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Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« Update on the Bribery Scandal | Main | Resveratrol: What's It Do For Mitochondria? »

July 23, 2013

One GSK China Scandal Blends Into Another

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Posted by Derek

According to the New York Times, the problems with GSK's China operations have been going on for a while. It's worth distinguishing two types of trouble, though: there's the bribery scandal, where the company's representatives have been paying off people up and down the Chinese health system, and there's the scientific scandal at the Shanghai R&D site, which has led to a very public retraction and dismissal of employees. I make this distinction because the research end and the commercial end of a given drug company are usually quite far apart from each other; you have to go very high up the chain to find someone who's in charge of both.

What the Times has bears on the R&D problems, and it's not good. THey've obtained a confidential document dated November 2011:

Executives at the British drug maker GlaxoSmithKline were warned nearly two years ago about critical problems with the way the company conducted research at its drug development center in China, exposing it to potential financial risk and regulatory action, an internal audit found. . .

Auditors found that researchers did not report the results of animal studies in a drug that was already being tested in humans, a breach that one medical ethicist described as a “mortal sin” in the world of drug research. They also concluded that workers at the research center did not properly monitor clinical trials and paid hospitals in ways that could be seen as bribery.

That last part refers to a practice of paying clinical trial coordinators a flat fee for their services, regardless of how many people were enrolled at their site. This could be a way of paying someone for supposedly doing a full-time job when they're actually doing nothing of the kind. And that, I have to say, sort of mixes the paint together for all these stories: if even the clinical development group was paying people off, where does it end? Now we have a scientific scandal, a bribery scandal, and a scientific bribery scandal - if this goes on, I'm going to have to make a chart to keep it all straight.

I've been saying unkind and cynical things about the Chinese government while writing about the bribery scandal, and I don't plan on taking any of that back. But there are unkind things to say about GlaxoSmithKline, too. With all the information that's coming out, you have to wonder how well GSK was keeping an eye on things. The Chinese market is so huge, and so potentially lucrative, that some companies might just be tempted to say "OK, you folks are the XYZ Corporation's Chinese branch. Do what you need to do to stay competitive over here, but don't tell us about it, OK?" But I don't think that's something you can get away with, not forever. It catches up with you, especially when dealing with a government like China's that has no problem pitching high and inside when they feel the need.

GSK is a big company, full of people who understand how the world works. The Times document shows that they were aware of what was going on, and what could happen. And here it is, happening. Anyone on the inside who was sounding the alarm probably isn't getting much satisfaction about saying "I told you so", though.

Comments (31) + TrackBacks (0) | Category: Clinical Trials | The Dark Side


1. annon2 on July 23, 2013 7:50 AM writes...

Wink, but don't get caught.....

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2. TheScarletPimple on July 23, 2013 8:01 AM writes...

The question is: Where does the buck stop?

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3. Anonymous on July 23, 2013 8:14 AM writes...

I've heard multiple times that the only way for a foreign company to get anything done in China is to pay the right people off. It wouldn't be that big of a stretch to say that, in most cases, the more successful a company is in China, the more they are engaging in shady business practices.

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4. Nick K on July 23, 2013 8:20 AM writes...

Agilist will be along in a minute to tell us all how "Patrick", "Moncef", and "Andrew" are dealing heroically with these scandals.

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5. petros on July 23, 2013 8:37 AM writes...

Given the $3 billion fine incurred last year for mismarketing drugs in the US, are the latest disclosures to be expected?

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6. Anonymous on July 23, 2013 8:55 AM writes...

Sounds like a lot of hassle for zero drugs discovered.

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7. Pete on July 23, 2013 9:01 AM writes...

A summons to the headmaster's study would seem inevitable?

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8. ex-GSK on July 23, 2013 9:45 AM writes...

But this time, they really are sorry and will definitely clean things up and it will never, ever happen again.

Heard this every few years of my 20 at the company.

Maybe the type of stiff criminal penalties imposed on the banking industry after the financial collapse would do the trick?

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9. niche on July 23, 2013 11:16 AM writes...

"What the big pharma does in China is also common in the US. The difference is that the Chinese call it corruption, we call it business as usual."

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10. Anonymous on July 23, 2013 11:26 AM writes...

