Pharma news highlights: July

Ed Silverman


Ed Silverman provides us with his top news highlights from the pharma industry over the past four weeks.

(Continued from “Pharma news highlights: June”)

For the past several months, K-V Pharmaceutical regularly signalled that its ability to continue as a going concern is jeopardized by its inability to sell sufficient quantities of its Makena medication for premature births. The little drug maker has been battling with the FDA over a contentious decision by the agency not to pursue compounders unless there is a threat of harm to consumers that may be caused by one of these alternative treatments.

In fact, K-V sued the FDA for failing to prevent some compounding pharmacies from offering lower-cost versions of Makena, which was approved last year under the Orphan Drug Act. But shortly afterwards, both the drug maker and the FDA came under fire after K-V Pharma set pricing at $1,500, compared with $10 to $20 a week for compounded versions of a med that has been used for decades. Now, K-V has finally filed for bankruptcy, but also filed lawsuits against two states because their Medicaid programs failed to cover Makena.

Despite the troubles, the K-V board awarded CEO Greg Divis a hefty raise in compensation, just before the bankruptcy filing. His total pay package doubled to more than $976,000, which included option awards of more than $204,000, a $130,000 discretionary cash bonus and $638,750 in salary. The payout includes vacation and holiday pay, repayment of deferred salary plus 20 percent and an increase in salary reflecting his promotion to CEO. Last year, his total pay was $385,102, in 2010, it was $525,505.

Purdue Pharma court case

A federal appeals court ruled that the US Department of Health &amp, Human Services can legally exclude three former Purdue Pharma execs from doing business with federal healthcare programs such as Medicare and Medicaid, because the drug maker illegally marketed the powerful painkiller OxyContin. However, the court disagreed that HHS sufficiently explained its decision to exclude the executives for 12 years, and sent the matter back to the agency for reconsideration.


“The case has been closely watched because the exclusions would make it impossible for an executive to continue a career in the pharmaceutical industry…”


The case has been closely watched because the exclusions would make it impossible for an executive to continue a career in the pharmaceutical industry, as just about every drug maker does business with the US government in some fashion. The government claimed Purdue Frederick, a subsidiary of Purdue Pharma, misled patients, regulators and doctors about the addictive risks of OxyContin. In 2007, the subsidiary pled guilty to felony misbranding as part of a settlement and was automatically debarred from winning new government contracts. The parent company, which avoided criminal charges by striking a nonprosecution agreement and paying $600 million in fines, was allowed to pursue contracts.

Meanwhile, the three former execs were ordered to disgorge a total of $34 million, although the drugmaker actually paid this amount, while the trio avoided jail time. The former execs later argued, however, they were innocent third parties, because there was no personal wrongdoing and that excluding them from doing business with federal health care programs was inconsistent with the law. They also maintained the 12-year exclusion, which was reduced from 20 years, was unreasonable.

FDA blamed for drug shortages

Prescription drug shortages continue to be a huge problem in the US, but in recent weeks, a Congressional committee has gone out of its way to blame the FDA. Last month, the US House Committee on Oversight and Government Reform charged that, instead of ensuring that the US has a sufficient supply of safe and effective medicines, the committee charged the FDA has overzealously enforced manufacturing regulations that have choked supplies.

At the time, the agency took umbrage at the notion and denied a specific contention that overzealous enforcement was demonstrated in the number of warning letters issued in recent years. Otherwise, though, the FDA was mute. The agency more recently responded in a tartly worded letter that was released to coincide with a hearing that the committee held. And the FDA suggested the committee is misguided for blaming oversight that is designed to protect safety.


“The FDA, in fact, says more than 70 percent of shortages were due to production problems.”


In its letter, FDA officials denied the agency is the “root cause” of prescription drug shortages. “In recent years, more than half of shortages were related to manufacturing production problems, including quality-control related issues and delays. The remainder of the shortages was caused by business decisions to discontinue certain products, difficulty obtaining raw materials, loss of manufacturing sites, increased demand and component problems.” The FDA, in fact, says more than 70 percent of shortages were due to production problems.

Drug disposal down to drug makers, votes US county

After months of debate and controversy, a California county voted unanimously to require drug makers to pay for the disposal of unused and expired prescription medicines. The move by Alameda County, which has been closely watched by other local governments around the country, is the first of its kind in the US and comes after the pharmaceutical industry lobbied to defeat the effort. The county wants to reduce contaminants in drinking water and also lower the threat of drug abuse stemming from painkillers that linger in household medicine chests. But disposal costs can overwhelm local governments. Alameda County residents currently can drop off their medications at 28 different locations at a cost of about $330,000 annually, according to official estimates.

But the pharmaceutical industry continues to disagree and views the requirement as money down the drain.

“This ordinance isn’t going to have any effect on abuse of prescription drugs. It’s going to take a whole lot of other activities to convince people not to abuse prescription drugs.”

Marjorie Powell, a representative of Pharmaceutical Research and Manufacturers of America, said after the vote.

Drug makers also say there is no evidence that such programs help the environment and the ordinance unfairly places disposal costs only on out-of-county manufacturers.

FDA-approved weight loss drugs

For the first time in more than a decade, the FDA approved new prescription diet drugs. Two, in fact, One to be sold Vivus and is called Qsymia, but its sale will come with restrictions. The drug contains phentermine, which is the surviving half of the fen-phen cocktail, and topiramate, the active ingredient in the Topamax seizure med, which generated concern over cardiovascular and teratogenic risks – specifically, cleft palates – and prompted the agency to reject the drug in 2010.


“For the first time in more than a decade, the FDA approved new prescription diet drugs.”


The other drug is called Belviq and will be sold by Arena Pharmaceuticals, but it is not expected to be available for several months, because Belviq must still be listed on the US Drug Enforcement Agency schedule for controlled substances. Despite the limitations, the approvals reflect a desire by the FDA to balance a pressing need to combat obesity with concerns over side effects.

Alzheimer’s drug studies cancelled

There was little surprise when Pfizer and Johnson &amp, Johnson decided to end their Phase III testing of their bapineuzumab Alzheimer’s drug. Within a month, studies showed patients with mild-to-moderate disease with and without the ApoE4 genotype failed to meet co-primary clinical endpoints – a change in cognitive and functional performance compared to placebo. A Phase II study will continue, but the moves underscored the ongoing difficulties in developing meds to treat the disease. Eli Lilly is working on a similar drug and Wall Street is already betting that the med will fail.

The next ‘Pharma news highlights’ can be viewed here.




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.

Which pharma news story caught your eye in July?