Big Trouble in Little China: Back Taxes & Backhanders

Gerald Clarke


It has been a busy few weeks for stories coming out of China. Many of them reflect that language isn’t the only barrier to operating in this vast land of promise. Many companies are opening Chinese subsidiaries to perform research or to make the most out of the enormous populous in performing clinical trials, but the following stories show that care must be taken to ensure that reducing costs by working in China doesn’t result in a reduction in quality work.

A Few Wrinkles for GSK

                 Sacked R&D chief

A recent sacking in GSK’s China office could hardly be more high profile, a head of R&D, a Nature publication and fraudulent data. Dr Jingwu Zang, head of the China R&D department was fired last month after they received a tip that data in their publication in Nature Medicine was misrepresented. The research focused on Multiple Sclerosis, however the tissue that was involved in this pre-clinical investigation did not originate from patients with multiple sclerosis and in some cases the origin could not be verified at all. The paper has since been retracted and several other staff were fired or placed on leave

                Backtaxes & Backhanders

On the 11thJuly, China’s Security Ministry announced that an unknown number of unnamed GSK executives had pled guilty to a number of ‘economic crimes’. These crimes involve both bribery and using fake receipts to avoid tax.

This story comes as GSK themselves are investigating claims that sales staff in China were bribing doctors to use botox. This investigation has been prompted by a whistleblower that made the claims that doctors were being given money to use the product.

Bristol-Meyers Squibb Slip Up

A China-based Trial called Aristotle of the drug Eliquis was outsourced by Bristol-Myers Squibb to another American company called Pharmaceutical Product Development Inc. (PPI) to supervise. At the China trial sites, it was discovered that patients had in a number of cases been receiving the wrong medicine with the FDA noting “concern with the finding that a substantial fraction of patients might have been given the wrong treatment (active drug instead of placebo or vice versa)”. Additionally they said that “The records were altered in order to cover-up GCP violations which had occurred at the site.” Several employees have been fired at the sites where this data has been forged. The drug has since been approved but the reasons behind the delay in its approval were only revealed recently. The drug’s approval seems to make the misconduct even more pointless as a good drug was kept off the market when it could have been used to treat patients.

China’s pharma market will continue to grow and in the coming years it is expected to become the world’s second biggest drug market, but these stories illustrate how companies must be aware of the different conditions when they make the decision to move into China. Many of these could have been avoided or the damage of them mitigated with a greater understanding of the Chinese regulatory landscape. With the stories of arrests or corruption, companies must provide greater oversight for their Chinese operations to stop events like these happening.