Moncef and Patrick definitely knew about this audit. Jingwu Zhang was behind it and had a very blase attitude towards what was going on. From what i've heard, there were 100's of animal studies deleted internally which, if taken into account, would have meant that the clinical trial in question would have been terminated. There were multiple resignations over this one, of the 'him (Zhang) or me' type.

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11. Esteban on July 23, 2013 12:05 PM writes...

@8: I know the fake soul searching routine well from my big pharma days.

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12. Anon on July 23, 2013 12:14 PM writes...

Right now they are doing the opposite. They are spending tons of money getting drugs approved in the US/EU and then trying to recoup some of that cost in China...which clearly can not happen.

At some point these guys are going to have to split their data and drug candidates. Those developed and approved in China would then be tested in a more strict regulatory environment (US/EU). Drugs discovered in US/EU would have to stay in the US/EU, because if they were to be sold in China, a "discount" rate would be required which would then cause a feedback loop of US/EU governments wanted those same discounts.

Take it one step further and just save time by not putting any operations in China and only acquiring those with approved drugs that may be candidates for passing the FDAs higher bar and be allowed for sale in the US.

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13. pc on July 23, 2013 12:26 PM writes...

Now one American was detained for questioning. It appears that this whole thing is gaining momentum. I liken the pharma rush to china during the past two decades to the California gold rush in the wild west. Or land grab if you will. You are hoping to rake in big chunk of profit in the lawless world (maybe a bit too harsh to China - they have laws after all, or so it appears). This is also true to some of those so called sea turtles - Zang in the research paper scandal of GSK appears to be just one such creature.

Maybe the real purpose for the government behind the crackdown is to force the price of drugs (especially imported ones) down, just like the baby formula episode. Nevertheless personally I'm glad to see this probe happen. The acts will be cleaned up, the standard of the practice will be hold higher, so the next time someone thinking about handing out the cash in various forms or organize all those lavish "conferences" would seriously think twice. Is it going to be the turning point of some sort? I don't have high hope but will keep my fingers crossed.

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14. emjeff on July 23, 2013 12:39 PM writes...

For the first time in my 13 years at GSK, I am ashamed to work here. If the Times is correct about higher-ups knowing about these problems, heads had better roll.

What is so ironic about this is that every employee in the US and EU have had to take anti-bribery and anti-corruption training last . For every employye, it was more than 6 hours of training, to learn what you'd already know if you spend even one Sunday in Sunday school. The fact that the higher-ups in this company seem to have a separate set of rules for themselves makes me want to vomit.

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15. anchor on July 23, 2013 1:02 PM writes...

@ 14- Don't be hard on yourself! I know where you are coming from. The fact of the matter is both China and India are full of corruption at every level and that is the only way the multinational operate to get a foothold there. Also, understand that it also takes two (giver and taker) to tango. But my umbrage is reserved for the Chinese government bureaucrats who take the "nobler than thou" attitude. I believe that this is a retaliation in part due to recent spate of Chinese nationals caught (NIH, Wisconsin etc.)in their "stealing act" here in the USA.

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16. David Formerly Known as a Chemist on July 23, 2013 1:29 PM writes...

This is unfortunately the cost of doing business in a country like China. "If you want a piece of our big juicy market you need to grease the following palms..." You either play by those disgusting rules or you maintain your morality and refuse. Guess what our shareholder-driven capitalist system encourages?

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17. MTK on July 23, 2013 1:39 PM writes...

The NY Times article does end on somewhat of a more positive note (if you're GSK) in that the outsiders contacted did give them some credit for investigating their own research center then following up and acting on the reports afterwards.

If you believe them...

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18. watcher on July 23, 2013 1:44 PM writes...

17, and what else do you suggest that GSk might be saying officially at this point?

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19. Sir Can-drew on July 23, 2013 1:58 PM writes...

Who was was behind putting an R&D center in China? Moncef
Who hired Jingwu Zhang? Moncef
Who was Jingwu's 2nd in command in Shanghai? John Elliott
Who were Jingwu Zhang's supervisors? Moncef, then Patrick Vallance
Who moved neuroscience discovery and then development from US and EU to Jingwu and GSK China? Patrick
Who put Jingwu's wife in charge of clinical development in China? Patrick
Who supervises Moncef and Patrick? Andrew Witty
Who oversees Andrew Witty? GSK's Board
Who will get the blame for all of this? A bunch of hooligan Chinese VPs and underlings.

