Sinovac CEO caught for bribing Chinese regulator remains unscathed and continues to oversee COVID-19 vaccine development

The Washington Post published a news article last month highlighting that Sinovac was involved in bribery in the past many years with regard to getting its previous vaccines approved by Chinese authorities (‘As China nears a coronavirus vaccine, bribery cloud hangs over drugmaker Sinovac‘, 4 Dec).

In 2003, Sinovac was the first to begin clinical trials of a SARS vaccine and first to bring a swine flu vaccine to consumers in 2009. However, its founder and CEO, Yin Weidong, was also bribing top China’s drug regulator for vaccine approvals during that time, as revealed by Chinese court records seen by The Post.

In its article, The Post noted that “graft and weak transparency have long plagued China’s pharmaceutical industry”.

As of last month, Sinovac has not yet released efficacy data for its COVID-19 vaccine, making it unclear whether its vaccine can protect recipients as successfully as the vaccines from Moderna and Pfizer, which were more than 90 percent effective in preliminary analyses.

With regard to past bribery cases involving Sinovac’s CEO, the company’s regulatory filings said that he cooperated with Chinese prosecutors and was not charged. The CEO said in a testimony that he could not refuse demands for money from a regulatory official.

Still, there is no evidence that any of Sinovac’s past vaccines approved in cases involving bribery were faulty. But some medical experts say that extra scrutiny of Sinovac’s drug claims is justified, given its record of “moral flexibility”.

“The fact that the company has a history of bribery casts a long shadow of doubt over its unpublished, non-peer-reviewed data claims about its (COVID-19) vaccine,” said Arthur Caplan, medical ethics division director at New York University Langone Medical Center. “Even in a plague, a company with a morally dubious track record has to be treated with great caution concerning its claims.”

A review of public records and trial testimonies by The Post reflects that Sinovac’s rise in China’s vaccine industry took place with the help of priority projects from Beijing and kickbacks to officials who assisted in regulatory reviews and sales deals.

A number of details from the court cases have not been reported previously, in part because of China’s censored media, said The Post.

Sinovac’s history of bribing Chinese officials and hospital staff

In a 2016 court testimony, Sinovac’s CEO admitted to giving more than US$83,000 in bribes from 2002 to 2011 to a regulatory official Yin Hongzhang and his wife. Yin Hongzhang was the deputy director of the China Food and Drug Administration’s drug-testing center who oversaw vaccine reviews. He had confessed to expediting Sinovac’s vaccine certifications in return for receiving bribes from Yin Weidong.

Those years corresponded to Sinovac’s large growth when the biotech start-up founded in 2001 was handpicked by Beijing officials to lead development of vaccines for SARS, avian flu and swine flu.

Yin Hongzhang revealed in court that the bribes were for giving regulatory approval for Sinovac’s vaccines for hepatitis A, SARS, avian flu, foot-and-mouth disease and influenza A. He admitted that he had helped “accelerate the approval process” for those Sinovac’s vaccines.

In fact, before SARS hit in late 2002, Sinovac’s Yin Weidong had already been bribing Yin Hongzhang for a year. The 2 Yins are not related.

In his court confession, Yin Hongzhang said he mentioned to Yin Weidong in 2002 that he wanted to buy a car, drawing a US$15,200 cash gift from the executive. That same year, Sinovac’s first product, the Healive hepatitis A vaccine, was approved for sale.

A few years later in 2006, Yin Weidong gave Yin Hongzhang and his wife $7,600 in cash, saying it was to help them furnish their new apartment, according to testimony by Yin Hongzhang’s wife. Yin Weidong said in testimony that when he was invited to their newly furnished home months later, he gave them another US$15,200 in cash, which he expensed.

During that period, Sinovac gained approvals to sell influenza, avian flu and swine flu vaccines in China. Sinovac’s swine flu vaccine was approved for sale in China just half a year after the virus was detected in Mexico.

In 2011, Yin Hongzhang asked Yin Weidong to lend him around $45,600 to buy a villa on Beijing’s northern outskirts. Yin Weidong said in court that he arranged the cash drop-off through an intermediary, wary of repercussions if he handled it personally. Yin Hongzhang’s wife told the court that she and her husband later picked up the cash in a hotel lobby.

Gleaning from court documents, The Post further revealed that not only Yin Hongzhang had admitted to taking bribes, at least 20 other Chinese officials and hospital administrators across five Chinese provinces had also admitted in court to taking bribes from Sinovac employees.

“In the vaccine industry, we usually give a commission to the person in charge to encourage them to use our vaccines,” one Sinovac’s salesperson said in a 2017 case in the southern province of Guangdong. The salesperson admitted to giving a hospital staff US$2,441 in kickbacks — “always through envelopes of cash” — as a reward for the hospital purchasing 5,351 doses of Sinovac’s hepatitis A vaccine from 2011 to 2015.

Bribe-taker goes to jail but bribe-giver remains unscathed

The Chinese regulator Yin Hongzhang was sentenced in 2017 to a decade in prison for taking bribes from Sinovac and seven other companies. While Yin Hongzhang admitted to graft, Sinovac’s CEO Yin Weidong said in his testimony that he “could not refuse” requests from a regulator.

The Sinovac’s CEO was not charged and continues to oversee the company’s COVID-19 vaccine development.

Peter Humphrey, a British corporate investigator who has probed pharmaceutical corruption cases in China, called it “a bit extraordinary” that Sinovac emerged unscathed in 2017, despite its CEO confessing to bribing the Chinese regulator.

In a statement to The Post, a Sinovac spokesman said the company had entrusted the legal system with handling the past bribery cases appropriately. He said the CEO’s ability to do his work was unaffected. Sinovac, however, did not make their CEO Yin Weidong available for an interview.

It’s perplexing that a top China executive from GlaxoSmithKline was given a suspended prison sentence for bribing doctors and officials to bolster sales in a 2014 court case while Sinovac’s CEO emerged unscathed. Furthermore he is allowed to develop the COVID-19 vaccine, which Singapore government is currently considering for approval.

Vaccine mishaps continued to occur in China in recent years. Two years ago, another Chinese vaccine firm Sinopharm recalled 400,000 shots of diphtheria, pertussis and tetanus vaccine for substandard quality.

Meanwhile, inside Sinovac, an acrimonious shareholder struggle is brewing, which resulted in the freezing of trading of its stock on Nasdaq since February 2019. The ownership battle has taken dramatic turns, including a physical fight for the company seal — a stamp used by Chinese firms for legalizing documents — that Sinovac said resulted in a factory power outage and ruined vaccines. Sinovac has otherwise continued business as usual.

 

 

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