Drugs, China, and the curious case of Dragon Pharmacy knock-offs

This is how it works: A customer goes in and asks for a certain drug — perhaps with a photograph of the bottle. Store workers look up the treatment, call around, look at inventory and provide a quote. They ask for half or full payment. Many only take cash, while a few accept credit cards.

Bloomberg visited 40 pharmacies in Hong Kong and found several willing to dispense treatments such as Viekira Pak, Herceptin, Sovaldi, Bayer's Nexavar for liver cancer, and Novartis AG's Glivec for leukemia, without a prescription. Some quoted prices that were cheaper than those listed by pharmacies on the mainland; the charges for some treatments not available in China tracked those in the U.S. One pharmacy offered to sell Sovaldi for about $2,800, a fraction of the U.S. price of $84,000, which rendered the merchandise suspect.

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The real Dragon City Pharmacy says it will only provide drugs to those with a Hong Kong prescription. This was corroborated by customers who had just visited and asked for treatments.

The original Dragon City also says it has had complaints of customers mistakenly going to copycat branches and ending up paying too much. "All we have is our brand and we feel it's being tarnished," said Kwong, Dragon City's manager, who asked that only her last name be used. "But even if we complain, one after another keeps popping up."

The original Dragon pharmacy has signs outside its doors saying that it only has one branch.

The Hong Kong government conducts routine inspections of pharmacies, and also buys and tests prescription drugs to fight illicit sales, the health department said in an e-mailed response to questions. From 2011 to 2014, the department conducted 4,775 inspections of pharmacies and convicted 67 for illegal sales of prescription medicines. In Hong Kong, the maximum penalty for illegal possession and sale of prescription medicines is a fine of HK$100,000 ($13,000) and two year's imprisonment upon conviction, according to the health department.

Reputation

Hong Kong has long had a reputation for selling quality health products, and many stores doing legitimate business have flourished. Watsons, a retail pharmacy chain controlled by Hong Kong's richest man Li Ka-shing, has over 200 stores in the city and continues to add more. "At Watsons, we only sell prescription drugs to customers or patients with doctor's prescription and our registered pharmacists will check each case thoroughly," the company said via e-mail.

But there are others who don't follow the same rules. On Aug. 13, Hong Kong's Consumer Council, a government-funded body, cited seven outlets for their "disgraceful" practices, including charging exorbitant amounts for products, saying the stores hurt Hong Kong's reputation as a "shopping paradise."

Lagging behind

William Chui, president of the city's Society of Hospital Pharmacists of Hong Kong, estimates that 90 percent of cancer drug sales at Hong Kong drugstores are to mainland tourists, since most local patients can get their supply through hospitals or their doctors (in China and Hong Kong, physicians can dispense as well as prescribe medicines). "How can they survive and pay the salary of a pharmacist and the rental cost?" said Chui, referring to the mom-and-pop stores opening up in some of the city's high-priced neighborhoods. "You think they can get by just selling toilet rolls, formula milk powder, shampoo? Of course not."

Roche spokeswoman Nina Schwab-Hautzinger says its main customers in Hong Kong are the Hospital Authority and oncologists, though it monitors market demands and would alert authorities to any "unusual activity." Novartis spokesman Dermot Doherty said in an e-mail that the company is "committed to preventing the diversion and counterfeiting of all our products to protect the safety of patients in all countries." Oliver Renner, a Bayer spokesman, echoed the sentiments, adding: "We manufacture prescription drugs, ones that need to be prescribed by doctors.

AbbVie expects pharmacies to dispense Viekira Pak to patients only when presented with a doctor's prescription, in accordance with Hong Kong regulations, spokeswoman Adelle Infante said in an e-mail. Gilead said its drug has been available for prescription in Hong Kong since July, primarily through gastrointestinal specialists and hepatologists, spokeswoman Sonia Choi said in an e-mail, adding it's working to get access for patients in China.

On a smoggy Friday in Hong Kong, one mainland Chinese woman surnamed Li said she had just put a down payment on Herceptin for a cousin from the northern Hebei province. The drug was costing her HK$20,000 ($2,500), and she could pick it up the next day. The price they quoted her is about 30 percent lower than in some parts of China.

"When we found out she had cancer, I rescheduled my trip and came here earlier," she said, standing on Nathan Road, Hong Kong's version of New York's Times Square. "This is life or death, so of course we will do all that it takes to get the best treatment."

—With assistance from Jill Mao and Jasmine Wang in Hong Kong and Li Hui in Beijing.