Funny how that works.

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20. MTK on July 23, 2013 2:08 PM writes...

@18, nothing really.

Just saying there was a little tidbit at the end which spins it slightly better than Derek's post, FWIW. (and it may be worth very little)

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21. Hap on July 23, 2013 2:21 PM writes...

I don't think China's hands are clean, but considering relatively recent history, pharma management and sales need no additional license to let their inner door-to-door salesmen come out to feed. They seem to be only a few steps behind Dr. Oz in the "how much of your integrity/soul/self can you sell" sweepstakes.

Converting the reputation of an honorable and useful (but financially underperforming) business to that held by late-night hucksters and supplementeers (while maintaining its previous level of financial underperformance) is apparently rather lucrative.

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22. Anonymous on July 23, 2013 3:20 PM writes...

GSK gave business to China exactly for these kinds of things, they just did not expect they'd get caught.

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23. Anonymous on July 23, 2013 8:36 PM writes...

Every one in the pharma field knows how GSK China does their business (business model!) and actually, GSK IS one of the first few companies introduce such MODEL into China. How creative they are! There is no way GSK HQ does not know what is happening there.

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24. pharma professional on July 24, 2013 11:41 AM writes...

@ #14 - I hear you; more CIA and ABAC training to come

@#19 - thinking it'll be mostly the underlings (i.e. foot soliders in R&D) all over (not just China) who will bear the blame. The higher ups will be just fine. Unless the board grows a pair and makes some changes (unlikely)

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25. LondonJourno on July 24, 2013 1:58 PM writes...

Hello, I'm a London based Journalist looking at Big Pharma practices in the UK.

If anyone has any information about these practices - whether you call them kickbacks; bribes; financial inducements -
taking part in the UK please get in touch on

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26. Anon on July 24, 2013 2:12 PM writes...

As LondonJourno is not disclosing their news organization I would not send them any information.
They may not be who they say they are and may use the information against you.

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27. Derek Lowe on July 24, 2013 2:23 PM writes...

#25 is on the level - I've heard from her directly.

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28. Homo lunaticus on July 24, 2013 2:57 PM writes...

And at the end of the day there will be another round in regulatory paranoia. The 99.9999% of companies playing by the rules are going to be the real victims - as always.

It is no fun to work in this business anymore.

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29. Ellen Clark on July 24, 2013 4:12 PM writes...

I too was approached by email about the GSK scandal today. But my reporter was a woman from Bloomberg in Hong Kong. I told her I didn't know anything that wasn't in the news already. No inside skinny. At least the reporters are doing their job and actually doing investigative journalism.

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30. collabchem on July 25, 2013 8:53 AM writes...

GSK folks have a habit of not erasing whiteboards ( so perhaps journalists and investigators should start there, who needs to tap email..

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31. Anonymous on July 30, 2013 9:01 PM writes...

I was talking with an expat Chinese colleague about this whole scandal and they said something that resonates with what #15 said about "givers and takers". This person has a friend who is a doctor back in the homeland. According to this person, the system is set up where it might be impossible for companies to get usage of their drugs *without* "gifts". For example, when somebody goes in for surgery, it is very common for family members to visit the HCPs with "gifts" to ensure the highest standard of care. Even if the doctor doesn't want to accept the gift, they often let their assistants partake to ensure they have their best effort. Mind you, HCPs there don't make nearly the per capita income as their Western counterparts so there is a much higher temptation for this "supplemental" income. Note I am not trying to excuse the Pharma Reps' behavior; if they weren't busted by China, they could (& should) be charged under the foreign corrupt practices act. However, the way things are being portrayed in the media, the HCPs appear blameless. IMO, if you take the bribe, you too share some responsibility. If my friend's account is representative, perhaps the government is "killing the chicken to make the monkey nervous". It is hard to imagine that the government has the stomach for the upheaval that would be caused by going after briber and receiver at the same time, Even the most powerful government officials will sooner or later need to go to the doctor.

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