Drug Industry Daily - July 9, 2010 Issue

Vol. 9 No. 132

Merck Shutting R&D, Manufacturing Sites as Part of Consolidation

Merck will close eight research sites and eight manufacturing plants as part of its restructuring plans following its merger with Schering-Plough.

The drug giant expects to save between $2.7 billion and $3.1 billion in annual costs in 2012 as a result, the company said Thursday. Merck also plans on laying off 15 percent of the combined companies’ workforce to achieve a goal of $3.5 billion in annual savings.

Merck’s Cambridge, Mass., research facility is the only U.S.-based one slated for closure. The others are in Canada, Denmark, Germany, the Netherlands and Scotland.

After consolidation, Merck Research Laboratories will have 16 research and development centers worldwide that will focus on seven key areas: cardiovascular disease, diabetes/obesity, infectious disease, oncology, neuroscience and ophthalmology, respiratory and immunology and women’s health.

The company’s manufacturing sites will shrink from 91 to 77, which include animal health facilities previously scheduled to shutter as part of Schering-Plough’s venture with Sanofi-Aventis’ Merial.

Merck’s $41.1 billion merger with Sanofi-Aventis took effect last November. — Jonathan Block


Obama Uses Recess Appointment to Place Berwick as CMS Head

Hoping to avoid a drawn-out Senate vetting process, President Obama used the congressional recess to seat his nominee for Centers for Medicare and Medicaid Services (CMS) administrator, Donald Berwick.

White House Press Secretary Robert Gibbs noted in a July 7 briefing that CMS needs a leader now because the agency has several deadlines looming from the recently passed health reform bill, including defining an administrative pathway for drugmakers to make payment arrangements for coverage gap discounts under Medicare Part D and setting up the new Center for Medicare and Medicaid Innovation.

Berwick, a pediatrician, is a long-standing thought leader in policy circles and a proponent of using comparative effectiveness to reduce healthcare costs. He would be the first permanent hire for the post since former Administrator Mark McClellan left in 2006.

White House officials said it was imperative to put their best choice in the CMS head chair and noted that Berwick has support on both aisles, so he would likely have been approved by the Senate. But Republicans have been dragging their feet on nomination processes, and the White House said this was too important a position to keep in limbo. “The president is going to install people that need to be installed for this government to run effectively and efficiently,” Gibbs noted.

Berwick is CEO of the Institute for Healthcare Improvement, a professor at Harvard Medical School and is an elected member of the Institute of Medicine. He also has served as chair of the National Advisory Council of the Agency for Healthcare Research and Quality. — Pamela Taulbee


Group Asks FTC to Examine Merck, Sanofi Vaccine Deals With Physicians

Vaccine makers could face increased scrutiny from the Federal Trade Commission (FTC) following a public interest group’s accusations that Merck and Sanofi Pasteur use anticompetitive practices in their marketing of vaccines to physicians.

Both Merck and Sanofi have entered into “compliance contracts” with physician healthcare groups, under which the companies offer significant price discounts if all of their members agree to buy their vaccines from just one manufacturer, Citizens for Responsibility and Ethics in Washington (CREW) said this week in a letter to the FTC. The group asks the agency to examine whether the contracts are legal.

“As a result of these restrictive contracts, physicians are barred from purchasing alternative vaccines even when they are demonstrably more effective and their use would be in the patients’ best interests,” CREW says.

The FTC would not comment on whether it is considering an investigation into the contracts, but FTC senior public affairs specialist Mitch Katz told DID that exclusive dealing would fall under the agency’s purview.

“We take all of these letters seriously and will respond in the appropriate amount of time, but we don’t speculate on whether they will lead to an investigation,” Katz said.

For its part, Merck did not deny the existence of the contracts, but said they are legal and denied any wrongdoing.

“We work with our customers to negotiate contracts that help meet their needs; those negotiations are private and all individual contracts are confidential,” Ron Rogers, a Merck spokesman, told DID. “The terms of the contracts are lawful, and we strongly disagree with any statement or implication suggesting otherwise.”

Sanofi did not respond by press time to a request for comment on the contracts.

CREW’s letter to the FTC is available at www.fdanews.com/ext/files/20100706-LtrtoFTC-DrugCoAntitrustViolations.pdf. — David Belian


Tufts: US Could Benefit from Greater Evidence-Based Reimbursement

Though U.S. patients have wider access to oncology drugs compared to their counterparts in Australia, that country’s evidence-based reimbursement approach results in lower prices and greater affordability, according to Tufts University’s Center for the Study of Drug Development (CSDD).

