Pharmalot

J&J Asks Employees To Assess Its Battered Corporate Credo

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In the wake of scandals and investigations over manufacturing gaffes, countless product recalls and questionable marketing practices, Johnson & Johnson is embarking on a round of corporate soul searching. The health care giant is asking employees to take "reflect, reaffirm, question, challenge and share" their thoughts on the 70-year-old credo and then take a survey for the purpose of “identifying opportunities for improvement and action.”

The news was conveyed this morning to employees by J&J ceo Alex Gorsky and Peter Fasolo, worldwide vp for human resources and follows the recent launch of the first corporate image campaign in more than a decade. Ironically, the campaign was unveiled the same week that J&J encountered a production scandal in South Korea that may lead to criminal charges (back story).

As noted many times, the J&J image has taken a severe beating over the past three years. During that time, J&J (JNJ) has experienced an outsized list of problems that have led to recalls of Tylenol, Motrin, Rolaids, Sudafed and Benadryl; K-Y Jelly; Acuvue contact lenses; syringes; hip replacement devices; the Topamax epilepsy med and glucose meters (which came after a patient death).

The J&J Ethicon unit last year halted marketing of four vaginal mesh implants that have been the subject of lawsuits filed by approximately 1,000 women who claims the products have caused serious internal injuries. And the healthcare giant also had difficulty stocking Tampons and the Nizoral anti-fungal shampoo , the only over-the-counter shampoo used to treat dandruff and psoriasis.

Two of the most contentious scandals have taken place in business units that were headed by Gorsky, who last year was promoted to ceo and chairman. One involved defective hip implants and an effort to downplay failure data that was not publicly released. The other was a widely publicized kickback case involving the Omnicare nursing home pharmacy. At issue were charges Omnicare received kickbacks – in the form of rebates, educational grants and payments for marketing data – so that the J&J Risperdal antipsychotic would be prescribed more often than rivals meds (learn more here).

By early last year, these developments had taken a toll. A corporate reputation poll from Harris Interactive found that J&J ranked 7th, which was the first time that the healthcare giant did not rank in first or second place (see this). Investors, however, have not been deterred. J&J shares have climbed some 43 percent in the past year, as shareholders have decided the promise of product sales and drug pipeline outweigh the recent problems and any ensuing image issues. In fact, to keep investors happy, J&J recently increased its dividend 8.2 percent.

 

 

 

 

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Ranbaxy Whistleblower: So Many Infractions And Each Was Egregious

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Last week, Ranbaxy Laboratories agreed to pay $500 million to settle criminal and civil charges in the US for a serious and widespread manufacturing ruse. The feds called this the largest such penalty ever paid by a generic drugmaker for such violations. For nearly a decade, Ranbaxy perpetuated a scheme to boost profits and maintain its edge as a leading purveyor of low-cost generics. Scientists were ordered to manipulate reports; other employees were forced to illegally carry supplies of brand-name drugs to India and duplicitous statements were issued by high-ranking executives. The FDA, which later banned 30 Ranbaxy drugs from the US and reached a consent decree with the drugmaker, was alerted to the fraud by Dinesh Thakur, 44, who had worked for Bristol-Myers Squibb in the US and became a whistleblower after moving to India to work for Ranbaxy. He returned to the US seven years ago and will now collect $48 million, less attorney fees, for his role in helping the feds. We chatted with him about the fraud that he detailed in his lawsuit and the lessons learned from this episode. This is an edited version…

Pharmalot: So I read that early on, your son had an ear infection and you gave him a Ranbaxy drug, but it was ineffective. It was a foreshadowing, I guess, but what exactly happened?

Thakur: Children at that age develop ear infections and most often you prescribe amoxicillin and I got a pediatric dose, but nothing happened. That was the troublesome part. You trust the medication. You don’t question it, unless something stands out that makes you question it… So I (went back to the doctor) and the drug was switched for Augmentin, which is sold by GlaxoSmithKline and that made him better.

Pharmalot: As you looked into the various fraudulent activities, you saw a lot of disturbing things, which were outlined in the complaint (this story links to the complaint), but which of these worried you the most?

