Corruption in the Procurement of Pharmaceuticals and Medical Equipment in China:

Are Multinationals Especially Vulnerable?
Susan Rose-Ackerman, Henry R. Luce Professor of Jurisprudence (Law and Political Science), Yale University
| CSCC Conference Room, Fisher-Bennett 345

Calls for reform of the Chinese healthcare system are voiced at the highest levels, and reform efforts are ongoing and fast changing. Healthcare is an essential service provided by professionals to poorly informed patients; a situation that creates incentives for self-dealing in all countries. China is no exception, but some aspects of its healthcare system are unique. We highlight those aspects and consider the interrelationships between Chinese institutions and private producers of medicines and equipment, especially multinational firms. The problem of corruption goes beyond the involvement of particular firms in particular deals. Rather, the structure of Chinese healthcare creates widespread corrupt incentives. The intertwining of three parties--the government, hospitals and their medical staffs, and private companies--has led to the current corruption scandals. Our basic message is that law enforcement is not enough and will be counter-productive if citizens view it as biased and used for political purposes. No reform can succeed unless policymakers confront the incentives for corruption and personal self-dealing built into the institutional structure of the healthcare system. Laws against paying and accepting bribes are a necessary background condition, but they cannot have a lasting positive impact unless coupled with underlying institutional and policy reform.

Susan Rose-Ackerman is the Henry R. Luce Professor of Jurisprudence (Law and Political Science) with joint appointments between Yale Law School and the Yale Department of Political Science. She has taught and written widely on corruption, law and development, administrative law, law and regulatory policy, the nonprofit sector, and federalism. Her recent books are Corruption and Government: Causes, Consequences and Reform, which has been translated into 17 languages, and From Elections to Democracy: Building Accountable Government in Hungary and Poland plus the edited volumes: Interantional Handbook on the Economics of Corruption, vol I, vol II (with Tina Søreide), Comparative Administrative Law (with Peter Lindseth), and Anti-Corruption Poilcy: Can International Actors Play a Constructive Role? (with Paul Carrington). Professor Rose-Ackerman has been a fellow at the Center for Advanced Study in the Behavioral Sciences and at Collegium Budapest as well as a visiting research scholar at the World Bank. She holds a Ph.D. in Economics from Yale University and has held Guggenheim and Fulbright Fellowships. She has a B.A. from Wellesley College. Her current research focuses on comparative administrative law and public policymaking and the political economy of corruption.

* Open to all, lunch provided.