MDT Medtronic PLC

The Chinese government's punishment of a medical-equipment supplier for price-fixing could be the opening to wider scrutiny of health-care costs.

The National Development and Reform Commission this week fined Medtronic PLC 118.5 million yuan ($17 million) for refusing to let dealers and distributors discount prices for the company's insulin pumps, pacemakers and other medical devices. It said this raised costs to patients.

This was the first time the commission had fined a medical-device maker, according to the state broadcaster CCTV. The news was widely covered in official media--usually a sign of a major investigative push.

Medtronic is just the "tip of the iceberg," according to the China Economic Herald, the commission's official publication, which reports that 100 pharmaceutical and medical-device companies are under the microscope.

A spokesman for Dublin-based Medtronic said the company accepted the decision and would pay the fine.

"We are absolutely committed to ensuring that we are in full compliance with local laws and regulations," he added.

In April more than 40 commission officials raided Medtronic's China headquarters in Shanghai, according to Chinese media reports, which said the company sought to impede the investigation by deleting emails and refusing to answer questions. The Medtronic spokesman didn't dispute those accounts.

CCTV said Medtronic enforced price-fixing by firing any dealers selling items for less than the price it set.

China is looking to restrain health-care costs as economic growth slows. Some medical devices are much costlier in mainland China than in neighboring markets such as Hong Kong and Taiwan, said Professor Zhou Zijun from Peking University's School of Public Health, adding that Beijing closely monitors prices elsewhere for evidence that the ones at home are inflated.

Fanfan Wang

(END) Dow Jones Newswires

December 08, 2016 03:36 ET (08:36 GMT)

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