In her lawsuit, Shull alleges that, beginning in January 2005, when she became Famvir brand director, she was told to ensure Famvir's value through at least 2008-2010 by Novartis managers, including Tom Eberling (who until recently was the Novartis US pharma president). The global Famvir team developed what was called an impairment model - referring to the difference between the current book value and future book value. To avoid impairment, or a preciptious drop, "future value was inflated through high predictions about future sales."
And how were those predictions to be calculated? "These predictions were partially based on the inclusion of worthless clincial trials, each projecting tens of millions of dollars in future value expressed as net present value. Further value was elevated by utlilizing extremely low generic erostion rates compared with industry standards. By employing these measures, Novartis proactively concealed the impending impairment from shareholders and investors," the lawsuit charges. Shull also claims Novartis created a 10 percent "cushion" in future value to prevent PriceWaterhouseCoopers, from "digging deeper into the overall model and valuations."
However, Shull alleges the trials, which were designed to enhance Famvir value by "several hundred million dollars," were never included in the impairment valuation, nor was a patent challenge by Teva Pharmaceuticals. However, she claims she was told by Jeff Fletcher, the global brand director, that one of the trials was potentially valuable because the results could be used for off-label promotion of Famvir as a treatment to prevent genital herpes (as opposed to being merely a treatment).
In her lawsuit, Shul describes various attempts she claims to have made to convince Novartis execs to change their minds about Famvir valuation, but to no avail. She was fired this past March. Meanwhile, Novartis two months ago took a one-time charge of $250 million to $300 million for impairment of its Famvir assets after Teva launched a generic version. Last year, by the way, Famvir generated $166 million in US sales.
UPDATE: A Novartis spokesman writes us on Tuesday with this statement: "We are familiar with Ms. Shullâ€™s situation. When her employment was terminated earlier this year for lawful reasons, it was handled appropriately and fairly. We look forward to defending ourselves in court and responding to these allegations."