Smoke Detector® report Life sciences

Issue 96 January 2012

Legislative and regulatory mattersUS FDA updates FDA plans to assist drugmakers in accelerating the drug development and approval process

The FDA plans to develop guidance documents for drugmakers in an attempt to accelerate the development and approval of promising drugs that fulfill unmet medical needs. For instance, in one of the guidance documents to be released soon, the FDA will explain how sponsors of clinical studies can use pathologic complete response as a surrogate endpoint for the accelerated approval of drugs used to treat breast cancer. The agency is focusing on seven areas of reform to strengthen the US’ position in innovation in drugs and medical devices: restructure the FDA’s small business outreach services; build infrastructure to support personalized medicines; develop an expedited development pathway for targeted therapies; explore the potential of data mining and sharing while maintaining strong privacy protection; improve the consistency and transparency of the medical device-review process; train the next generation of innovators; and streamline and reform FDA regulations. Toward this end, the FDA plans to set up a small-business liaison to assist start-up companies in product development and approval. For this, the agency is looking to hire business executives with relevant experience in setting up biomedical companies and procuring venture capital funding. To strengthen the development of personalized targeted therapies, the FDA is drafting guidance on approaches for developing a novel companion diagnostic and therapy concurrently. Finally, the FDA is devising an internal plan on how to review applications using co-development strategies, with an aim to meet the needs of innovative products in a timely fashion.1 1 “Expedited drug approval tops FDA innovation initiatives list,” Washington Drug Letter, 10 October 2011, via Factiva, © 2011 Washington Business Information, Inc.

2 Smoke Detector® report Life sciences January 2012

Loopholes in post-market data hinder drug safety surveillance, says FDA

FDA officials noted that gaps in the agency’s drug-use data, especially those related to the use of intravenous cancer and chemotherapy drugs, are impacting the FDA’s drug safety review. According to an agency representative, the FDA sources a major chunk of its post-market data from commercial billing systems that gather information on outpatient prescriptions. However, cancer hospitals are not open to collecting such data. Additionally, both the FDA’s Sentinel Initiative and Adverse Event Reporting System have been criticized for not adopting a systematic approach to validate the source of data for such programs. Incomplete individual case reports, submitted by physicians and pharmacists to drugmakers and the FDA, are also undermining the agency’s pharmacovigilance measures.2

FDA restructures and renames DDMAC

The FDA has reorganized the Division of Drug Marketing, Advertising, and Communications (DDMAC) and renamed it the Office of Prescription Drug Promotion (OPDP). These changes have been introduced as the Center for Drug Evaluation and Research’s Office of Medical Policy (OMP) transitions itself to a super office. The newly formed OPDP is expected to divide the review and oversight of drug marketing between the Division of Professional Promotion and the Division of Direct-to-Consumer (DTC) Promotion. FDA officials believe this will help thwart misleading promotions of prescription drugs and improve the quality of company communications. The leaders of DDMAC will head the new OPDP.3

FDA updates enforcement policy on unapproved marketed drugs

According to revised FDA guidance, “Marketing Unapproved Drugs Compliance Policy,” drugmakers selling unapproved drugs in the

US after 21 September 2011 could be subject to enforcement action without any prior notice, unless notice is necessary to protect public health. Through this guidance, the FDA intends to clarify its enforcement priorities and emphasize the importance of marketing only approved drugs. The FDA intends to continue giving high priority to enforcement action against unapproved drugs that lack evidence of efficacy; pose safety risks to patients; are the subject of misleading claims; present direct challenges to the New Drug Application and Over-the-Counter (OTC) drug monograph systems; violate the Food, Drug and Cosmetics Act; or are reformulated to avoid the agency’s enforcement action. According to the guidance, drugs subject to an ongoing drug efficacy study implementation or OTC drug monograph proceeding will be exempt from any enforcement action. The FDA will examine drugs on a case-by-case basis to determine whether any enforcement action is required or a grace period should be given to that particular drug.4

FDA participates in the IIWA in support of the campaign against illegal-drug marketing on the internet

The FDA recently participated in the 2011 International Internet Week of Action (IIWA), a global effort to rein in the sale and distribution of fake and illegal medical products on the internet. IIWA is coordinated by many national and international crime agencies and is considered the largest internet-based event of its kind in support of the International Medical Products Anti-Counterfeiting Taskforce. Its objectives include protecting public health by spreading awareness of threats associated with purchasing medicines and medical devices online; identifying producers and distributors engaged in selling illegal drugs via the internet; and taking appropriate action against these companies or individuals. The FDA focused on websites selling unapproved drugs and sent warning letters to hundreds of sites, leading most of them to suspend operations.5

2 Johnathan Rickman, “Data ‘holes,’ reporting hinder FDA’s drug safety efforts,” Washington Drug Letter, 26 September 2011, via Factiva, © 2011 Washington Business Information, Inc. 3 “FDA promotes DDMAC to office of prescription drug promotion,” Washington Drug Letter, 26 September 2011, via Factiva, © 2011 Washington Business Information, Inc. 4 Meg Bryant, “FDA clarifies enforcement policy on unapproved marketed drugs,” Washington Drug Letter, 26 September 2011, via Factiva, © 2011 Washington Business Information, Inc. 5 “FDA participates in global efforts to protect consumers and patients from unsafe drugs on the internet,” PR Newswire, 29 September 2011, via Factiva, © 2011 PR Newswire Association LLC.