Thakur: The one thing that I can say is that working for any pharmaceutical company is that there are expectations for the drugs that are made and that the patients take. What I saw was a basic violation of the trust. There were a number of different things I saw and documented. But it all goes to the basic premise that you trust the medicine and if you can’t, there’s a big issue.  But it was a combination of all of these things. I can’t single out one and say this was worse than another. When you think about all the things I saw and, it is in the complaint, each one by itself is an egregious thing (read more details here).

Pharmalot: From what I gather you went to the FDA (with your concerns), but not to the authorities in India. Why was that?

Thakur: No, I did not go to authorities there. I was educated in the US and worked in a US pharmaceutical company and I knew the FDA had the most understanding and knowledge of regulations and enforcement capability. And I just wanted to make sure that patients who were taking the drugs were not being harmed. And in my opinion, the FDA had the wherewithal to do that.

Pharmalot: What about the patients who took Ranbaxy drugs before the FDA instituted the ban or the consent decree was issued? They’re not really benefiting from this episode, are they?

Thakur: If you look back at the sequence of events that led to last Monday, with the Application Integrity Policy (see this), the FDA essentially eliminated 30 drugs from the supply coming into the US. Clearly, this was a benefit to patients in...

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Hopes For Autism And Fragile X Drug Dashed By Little Biotech Struggles

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In a setback to autism research, a small biotech has placed its activities on hold and discontinued a clinical trial for its lead compound due to funding difficulties. The move comes shortly after results of a Phase IIb clinical trial indicated the drug, STX209, did not meet its primary endpoint, prompting Roche not to exercise an option that would have provided Seaside with needed financing.

Last year, Seaside and Roche signed a pact to collaborate on treatments for autism spectrum disorder and fragile X syndrome. Since its founding in 2005, Seaside has been trying to create the first drugs to treat the underlying neurological problems that cause these disorders. The biotech, which used research from the Massachusetts Institute of Technology as a springboard, has survived on private backing (back story).

The pact signed last year with Roche was seen as validation for its approach. As part of that deal, Roche had the right to exercise options to commercialize STX209 – also known as arbaclofen - upon completion of certain clinical development phases in both autism spectrum disorder and Fragile X syndrome, although Seaside continued to lead clinical development (look here).

But after the recent clinical trial disappointment (read here), Seaside last week sent e-mails to parents whose children were enrolled in an open-label extension study to say the trial was being discontinued immediately. The study had enrolled more than 350 children and was expected to complete data collection later this year, according to ClinicalTrials.gov (see this).

"We regret to inform you that Study 209FX303 [An Open-Label Extension Study to Evaluate the Safety, Tolerability, and Pharmacokinetics of STX209 (arbaclofen) in Subjects with Fragile X Syndrome] is being terminated immediately. The closure of the study is due to resource limitations at Seaside Therapeutics, Inc., and is not related to any known safety issue in patients dosed with STX209," the email stated.

Not surprisingly, the decision was met with disappointment by parents, who regularly struggle with efforts to fund research into autism. Some responded by creating an online petition to urge government and industry to provide Seaside with backing to continue its work. Such efforts are increasingly commonplace, of course, in an era where the Internet is used to focus attention on the plight of the very ill, particularly children. So far, some 3,400 people have signed (here is the petition).

STORY ENDS HERE

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France Says 'Non!' To EMA Over Bayer Acne Pill

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Last week, the European Medicines Agency completed a review of the Diane 35 acne pill sold by Bayer, which is also prescribed as a contraceptive, and concluded the pill is safe to use, provided steps are taken to minimize the change of blood clots forming. The review was conducted at the behest of French authorities who, earlier this year, suspended usage after four deaths were reported (back story).

But this review apparently is not good enough for France’s National Security Agency for Medicines and Health, or ANSM, which rejected the recommendation from the EMA Pharmacovigilance Risk Assessment Committee in favor of waiting for a decision by the European Commission. And so, France is continuing to suspend sales and all available product must be recalled as of today.

In explaining its decision, the French agency found that the "thromboembolic risk… especially on the venous (four times higher than women not taking these treatments), was not sufficiently taken into account in practice. Severe cases (that) can lead to death of the patient were reported." And the regulator continued to express concern about off-label use of the drug as a contraceptive (see this).

For its part, the EMA reiterated its position despite the "unexpected" announcement by the French regulator. The EMA noted, however, that its recommendation is only the first step toward a common EU approach (read here).

