Global Pharma's R&D Re-Balancing

Earlier this week, in Michael Woodhead’s superb blog China Medical News, he wrote about “major problems with ‘serious’ research clinical trails carried out in China.” Michael points to a JAMA article and then proceeds to elaborate:

“the FDA found serious problems with the Chinese clinical trials of apixaban, a novel anticoagulant. At one site the FDA concluded that patient records had been altered. When they investigated further the FDA inspectors declared that data from 23 other Chinese clinical trial sites was suspect and should be excluded from their evaluation of apixaban (Eliquis). We often hear that western pharma companies are shifting their R&D from the US and Europe to China. It may be cheaper but with reports like this you have to wonder if it is worth it in the long run.”

This is not the first set of concerns that have been voiced about clinical trials and other pharma-specific R&D endeavors underway in China. Lost in the last two years during all the commotion about GSK’s corruption problems in China was the company’s other problem in its clinical trial group, which resulted in the 2013 firing of its research chief.

These problems all take place against the backdrop of a major re-balancing of where pharmaceutical R&D budgets are being spent globally. Almost every major pharmaceutical multinational has made announcements of planned investments in their own R&D capacity in the China market. These investments reflect simple realities: China’s appetite for innovative medicines means that more R&D inevitably can and will be done inside its own borders. This inevitability has been made all the more certain as China has focused on the development of a domestic life science sector as one of its focus areas, a decision reflected in the most recent Twelfth Five Year Plan.

What to make of these problems, and the re-balancing of where pharma MNCs spend their R&D budgets, are the more interesting questions. Quick work should be made of two tropes: that these problems are somehow illustrative of the unique problems of doing innovative R&D of any sort in China, and that this sort of re-balancing is inherently bad for the countries who currently enjoy dominant positions economically by serving as the global workforce for where bench science takes place. Of all topics international trade policy touches on, public health should be one of those that certainly is not a zero-sum game.

China’s aspiration to develop its own domestic pharmaceutical sector has twin goals. Yes, there is an economic development goal that smacks into long-held points of contention between the so-called “Washington” and “Beijing” models, with the latter focused on a more explicit sort of favoritism and command-driven national economic development model than the American approach. But more important (and more likely to be successful) than China’s economic development goals are the country’s public health goals, which explain a large part of the country’s desire to have domestic R&D capabilities to ensure that innovative therapies are being developed and commercialized specifically for China. Step into the middle of where these two goals intersect, the infrastructure within which pharmaceutical clinical trials occur, and no one should be surprised that problems have presented themselves. In fact, these sorts of problems coming to the surface are necessary and, if Chinese officials and MNC businesses respond accordingly, these can also benefit industry, government and ultimately patients.

How so? First off, and admittedly the most optimistic take-away, is that knowing about these problems at all is a step in the right direction. Yes, we certainly can surmise that for every one story that has come to light, there are a number of others that have been hidden away; however, these problems could easily have been swept under the rug. Transparency in China is an especially hard quality to institutionalize, and because of this, cynics about China’s aspirations in the life science sector understandably seize on these problems. What can – and should – be pointed out is that these problems appear to have surfaced after a combination of internal company-led inquiries and American regulatory oversight.

Second, problems around data irregularities, lack of traceability, and data integrity have to be resolved for China to achieve either of its twin goals around making this sector a source of economic growth, or helping address its own domestic public health issues. China deeply desires to make life sciences one of its successful high-technology sectors capable of exporting domestically developed and produced goods into overseas markets. For export markets to trust Chinese developed pharmaceuticals, regulators and consumers have to have confidence in the efficacy of the R&D, as well as the quality of the products being exported. Problems like those apixaban encountered are how compliance systems become more, not less, robust.

Third, these problems shed further light on the need to see China’s own FDA (known as the CFDA), to have additional budgeted funds available for spending on new staff, training programs, and infrastructure designed to ensure China’s domestic life science sector is capable of providing a scientifically based, fully transparent regulatory regime on-par with those in the developed world. The best of China’s intentions in these areas will be of little help if the country does not significantly increase the amount of regulatory capacity at its disposal.

Fourth, the clinical trial problems point towards the larger narrative around how China’s economy continues to modernize, inching into higher technology sectors that were previously out of reach for the country. Today, China’s aspirations are more likely than not to come true simply because of the enormous investments its government and foreign MNCs are making into the country’s life science infrastructure. Are these efficient investments? Today, they are not. But will they ultimately be effective, as the country’s bench science infrastructure improves? Yes, they will likely become highly effective.

This poses an interesting challenge to western policy makers: as China’s economic model proves effective moving into higher technology sectors such as life sciences, how do western countries ensure they have created and maintained a vibrant ecosystem for the most innovative pharmaceutical research and commercialization to be conducted within their respective borders?  This is competition, but in a way that embraces globalization, not that tries to turn the clock back to a period when China could be safely compartmentalized into low-technology heavy manufacturing sectors.  As with many complex issues Washington must face, the simple answer – more protectionist policies – would also be the most short-sighted. The harder response is to wrestle with China’s ability to focus and invest in areas it believes are essential to the country’s social stability, economic development and public health. They are a long way away from perfection, but their ability to concentrate on these topics is, at the very least, something Washington could stand to learn from.