In observance of ancient traditions, we will take a break over the next two days, and return next week. We recognize that the world will continue spinning in our absence, but assure you that we will be back soon enough to resume the daily dose of news, views and chatter that turns you on. Until then, we wish you the best.

Just one month after agreeing to buy Penwest Pharmaceuticals for $144 million, Endo Pharmaceuticals is in the process of laying off sales managers and sales reps, according to sources. The exact number of jobs to be eliminated is unclear at the moment, but we are told Endo is engaging InVentiv, a contract sales organization, to provide replacements and lower expenses. We await a reply from Endo.

This is not the only dismal jobs news in the pharmaceutical industry this week. As noted earlier, the recently announced $3.2 billion merger between Biovail and Valeant Pharmaceuticals will cause about 25 percent of the combined, 4,000-person workforce to be shown the door, according to this email sent by ceo Mike Pearson to employees yesterday. And Scrip News reported today that Shionogi is cutting its US sales force by about half, leaving roughly 350 people.

Earlier this week, a behind-the-scenes brawl between at least two Elan board members and the rest of the directors, including CEO Kelly Martin, erupted into public view. At issue is corporate governance, but more specifically, a series of deals in which accusations of undisclosed conflicts of interests were raised concerning Martin and several board members.

The dissident board members - Vaughn Bryson, a former Eli Lilly ceo, and Jack Schuler, a former president at Abbott Laboratories - hired their own law firm to conduct an independent review, but Elan raced to court and received a one-week injunction to stop them. Elan claims the separate review will undermine its own examination, a curiosu position because it contradicts the role of independent board members. Bryson and Schuler could not be reached.

But the two sides are quarreling over various deals, notably the transaction last year in which Elan transferred Alzheimer’s assets to Johnson & Johnson, but others in which either Martin or various board members allegedly had undisclosed interests. There is also a dispute over the role of the McKenna law firm hired by the Elan board to review corporate governance practices, according to sources, who say the firm signed off last year on Elan’s practices, but was hired again to do an independent review.

Essentially, most of these are the same issues that have been raised by a dissident shareholder, Ib Sonderby, who recently launched a web sited called SaveElan and today introduced three candidates he is proposing for the Elan board (take a look). But battered from within and without, Martin late Monday issued an extraordinary, 18-page denunciation.

In his missive, Martin recounts various financial and pipeline accomplishments on his watch, and then attempts to debunk each of the allegations raised by his foes. “A number of shareholders have asked me to set the record straight and I want to take this opportunity to do so,” he writes. Curiously, the letter is not on the Elan web site, at least as far as we can tell, although it was distributed to shareholders. If Martin and his allies are so confident of their position, perhaps they ought to let the alternative board review proceed and quell the speculation on investor boards (see this).

Two years ago, an investigation disclosed that Wyeth used a ghostwriting firm to generate material used to promote its hormone replacement therapies. By then, of course, the meds were linked to breast cancer in the 2002 Women’s Health Initative study. But the disclosure prompted a US Senate probe and has since been widely cited as an instance in which pharmaceutical marketing corrupted the process by which legitimate medical info is supposed to be disseminated (background).

But just how extensive was the Wyeth ghostwriting? Well, between 1997 and 2003, a firm hired by Wyeth called DesignWrite generated more than 50 peer-reviewed publications, more than 50 scientific abstracts and posters, journal supplements, internal white papers, slide kits, and symposia to promote its Premarin and Prempro meds. There were other firms, but DesignWrite was used most often and was paid between $20,000 and $25,000 for each of 20 review articles (you can read the publication plan for low-dose Prempro here, for instance).

“The beauty of this process is that we become your postdocs,” Karen Mittleman, a DesignWrite employee who supervised medical writers, wrote in a 2001 email to an academic author. “We provide you with an outline that you review and suggest changes to. We then develop a draft from the final outline. You have complete editorial control of the paper but we provide you with the materials to review/critique.” The author was puzzled over the concept of authoring, but not writing a paper.

All this and more is courtesy a paper published in PLoS Medicine, which reviewed approximately 1,500 documents - emails, contracts, internal memos, depositions - that were culled from litigation brought by some 14,000 women and their families against Wyeth - now owned by Pfizer - and obtained by PLoS and The New York Times last year. The paper was written by Adriane Fugh-Berman, a researcher at Georgetown University Medical Center in Washington DC, who has also been a paid expert witness for plaintiffs against Wyeth and Pfizer.