The move by the French agency to maintain the suspension is significant because this signals a tougher stance following the Mediator scandal. This involved a pill sold by Servier as an appetite suppressant for overweight diabetics and linked to heart-valve damage. Government investigators contended the risks were deliberately concealed. As many as 5 million people took the pill between 1976 and 2009, when it was withdrawn, several years after being yanked in Spain and Italy.

Two months ago, the ANSM came under formal investigation for alleged involuntary manslaughter over concerns the agency neglected to respond to numerous reports that Mediator was causing serious harm. The pill has been linked to some 500 deaths. Several months ago, Jacques Servier, the 90-year-old founder of Servier Laboratories, was also placed under investigation for involuntary manslaughter for allegedly misleading patients and regulators about the drug (back story).

STORY ENDS HERE

 

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Pharmalot... Pharmalittle... Good Morning

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Rise and shine, everyone. Another busy day is on the way, and we are no exception. We have an interesting meeting planned and, of course, various documents to read, which is our own version of R&D. So please join us as we prepare by downing a cup or more of stimulation. Our flavor of choice remains Southern Pecan, by the way. But enough with the endorsements. Time to get to work. So here are some tidbits. Hope you have a smashing day and keep us in mind if you come across anything interesting. We accept all manner of confidential materials, you know...

Pfizer Halts Study Of Non-Hodgkin's Lymphoma Drug (Bloomberg News)

Pfizer Recalls Levoxyl Thyroid Drug For A Second Time (Dow Jones)

Xenoport To Drop Multiple Sclerosis Drug (Reuters)

Royalty Pharma Increases Bid For Elan (Pharma Times)

Bill To Ban Gray Market Drug Sales Is Re-Introduced (Regulatory Focus)

Activists Say Pharma Minister Firing Is Suspicious (Bangkok Post)

Novo Nordisk Pays $700M For Xellia Pharmaceuticals (Pharma Times)

EDITOR'S NOTE: Please check this post for additional stories during the day

morning coffee pic thx to chichacha on flickr

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Bristol-Myers Is Fined For Monkey Deaths, But Will $2,600 Matter?

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In what is apparently an unusual move, the US Department of Agriculture earlier this year fined Bristol-Myers Squibb for violating the Animal Welfare Act after the deaths of two monkeys in its laboratories. The fine was just disclosed by the People for the Ethical Treatment of Animals, which filed a complaint with the agency last year after a whistleblower provided information about lab conditions.

The deaths had previously been reported. In one case, a macaque was left unattended while restrained during a medical procedure, although the cause of death was not known. In the other case, a macaque was left in a case that was being sanitized, but remained locked inside when the cage was moved to a washroom and submerged in near-boiling water (back stories here and here).

These were actually two of four violations cited by the USDA, which fined the drugmaker $2,625 this past February. The others involved an expired bottle of epinephrine in an emergency kit and leaving food containers open (here is the USDA report). We have asked Bristol-Myers (BMY) for comment and will update you accordingly. [UPDATE: A spokesman for the drugmaker declined to comment.]

Although PETA expresses satisfaction that the drugmaker was cited for violating federal rules regarding animal welfare, the advocacy group acknowledges the amount of the fine is pocket change to a multi-national drugmaker that notched some $17.6 billion in worldwide sales last year.

“It’s what led up to it that we hope will prompt the company to overhaul its animal care program and pay attention to what happens in its laboratories. The USDA rarely ever fines facilities that violate animal protection laws and regulations,” Kathy Guillermo, senior vp of laboratory investigations at PETA, writes us. “…It is a long and embarrassing process” because the feds opened a formal investigation.

Although a whistleblower is inside the drugmaker, “we are extremely concerned that this won’t have the impact it should. We don’t know exactly what the company has done to ensure that animals aren’t suffering and dying before they’re experimented on and killed. We will be offering to meet with company officials to discuss these issues.”

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The Soprano Wanna-Bees Are Stealing More Drugs This Year

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After last year marked a notable drop in the value of pharmaceutical thefts, recent data indicates that those Soprano wanna-bees are having a banner year in 2013. So far, some $3.3 million in cargo thefts have occurred, which works out to an average of $172,500 for each heist.