A new study released Thursday examined access to cancer drugs approved in the two countries between 2000 and 2009. Among other things, it found that marketing authorization of a drug by Australia’s Therapeutic Goods Administration (TGA) does not guarantee reimbursement.

Australia was the first country to adopt an evidence-based approach to drug reimbursement decisions, the study notes. Canada and the UK have since established similar systems based on the Australian model, it adds.

Comparative effectiveness research “could close the gap between what is known and what is done in pharmaceutical care” in the U.S., the study says.

Overall, the FDA approved 61 percent more drugs (29 vs. 18) than the TGA during the study’s nine-year period. Two-thirds of FDA-approved products also gained TGA approval, but only a third of them were determined to be a cost-effective use of government funds by the Pharmaceutical Benefits Scheme (PBS), Australia’s reimbursement authority.

Conversely, the cost of cancer drugs in Australia averages 30 percent less than in the U.S., due in part to value-based pricing, the study adds, making those drugs that are reimbursed affordable to a wider group of patients.

“Based on the Australian experience, comparative effectiveness research severely restricts access to drugs not deemed cost-effective. On the other hand, it creates conditions for a more affordable, equitable system of access,” said author Joshua Cohen, a senior research fellow at CSDD.

Other key findings include:

  • Patient cost-sharing in Australia is notably less than in the U.S. (20 percent vs. 35 percent) and is more evenly spread across the patient population;
  • Prior authorization was required for 60 percent of drugs in the U.S., compared with all drugs in Australia; and
  • Average time for the PBS to list new drugs was 18 months.

The report is available at csdd.tufts.edu. — Meg Bryant


Genzyme, Hospira Broaden Manufacturing Deal

Genzyme is expanding a manufacturing agreement with Hospira to help make seven drugs over the next five years as Genzyme works to correct manufacturing quality violations.

Hospira will perform fill-and-finish services for Cerezyme (imiglucerase), Fabrazyme (agalsidase beta), Myozyme and Lumizyme (alglucosidase alfa), Thyrogen (thyrotropin alfa), Thymoglobulin (anti-thymocyte globulin [rabbit]), Campath (alemtuzumab) and certain product candidates in development, Genzyme said in an SEC filing Wednesday.

The new agreement will expire on the later of either June 30, 2015, or after the last project the companies agree to is completed. It will automatically be renewed for one-year terms unless either party provides at least two years’ termination notice.

The agreement replaces a 2009 one covering Cerezyme, Fabrazyme, Myozyme and Thyrogen, which would have expired Dec. 31, 2015 (DID, Jan. 5).

Cerezyme and Fabrazyme have been in short supply since 2008, after a viral contamination temporarily shut down Genzyme’s Allston, Mass., facility and an FDA inspection also found a particulate contamination at the same plant (DID, Nov. 17, 2009).

Genzyme will have to complete a remediation plan to correct the manufacturing quality violations, followed by five years of oversight and annual reports by a third-party consultant under a consent decree it signed this year (DID, May 25). — April Hollis


Malaria Drug Qualaquin Gets REMS Due to Off-Label Use

The FDA and AR Scientific are warning physicians against using malaria drug Qualaquin to treat leg cramps, as adverse events from off-label use prompted the agency to request a risk evaluation and mitigation strategy (REMS).

The FDA reviewed reports submitted to its Adverse Event Reporting System between April 2005 and Oct. 1, 2008, and found 38 U.S. cases of serious side effects associated with the use of Qualaquin (quinine sulfate), the agency said Thursday.

Most patients reporting serious side effects used the drug to prevent or treat leg cramps or restless legs syndrome, the agency noted.

Serious and life-threatening reactions were reported in 24 cases, including two deaths. Cases included low blood platelet levels and hemolytic uremic syndrome/thrombotic thrombocytopenic purpura, a blood disorder that results in clots in small blood vessels around the body that can be accompanied by kidney impairment.

The REMS requires that patients be given a medication guide explaining what condition the drug is and is not approved for, as well as the potential side effects. AR also must issue a “Dear Healthcare Provider” letter warning of the potential risk of serious and life-threatening blood-related reactions.

Qualaquin’s prescribing information includes a boxed warning stating that the risk associated with the drug’s use for nocturnal leg cramps, in the absence of efficacy evidence, outweighs any potential benefit. — April Hollis

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