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A Bull in a China Shop

July 23, 2013

In yet another entry under “Your Pharmaceutical Company Does NOT Have Your Best Interests At Heart”, GlaxoSmithKline is again in the news.  Not having the most pristine record when it comes to this sort of thing, Chinese officials have accused the company of bribery and corruption.  In the latest news, the company has also been cited for problems with it’s research and development operation in China.  The NYT reference is here:  http://www.nytimes.com/2013/07/23/business/global/drug-research-in-china-falls-under-a-cloud.html?ref=global&_r=O.  GSK, the largest British pharmaceutical maker, has entered the Chinese market like many others because of the possibility of massive profits there, falling profits domestically, and cheaper research and development.

Minxin Pei, a writer for Fortune magazine, said in a July 18th article: “Sales of pharmaceutical products in China in 2012 reached $82 billion, including roughly $10 billion of which were imported drugs. Western pharmaceutical firms, which also have over 1,500 joint ventures in China, have gained enormous market share with both imports and locally manufactured drugs. In most large cities, they account for 60-65% of the sales… To make health care accessible, the government keeps the prices of medical services very low. Hospitals lose money providing such services. To keep hospitals afloat, Beijing allows them to charge high prices on prescription drugs. As a result, income from prescription drugs accounts for 40-50% of a public hospital’s income in the cities and a much higher percentage in the countryside.”

On the first charge by the Chinese, of bribery, well kettle meet black.  It is my understanding that bribery is part of the deal when you do business there.  The Chinese do things like get the American delegation drunk the night before a negotiation so they can’t function the next day.  They don’t have very good checks on behavior, like a functioning legal system.  That part of the GSK thing is kind of a given.

The other part, about questionable research practices, is much more worrisome.  As any computer programmer knows, if you put garbage in you get garbage out.  Clinical trials of drugs are only as reliable as your least reliable data source.  Safety and efficacy absolutely depend on these things being carried out properly.  Any doubt about a part of the data casts doubt on all of it.  It is hard to trust the drugs that GSK makes when accusations like this surface.  Now, no doubt there are a whole bunch of rules and regulations within GSK, but remember they are dealing with a completely different culture and language.  Directions are issued from the very top in China, Face is very important, middle managers have very little decision-making capability, and everyone is untrustworthy until proven otherwise.  Other than fierce family and group loyalty, the Chinese are competitive as all hell.  Imagine this:  the guy running a certain research protocol is suddenly told of a breach in reporting of some animal studies of a drug that is already in human trials.  Well, he doesn’t want to look bad and lose face, he knows a guy down the hall on another study that’s recruiting faster than he is, he doesn’t want his bosses to stop his project, so he says nothing.  An American protocol director might make a similar decision, true, but it sounds like in this case the oversight provided by some of the executives, who also weren’t squeaky clean, was also questionable.

In the relentless pursuit of more money, GSK and others are willing to bend the rules of business.  They absolutely CANNOT  bend the rules on drug research.  Garbage in, questionable pharmaceuticals out.

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