For all of last year, however, the amount of pharmaceuticals that were swiped amounted to slightly more than $3.1 million, or $148,000 on average, according to FreightWatch International, a logistics security provider that tracks commodity thefts.

The rate suggests a decided rebound is under way. Consider that in 2011, a total of $12.7 million in pharmaceuticals were stolen, which works out to an average theft of $555,000. Despite industry efforts to squelch thefts, the numbers suggest thieves are finding new ways to succeed.

The issue has gained notice thanks to the brazen theft three years ago of some $76 million in medicines taken from an Eli Lilly (LLY) warehouse in Connecticut, where the robbers allegedly had inside knowledge of security systems and cut a hole in the roof (read more here). This one robbery increased the total value of thefts that year to $94.7 million, for an average heist of $3.7 million.

Such burglaries are not uncommon, but security experts say the rising number of thefts may suggest a change in tactics. For instance, the latest theft occurred last week when a tractor trailer was stolen from a truck stop in Livingston, Kentucky.

The driver stopped for a bathroom break and when he returned to the parking lot 15 minutes later, everything was gone. Tracking indicated the trailer left the theft site five minutes after stopping, which indicates the shipment may have been followed from origin, according to FreightWatch.

We should note that the value of some thefts is not reported; in other words, the total value of thefts each year is actually higher than data indicates. Also, FreightWatch often includes other items sold by drugmakers – such as vitamins and contact lenses – in its tallies.  

STORY ENDS HERE

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Actavis 'Moves' To Ireland For A Lower Tax Rate

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If there is a take-away message from the $8.5 billion deal in which Actavis is going to buy Warner-Chilcott, it would be that taxes matter. How so? As part of the acquisition, Actavis is going to declare its new headquarters will be in Ireland, where the drugmaker can pay significantly less corporate tax.

This year, for instance, Actavis can expect to pay roughly 28 percent in corporate taxes, but by reincorporating across the pond, its tax rate will drop to about 17 percent. And this boosts Actavis in different ways, according to analysts.

“They were at a little competitive disadvantage for deals,” says David Maris, managing director of specialty pharmaceuticals at BMO Capital Markets. “Competitors with lower tax rates can afford to buy products at higher prices, but now they can absorb (deals) into a lower tax jurisdiction… So they not just pay lower taxes today, but also benefit in future deals.

But it’s a clear example of how the tax rate hurts business The United States government loses out, because it’s not getting near-term cash and loses out forever on future taxes of the newly combined company. It’s not actually as simplistic as that because Actavis still has to pay taxes generated on profits in the US, but it’s fair to say the US Treasury gets less money when a company does something like this.”

Actavis executives, however, will likely continue paying some US income taxes, though. While not disclosing individual tax strategies, Actavis ceo Paul Bisaro acknowledged that the senior management team is not moving to Ireland. “Everybody loves New Jersey too much,” he told analysts this morning. For the curious, the drugmaker is currently based in Parisippany, New Jersey.

Of course, a key reason for this deal, which includes absorbing some $3.5 billion in Warner-Chilcott (WCRX)  debt, is that Actavis (ACT) should stand a better chance of successfully negotiating the looming end of the patent cliff. As fewer patents expire on big-selling brand medicines, generic drugmakers will have fewer opportunities to sell cheap copycat versions. “US generic companies are being driven up the value chain,” writes Sanford Bernstein analyst Ronny Gal in a research note.

Specifically, Warner-Chilcott helps Actavis diversify into such therapeutic categories as women’s health and dermatology. As a result, sales of brand-name medicines will soon account for 25 percent of annual revenue instead of approximately 8 percent. Put another way, this climbs from $600 million or so to perhaps $2 billion, according to Maris.

And this can create still more opportunities to take advantage of other brand-name purchases, since the Actavis name is now more likely to show up on a list of potential acquirers that bankers will circulate when talking to clients about products that may be auctioned off.  “They’re more likely to be in the running now,” Maris points out.

“Everyone wants the next Lipitor, but overall, the generic drug opportunity is shrinking,” he continues. “Actavis has a few brand-name drugs, but the list of companies able to make the transition is few and far between… But they’re also starting to realize that it also pays to be in emerging markets, where a generic drug can become a brand, where there’s no automatic pharmacy substitution. Warner-Chilcott is mostly a US business, but Acatvis can now start bringing those drugs to other geographies.”

 

 

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