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GlaxoSmithKline audit showed problems in China

Tourists walked in front of a public service advertisement regarding drug safety in Shanghai on Monday.Eugene Hoshiko/Associated Press

NEW YORK — Executives at 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.

The confidential document from November 2011, obtained by The New York Times, suggests that Glaxo's problems may go beyond the sales practices that are at the center of a bribery and corruption scandal in China. They may extend to its Shanghai research and development center, which develops neurology drugs for Glaxo.

The failings, some experts said, underscore the problems that can arise when major drug companies export their scientific development to emerging markets like China.


Since 2006, 13 of the top 20 global drugmakers have set up research and development centers in China, according to a report by McKinsey & Co. "It's cheaper to do research there," said Eric G. Campbell, a professor of health care policy at Harvard Medical School. However, "I have absolutely no doubt that with cheaper research comes greater risk."

In the case of Glaxo, auditors found that researchers did not report the results of animal studies in a drug that was 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.

Last year, Glaxo said, a more favorable audit found the concerns had been addressed. But several outside experts said the problems outlined in the initial audit were grave and painted a picture of an organization that failed to keep tabs on a crucial research center as it expanded both in size and scope.


In a statement, Glaxo said it was committed to conducting "robust" audits of its business practices, and in this instance, "the process worked exactly as intended." It added, "Patient safety is paramount and the audit reports do not show that this was compromised."

The 2011 audit report also raised alarms about the way the Shanghai office was paying the people who were overseeing the company's trials at outside hospitals or clinics. According to auditors, Glaxo was paying many sites a flat fee for the cost of a full-time coordinator, regardless of the number of participants enrolled in the trial.

Chinese investigators have said that Glaxo participated in a widespread bribery and corruption scheme in which the company used travel agencies to funnel illegal payments to doctors and government officials to bolster drug sales, and authorities have said they are also looking into the practices of other pharmaceutical companies.

On Monday, Glaxo said some of its executives may have broken the law.