For the curious, the documents make interesting reading, so look here and search by using the name of a drug. Other drugmakers have also been cited for ghostwriting, most recently, GlaxoSmithKline in connection with its Avandia diabetes pill (see this) and Merck, which employed the practice to promote its Vioxx painkiller before it was yanked in 2004 over links to cardiovascular risks (see this). Although some industry defenders argue the recent disclosures refer to dated examples, industry critics say the practice may persist, but is not necessarily known because most instances do not involve high-profile litigation or government investigations.

“Medicine, as a profession, must take responsibility for this situation,” write Fugh-Berman. “Naivete is no longer an excuse. Perhaps physician-investigators should create and uphold a standard where relationships with industry are regarded as unsavory rather than sought after. Academic institutions and medical journals should take a hard line on ghostwriting. Patient care will benefit if physicians draw together as a profession to denormalize relationships with industry and avoid the role of corporate pawns in the future.”

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In yet another blow to the US Federal Trade Commission, a federal appeals court has refused to reconsider its ruling last April that upheld the legality of so-called pay-for-delay deals that thwart the introduction of generic rivals (here is the order). However, in a dissenting opinion, Justice Rosemary Pooler writes that the issue must ultimately be decided by the US Supreme Court, given the conflicting outcomes in various cases.

The initial ruling by the US Second Circuit Court of Appeals was made after reviewing a deal in which Bayer paid Barr Pharmaceuticals, which is now owned by Teva Pharmaceuticals, to drop its patent challenge to the Cipro antibiotic. Barr challenged the Cipro patent in October 1991 and struck a deal with Bayer in January 1997, about two weeks before the case was set to go to trial.

However, a rehearing was sought after the federal appeals court also took the unusual step of inviting entities that purchase drugs and had challenged the settlement to ask that the case be reviewed by the full circuit, citing the “exceptional importance” of the antitrust implications (background here). That emboldened a group of consumers, union health and welfare funds, which have been certified as a class, to ask a California appeals court to review the same case, although how that will now play out is uncertain (look here).

The ruling is yet another setback for the Federal Trade Commission, which has been pushing aggressively to end pay-to-delay deals (look here). Earlier this year, a federal judge dismissed an antitrust lawsuit filed by the FTC against Abbott Labs’s Solvay unit for allegedly conspiring with several generic drug makers to delay competition for a testosterone-replacement med. And the White House included what became a scuttled proposal to make these deals illegal as part of its health care reform package.

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What can Johnson & Johnson ceo Bill Weldon do with all those millions of bottles of pediatric Tylenol that have been recalled this year? Rather than throw them in the trash, Bill can donate them to the US military for a perfectly good cause.

How so? Well, it turns out the military is giving a children’s dose of acetamnophen, which is the active ingredient in Tylenol, to dead mice that are then dropped by helicopter into the jungle in Guam in hopes of eradicating invasive brown tree snakes from around the naval base there. Snakes, after all, do not care if their Tylenol smells musty or contains metallic flecks. Grind ‘em up, feed ‘em to the mice, drop the mice in the jungle and, voila, no snakes. And for Weldon, no embarassing trips to the landfill.

“The discovery that snakes will die when they eat acetaminophen was a huge step forward,” Anne Brooke, conservation resources program manager for Naval Facilities Command Marianas, tells Stars And Stripes. “The problem was how you get the snakes to eat it.”

Putting Guam aside for a moment,this could be the public relations coup that Weldon so desperately needs. Rather than sheepishly dispose of millions of Tylenol tabs in the middle of the night, he and his new quality control team can be photographed proudly donating the poorly made goods to an effort that serves vital US interests. And best of all - J&J may be able to realize a tax break in the process. How’s that for leadership possibilities?

Hot on the heels of the $600 million settlement Allergan reached with the US Department of Justice for off-label marketing charges over Botox, a shareholder has filed a lawsuit claiming the Allergan board should pay for the whopping fine instead of relying on the corporate treasury.

