Former CRO Employee Stole Merck Compounds

Last month, a court in Shanghai convicted a former employee of WuXi PharmaTech, a contract research organization with operations in the US and China, of stealing samples of two different Merck compounds that were being tested in Chinese facilities. Xiao Hao was given an 18-month sentence, including six months that were suspended, and ordered to pay $45,000 in restitution, according to Chinese press reports (

see this).

The reports indicate that he stole small quantities of MK-3102, a GLP-1 inhibitor that is being developed to treat diabetes, and MK-5172, which is being developed to combat hepatitis C, both of which were in Phase II testing as of last fall, according to the Merck pipeline (read here). After the thefts, Xiao offered them for sale on the Internet, which Merck later discovered. The thefts took place last year, although were apparently not disclosed until the recent sentencing.

This is only the latest instance in which a drugmaker has experienced this sort of crime. Earlier this month, a former Sanofi chemist pleaded guilty to stealing trade secrets and selling compounds through another company in which she held an interest. The former chemist, Yuan Li, was sentenced to 18 months in prison, according to court documents (back story).

In a statement, WuXi described Xiao as a "junior employee" who acted by himself, and that the CRO has a "zero tolerance policy" for such activity. The CRO added that this was an "isolated" incident and the only known instance in 11 years of operations in which customer compounds were misappropriated. "We regret that one of our employees committed a crime on our premises," WuXi ceo Ge Li says in a statement. "As in any company, there will always be the risk of damage caused by a determined criminal."

To some, the theft may intensify a debate over the increased use of outsourcing in China. A growing reliance on companies in China have raised ongoing concerns over the reliability of the supply chain, especially in the wake of the Heparin scandal. Just last month, for instance, the State Food and Drug Administration found that hundreds of capsule makers were selling capsules with unsafe levels of chromium (read this). Then again, the Sanofi crime also illustrates that theft can happen anywhere.

A WuXi spokesman declined to comment on the Chinese press reports that identified Merck as the customer. "We prefer not to identify our customers," he says, refusing to confirm or deny that Merck compounds were stolen. We asked Merck for a comment and will update you accordingly. [UPDATE: A Merck spokesman phoned us to say that the drugmaker supports the statement made by WuXi, but declined further comment.] Meanwhile, WuXi says it is reviewing security measures and upgrading employee training and oversight.

jail pic thx to tim_pearce on flickr

14 Comments

Jun 4, 2012 - 2:14pm
Is THIS why clients of CRO's are so freaking paranoid all the time and get panties in a bunch if [God] forbid someone takes something home to read, when there are not enough hours in the workday to do the expected job as well as said reading, editing.

This whole system needs an enema. And I noticed the Glaxo thread as suing the Louisiana Attorney General.

I mean come on already. WTF???

BJ

Jun 4, 2012 - 3:10pm
It is fairly common security practice to disallow documents in insecure settings - such as your home. I used to attend investigator meetings for the sole purpose of cruising the meeting property for wayward meeting materials and I'd find them just about anywhere despite those participating having been trained on leaving such items scattered about. Not having enough time to work on things in a secured work space is not the problem of the client. It is the problem of your CRO not having enough staff to execute on what they've been contracted to do.

Of course your comparison of off site documents is also a far cry from a CRO employee stealing investigative API and then selling it over the internet but either case will get clients' panties in a bunch. Some tighter than others.

Jun 4, 2012 - 4:33pm
I wonder if there will be additional litigation, or if Merck will shore up controls to prevent future occurances because they realize that litigation might not be the best prevention strategy.
Jun 4, 2012 - 4:57pm
If the intent of the theft was to reverse engineer the synthesis it's very likely that the amount stolen was way too small for this purpose. Small samples of drug are mailed every day of the week to chem/tox labs, animal pharmacology labs all around the world. It would be easy for the samples to be diverted but everybody knows they are too small to do anything else with.

Keep your shirt on folks.

Jun 4, 2012 - 5:02pm
Big Jim, if you are taking CRF's back to your hotel to finish reviewing you should get to the site earlier in the morning. Once the CRF's are off site anything can happen and they can't be replaced. I have fired CRA's for doing the very thing you describe.
Jun 4, 2012 - 5:45pm
@OII the samples stolen were enough to manufacture and sell API over the internet. This is a significant case. I am curious to see what other details emerge publicly.
Jun 5, 2012 - 12:10pm
Costs versus trust.

Very simply. How far is your Bioscienses department willing to go to reduce their costs at the risk of losing the next blockbuster drug?....

I wonder why medication is so costly.

Jun 5, 2012 - 1:11pm
@OII 4:57PM--Were the structures of these compounds disclosed by Merck? Many pharmas hold that information closely for as long as possible, often through Phase II (and Merck holds ALL information closely....). If they weren't disclosed, then enough material for structural characterization would be enough for someone to find marketable value.
Jun 5, 2012 - 5:57pm
To answer NJB, I would ask if any of the X-Ray Crystallographers browsing Pharmalot this evening care to tackle that one?
Jun 5, 2012 - 10:47pm
@NJB WuXi was conducting research on the compounds in question. They manufacture the compounds in question - as an outsourced provider to Merck. They were given the keys to the kingdom and one of them decided to throw their own house party. There wasn't anything all that ingenious about what the scientist did other than sell it over the Internet like it was a commercially available drug.
Jun 6, 2012 - 5:11pm
Does Pfizer fear one of it's own disgruntled scientists would sell the Chantix compounds?
Jun 7, 2012 - 12:46pm
@Xmrk: My thought was more that a Merck competitor would find value in knowing what Merck was up to (in structure terms, anyway)--I agree with your thoughts on the person/people doing this.
Jun 7, 2012 - 6:02pm
@NIB The kicker here is that WuXi works for many drug companies. Who's to say that they don't present a POC candidate from drugmaker X as one of their own basic research discoveries to drugmaker Y? By the time such an action came out in the wash (I.e.,litigation) would WuXi care? Would anyone?
Jun 15, 2012 - 10:22am
I have visited WuXi multiple times. WuXi hires more chemists in a year than the entire US Pharma R&D industry - a demonstration of corporate commitment to scientific excellence in the US. They are an impressive organization and their management does the best they can to preserve confidentiality. Entire therapeutic discovery areas have been "outsourced" to WuXi from Merck and other pharmas. When corporations minimize R&D investment and when there is no US Government Industrial Policy (hasn't been one since the 1950s) we can expect to see lots of WuXi's taking up those tens of thousands of jobs shed every year from US Pharma R&D. Good luck to all of you who believe that naked profits and reducing taxes on Corporations who deserve to be considered as an individual person will again make the US a pre-eminent country.