Pharma news highlights: GSK, Merck and the FDA

From the GlaxoSmithKline bribery scandal in China to Merck's product liability lawsuit to the delays in FDA-required post-marketing studies, Ed Silverman provides his views on the latest pharmaceutical news from the last four weeks.

(Continued from "Pharma news highlights: court cases, controversy and increased transparency efforts")

Unarguably, the most sensational item over the past few weeks has been the GlaxoSmithKline bribery scandal unfolding in China. Earlier this week, Glaxo acknowledged that several execs broke Chinese law and will have "zero tolerance" for such behavior going forward. The mea culpa was issued just as other drugmakers may find themselves in the crosshairs of Chinese authorities as they review records held by travel agencies implicated in the drama.

The scandal is all about boosting prescriptions of Glaxo meds in China, where domestic drugmakers are notoriously corrupt and doctors are paid relatively low wages compared with the West. But the episode is renewing scrutiny of Glaxo – and by extension, all multi-national drugmakers – at a time when they are jockeying to expand in China and are also under a microscope for their corporate practices.

Moreover, the overall affect may be that Chinese patients will be paying as much as 10 times more for some medicines, since Glaxo funneled hundreds of millions of dollars in bribes. Glaxo, however, vowed that the changes to be made in its Chinese unit, which were not detailed, would help to lower the prices of medicines there.

The details, meanwhile, hint at lurid behavior as Glaxo used some 700 middlemen, such as travel agents, to funnel hundreds of millions of dollars to doctors and health officials to boost prescriptions. One Chinese investigator made headlines by saying "it is like a criminal organization, there is always a boss. In this game, GSK is the godfather."

The episode is especially embarrassing for the drugmaker, which only last year paid a $3 billion settlement with US authorities to resolve criminal and civil charges that drugs were marketed for unapproved uses and clinical trial data was withheld, among other things. Glaxo CEO Andrew Witty then vowed to bolster compliance and restore credibility.

Chinese authorities, who have also suggested the scheme involved tax evasion, have been combing through travel agency records and reportedly found indications that some agencies were doing outsized business with multiple pharmaceutical companies. As a result, any stepped up pressure on global drugmakers is likely to reverberate as they assess further investment and market expansion in China.

Delays in FDA-required post-marketing studies

A new analysis has found that a rising percentage of post-marketing studies required by the FDA are delayed and a hefty percentage have not begun. Forty-three percent had not yet gotten under way as of 2011, and the number of delays doubled to approximately one in eight that year, according to a research letter published in the Journal of the American Medical Association that examined study commitments issued between 2007 and 2011.

The academics chose 2007 because that was when Congress passed the Food and Drug Administration Amendments Act (FDAAA), which authorized the agency to require drugmakers to conduct post-marketing studies as part of the process for granting an approval. The FDA was also given authority to mandate adherence to deadlines.

So far, though, industry performance has been mixed. On one hand, the analysis found that the number of studies not yet begun fell from nearly 57 percent in 2007 to 43.5 percent in 2011, while the number of studies required under the FDAAA, but not yet started, rose steadily each year to 15.2 percent, or 271 studies, by 2011.

Meanwhile, the trend went in the opposite direction for studies that fulfilled the requirements. These increased from 122, or 6.6 percent, in 2007 to 224, or 12.6 percent, in 2011. But there were no fulfilled FDAAA studies during this period. Also, delayed studies rose from 125, or nearly 7 percent, in 2007 to 241, or 13.5 percent in 2011. By then, 1 percent of studies required by FDAAA were delayed.

Merck wins product liability lawsuit

Merck won an important court ruling for the entire pharmaceutical industry. A federal court decided that, under certain circumstances, drugmakers may defend themselves against product liability lawsuits by citing preemption, which was at the heart of a contentious 2009 ruling by the US Supreme Court. In that case, the court found that a Vermont woman was entitled to sue Wyeth, which is now owned by Pfizer, because the drugmaker failed to adequately include safety warnings on one of its medicines.

"...under certain circumstances, drugmakers may defend themselves against product liability lawsuits by citing preemption..."

The court found there was no evidence to show the FDA would have rejected a stronger warning if Wyeth had sought to do so. In other words, it was not "impossible" for Wyeth to have attempted to update its label. But the court also left the door open to another scenario that invites a preemption defense. If a drugmaker can provide "clear evidence" the FDA would not have approved a unilateral labeling change to include an updated warning, a drugmaker could argue this demonstrated it was impossible to comply with both FDA requirements and a state law finding for a stronger warning.

And a federal court judge decided that Merck had, in fact, attempted to strengthen the warning about a possible link between its Fosamax treatment for osteoporosis and femur fractures, but the FDA did not approve such an addition to the precautions section of the labeling. This attempt occurred in 2008, before an elementary school teacher suffered such a fracture the following year. She argued Merck was aware Fosamax might increase fracture risks years before the drug was made available, but failed to include info in the label.

However, US District Court Judge Joel Pisano disagreed and wrote that "preemption is warranted, because there is clear evidence that the FDA would not have approved a change to the precaution section of the Fosamax label prior to Mrs. Glynn's fracture." In citing FDA e-mails to Merck in 2009, he noted that the FDA rejected the updated labeling during the same month in 2009 that Glynn suffered a fracture, and that the agency warned Merck its drug may have been considered misbranded if the labeling change was made before FDA consent was given.

It was only after the American Society of Bone and Mineral Research issued a report in 2010 that the FDA required Merck and other drugmakers to strengthen the wording in their product labeling to reflect the possibility of an association between bisphosphonate drugs such as Fosamax and femur fractures. The teacher, by the way, already lost her case in court. In April, a jury found in favor of Merck, but Pisano deferred a ruling on a preemption motion until after a jury had made a decision.