In a shareholder derivative lawsuit filed in Delaware Chancery Court, the Louisiana Municipal Police Employees Retirement System claims that Allergan’s board is responsible because they breached their fiduciary duties by allowing Allergan to violate federal law with off-label marketing practices. Essentially, the pension plan argues Allergan board oversaw a calculated strategy to boost sales illegally and either willfully approved the effort or shirked their responsbilities (here is the lawsuit).

Allergan chairman and ceo David Pyott was also named as a defendant and, since he benefited from increased sales, the suit claims he should be forced to return part of his compensation. In a filing with the US Securities and Exhange Commission, Allergan stated it “is investigating the action and expects to contest it vigorously.”

No doubt, the board has insurance to cover such claims. But the lawsuit should be seen as a wake-up call to other boards presiding over companies that face off-label marketing accusations, especially given that attorneys who represent whistleblowers say an untold number of such lawsuits are currently pending in the court system.

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Hello, everyone, nice to see you again. A sunny day is dawning here on the Pharmalot corporate campus, where the short people are off to the schoolhouse for another year of adventure and, hopefully, a little learning. While we ponder the possibilities, please join us for another cup of stimulation and a quick scan of the news of the world. Hope your day goes well…

Glaxo Hires Goldman Sachs Banker as CFO (Reuters)

Business Confidence Is Higher In Pharma Sector (PharmaTimes)

Biovail And Valeant Merger To Increase Layoffs (The Globe & Mail)

Teva & Baxter Must Pay $365M To Man Infected With Hepatitis C (Ha’aretz)

Clinical Trials Initiated In South Korea Rose 150% Since 2006 (OutsourcingPharma)

Shanghai Pharma Plans $1.2B IPO (Reuters)

Glaxo And Lonza Sign Development Deal (Dow Jones)

Sun Pharma Can Proceed With Taro Pharma Takeover (Bloomberg News)

Continuing its string of pearls philosophy, Bristol-Myers Squibb has agreed to pay in cash for ZymoGenetics, which is developing a hepatitis C compound that was the focus of a collaboration between the two companies beginning early last year.

The move is a bid by the big drugmaker, of course, to strengthen its pipeline for hepatitis C, which is forecast to a grow into a multi-billion dollar market. At the moment, the focus is largely on forthcoming treatments from Vertex Pharmaceuticals and Johnson & Johnson, which are in a race with Merck to sell the most effective new protease inhibitor to treat the affliction (see this and this).

By acquiring ZymoGenetics, Bristol-Myers gets pegylated-interferon lambda, a novel interferon in Phase IIb, along with several other early-stage treatments (read the statement for details). You can also look at HCVDrugs to compare the various hepatitis C drugs under development by different drug makers (see the list).

Bristol is relying on its string of pearls strategy, which involves a combination of outright acquisitions and licensing deals, to eventually grow its way out of a dearth of needed meds. The idea is to selectively pursue companies and compounds that represent opporunities in specific therapeutic areas, as opposed to, say, the Pfizer tactic of gobbling up equally drugmakers. A notable deal was the $2.4 billion purchase of Medarex last year. Not every deal has worked out, though. Bristol paid $17 million last June to end a collaboration with Exelixis (look here).

As a widely anticipated arbitration hearing nears, Johnson & Johnson is demanding unspecified amount of damages in addition to ending a partnership to sell the Remicade and Simponi rheumatoid arthritis treatments, according to a Merck filing with the US Securities and Exchange Commission.

At issue are rights to Remicade, which generated $5.5 billion in sales last year, and the newer Simponi follow-up. After Merck bought Schering-Plough, with which J&J had a co-marketing agreement, J&J claimed the takeover canceled their deal, citing a change-of-control provision. J&J subsequently filed for arbitration, which should last 12 business days with a ruling 20 days later, according to Merck.

For its part, Merck claimed its takeover was really a reverse merger that was designed to avoid this conflict over the change-of-control language. Of course, as J&J has noted, the surviving entity has the Merck name on the front door, the Merck board is in control and operations are run from Merck headquarters in Whitehouse Station, NJ. In other words, if it walks like, talks like a duck….quack.

In its filing, Merck says J&J’s Centocor unit is claiming damages “in an amount to be determined,” and that if its loses, Merck could “suffer an impairment charge,” and have a material adverse effect” on its financial position and operations. A settlement, however, remains possible.