How to Tell When a Pharma Company is Asking for Trouble With the FDA: the Forest Labs Case
Some physicians have no patience for sales reps who provide incorrect information. So when two Forest Laboratories (FRX) sales reps last October visited a doctor to discuss the Daliresp medicine for chronic obstructive pulmonary disorder – but minimized the risks, failed to property describe its usage and misleadlingly broadened the indication – the doctor dropped a dime. Who was on the other end of the line? Drum roll, please… The FDA Bad Ad Program (read about it here).
And so, the FDA sent a stern untitled letter last week that cited what the reps did wrong. For instance, the reps responded to “direct questions about the risks of weight loss and psychiatric events, including suicidality in a manner which is consistent” with the product labeling, but “these risks were immediately downplayed with anecdotal claims regarding other physicians who have prescribed the drug, were pleased with it, and were not reporting any adverse events.” They also minimized the risk of weight loss by suggesting this may actually help COPD patients who are overweight.
As troubling as this may appear, the FDA struck a more ominous tone by suggesting that Forest may be inching closer to violating a September 2010 Corporate Integrity Agreement, which was part of a $313 million settlement for bad behavior. At the time, the drugmaker pleaded guilty to obstruction of justice, distributing an unapproved drug and illegally promoting two other meds (back story).
(As YCharts has reported, penalties for off label promotion and other FDA violations don't seem to make a dent in pharma company results.)
What will it take, though, before someone decides that Forest has violated the Corporate Integrity Agreement? This remains unclear. But at the rate the FDA is going, Forest ceo Howard Solomon may be retired by then and Carl Icahn may control the drugmaker (back story). Although to what extent Forest reps would operate terribly differently under an Icahn-controlled board also remains unclear. We may have to wait for the next few times that some reps say the wrong thing.
Icahn can't be too happy about Forest's stock performance of late:
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