Updates to FDA regulations for generic drugmakers

The FDA is following through on plans to issue a proposed rule to revise regulations to allow generic drugmakers to update labeling. The rule would update current regulations that prevent generic drugmakers from doing so, even if they become aware of a potential risk not mentioned in labeling. By contrast, brand-name drugmakers can update warnings and precautions on labeling before obtaining FDA approval.

The moves comes in response to a US Supreme Court ruling two years ago that generic drugmakers are not required to strengthen product labeling, even when alerted to side effects, so long as the same change has not been made to the labeling for the branded medicine. The decision sparked an outcry that product labeling would be insufficient to warn patients about the risks associated with numerous medications.

The step was disclosed on the website of the Office of Management and Budget, and was described as an attempt to "create parity" in the responsibilities required of both brand-name and generic drugmakers. The rule change would mean that generic drugmakers could face the same sort of liability over product labeling as brand-name drugmakers.

"The court found that it would have been impossible for generic drugmakers to comply with both state and federal regulations."

The rule would "amend the regulations regarding new drug applications, abbreviated new drug applications and biologics license applications to revise and clarify procedures for changes to the labeling of an approved drug to reflect certain types of newly acquired information in advance of FDA's review of such change," according to the statement on the OMB website.

In the 2011 Supreme Court case, which is known as Pliva v. Mensing, two women claimed in different lawsuits that generic drugmakers could have made changes to their product labeling under state law and without FDA approval for such changes. They cited an earlier 2009 Supreme Court decision – Wyeth v. Levine – that found FDA regulations do not protect drugmakers from being used under state law over labeling.

Generic drugmakers argued they would have been required to provide labeling that is different from what appears on labeling of the brand-name drug, effectively convincing the court that federal law preempts state law. The court found that it would have been impossible for generic drugmakers to comply with both state and federal regulations. The decision sparked a flurry of unsuccessful legal maneuvering in subsequent cases in which attorneys sought to avoid the preemption argument while hoping to force generic drugmakers to be held liable for harm.

Mutual Pharmaceuticals vs. Karen Bartlett

The US Supreme Court handed the pharmaceutical industry an important victory by ruling that state lawsuits claiming that drugmakers failed to adequately design their medications cannot proceed because these are preempted by federal law.

The case was closely watched because the decision clarifies the extent to which consumers will be able to file lawsuits against generic drugmakers stemming from alleged harm caused by their medicines. However, the issue had the entire pharmaceutical industry on edge because brand-name drugmakers feared the same notion might also be applied to their practices.

In fact, the Obama administration earlier this year had filed a brief in support of the pharmaceutical industry over concerns that the entire FDA regulatory review process could be undermined if medicines deemed safe and effective by the agency could later be considered "unreasonably dangerous".

An issue was a lower court ruling that was being appealed by Mutual Pharmaceutical, which wanted to overturn a $21 million jury award to Karen Bartlett. In 2004, the New Hampshire woman had taken its generic non-steroidal anti-inflammatory called sulindac for shoulder pain.

But she developed Stevens-Johnson Syndrome and toxic epidermal necrolysis, and is nearly permanently blind and suffered burn-like lesions over most of her body. She is unable to read, drive or work, and must use a feeding tube, according to court documents.

"... brand-name drugmakers feared the same notion might also be applied to their practices."

Barlett sued Mutual for alleged design defects under New Hampshire state law, and last May, a federal appeals court upheld the award. Mutual, however, argued that federal law preempts this type of claim because the FDA had already approved sulindac and federal law requires a generic drug to have the same design as the brand-name medication.

Mutual objected to the jury verdict by pointing to a Supreme Court ruling in June 2011 in Pliva v. Mensing, which found generic drugmakers are not required to strengthen product labeling if alerted to side effects, so long as the same change has not been made to the labeling for the branded medicine.

Bartlett, however, argued that the FDA should never have approved the drug in the first place and claimed the medicine was inherently dangerous based on the number of incident reports of the skin reaction that were filed with the FDA. On that basis, Bartlett and her attorneys had maintained that the design of the drug was "unreasonably dangerous" and defective.

But a majority of the Supreme Court disagreed. While calling the Bartlett case a "tragedy," Justice Samuel Alito wrote in the majority opinion that the earlier Pliva ruling "makes clear that federal law prevents generic drug manufacturers from changing their labels. Accordingly, Mutual was prohibited from taking the remedial action required to avoid liability under New Hampshire law."

"...State law design-defect claims like New Hampshire's that place a duty on manufacturers to render a drug safer by either altering its composition or altering its labeling are in conflict with federal laws that prohibit manufacturers from unilaterally altering drug composition or labeling," he continued.

About the author:

Ed Silverman is a prize-winning journalist who has covered the pharmaceutical industry for the past 16 years. In addition to editing Pharmalot, he is currently an editor-at-large for Med Ad News.

Previously, he was a bureau chief for The Pink Sheet, the venerable industry newsletter, and a contributor to its sister publication, In Vivo magazine. Before that, Silverman worked as a business writer for The Star-Ledger of New Jersey, one of the nation's largest daily newspapers, where he conceived and launched Pharmalot. During his 13-year tenure, he closely followed a variety of topics of concern to those who work for, and with, drug makers – drug development; mergers and acquisitions; regulatory oversight; safety and pricing controversies, and marketing issues.

Prior to joining The Star-Ledger, Silverman spent six years at New York Newsday and previously worked at Investor's Business Daily, among other newspapers. He has a master's degree in journalism from New York University and a bachelor's degree in accounting from Binghamton University. Tethered to his laptop and Blackberry, Silverman lives in suburban New Jersey with his wife, three children, a sizeable Labrador retriever and a sneaky beagle.

What news caught your eye in the pharma industry this month?