotechnology as one of the seven strategic emerging industries in its 12th 5th Year Plan (FYP) 2011-2015 — a promotion from its classification as a target industry in the 11th FYP.3 The 12th FYP's "primary goal of scientific development" is a prominent driver towards achieving "long-term, steady and relatively rapid economic development." (jingji changqi pingwen jiaokuai fazhan)4

Despite the trend of American corporations to gradually return some jobs back to the U.S. (or insourcing), high-tech manufacturing and research and development opportunities are still shifting from mature developed countries to emerging countries, including China. Continued construction of state-of-the-art factories and large-scale research industrial parks by multinationals, university-led organizations and Chinese economic development vehicles strengthens this shift.5 

INCREASES OF PROCUREMENT AND SUPPLY CHAIN FRAUD IN ASIA

In a relatively brief time, China has become an essential, if not the most important player in the global pharmaceutical supply chain. The abundance of talent, good infrastructure, and relatively low costs (though gradually rising), has enabled China to become a preferred destination for a number of pharmaceutical companies. Fraud is growing, in part, because of more complex supply chain gaps and continual changes in the global economic and regulatory landscape. A noticeable number of Chinese and Southeast Asian respondents in Kroll's 2011/2012 "Global Fraud Survey" acknowledged this type of fraud.6 
 

       


For full access to story, members may sign in here.

Not a member? Click here to Join Now and access the full article.