ResourcesEventsCBI’s 9th Annual Pharmaceutical Compliance Congress January 24-25, 2012 Washington, District of Columbia

Ernst & Young Fraud Investigation & Dispute Services practice is sponsoring this event, and several of our professionals will speak on panels. If you’re interested in attending, you may register for $300 off of the registration rate by using the code: PCCEY5 at www.CBINET.com/PCC. We hope you will join us!

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FDA issues draft guidance on substantiating aseptic procedures for PET drugs

The FDA has issued a draft guidance stating that media fills used to validate aseptic manufacturing procedures for positron emission tomography (PET) drugs should be performed in production areas. They should also consider all manipulations that could occur during production. In line with the draft guidance, media fills should be able to evaluate the aseptic assembly and operation of sterile equipment and demonstrate that environmental controls are adequate to produce a sterile drug by aseptic procedure. Moreover, if a container is filled within a hot cell, media fills must be performed in the hot cell. Comments on the guidance are requested by 29 December 2011.6

FDA agrees to increase user fees for drug reviews

The FDA has reached an agreement with branded drugmakers on hiking the fees it receives for reviewing new drug applications by 6%. Drug industry user fees currently fund approximately 62% of the more than $930 million spent by the agency on reviewing drug applications. The fees were originally created by the 1992 Prescription Drug User Fee Act (PDUFA) and were most recently reauthorized in 2007 for five years. The new agreement must be approved by the US Congress.

Relatedly, as it also falls under the purview of PDUFA, the FDA has proposed adding two months to the deadlines of its review processes for new drug applications — both its regular review (currently 10 months) and the priority review (currently six months).

The industry supports the extension. The FDA is also in advanced talks with generic drugmakers on the creation of a user fee system for generics sold in the US.7

FDA initiates the implementation of the pending GDUFA

The FDA’s Office of Generic Drugs (OGD) has initiated the implementation of the proposed Generic Drug User Fee Act (GDUFA) even before the act has been introduced in Congress. The OGD is arranging for increased headcount and advanced reporting in line with GDUFA. The OGD has initiated brainstorming sessions to implement GDUFA and is also upgrading the FDA’s information technology and generic-drug tracking systems. Of note is that a key barrier for the FDA is likely to be hiring enough qualified international inspectors to conduct surveillance inspections of all foreign manufacturing facilities every two years — a key part of GDUFA.8

FDA’s new draft guidance could require generic drugmakers to provide 12 months of product-stability data

The FDA has drafted a new guidance document that would require generic drugmakers to submit 12 months of product-stability data, instead of the current requirement of three months, at the time of submitting an abbreviated new drug application (ANDA). According to the new guidance, generic drug manufacturers will be required to submit three batches of product-stability testing data covering various times and temperatures. Currently, companies are

6 ”FDA issues draft guidance on validating aseptic procedures for PET drugs,” Drug Industry Daily, 30 September 2011, via Factiva, © 2011 Washington Business Information, Inc.; “Draft Guidance on Media Fills for Validation of Aseptic Preparations for Positron Emission Tomography Drugs; Availability,” http://www.pharmcast.com/FederalRegistrar/Yr2011/Sep2011/092611/093011_Asceptic.htm, accessed 10 November 2011. 7 “FDA, brand drug firms agree on increased fees,” The Wall Street Journal, 1 September 2011, via Factiva, © 2011 Dow Jones & Company, Inc.; Anna Yukhananov, “FDA may get two more months to review new drugs,” Reuters Health E-Line, 2 September 2011, via Factiva, © 2011 Reuters Limited. 8 “FDA begins to implement pending generic drug user fee act,” Washington Drug Letter, 10 October 2011, via Factiva, © 2011 Washington Business Information, Inc.

Legislative and regulatory matters

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required to submit two batches of product-stability testing. The new requirements, if implemented, could substantially impact the overall strategy deployed by generic companies in filing ANDAs. The FDA says generic drugmakers already have to supply 12-month stability data to international regulators. The guidance document is presently being reviewed internally.9

New plan could allow the FDA and Medicare to review medical devices simultaneously

US health officials are launching a pilot program aimed at accelerating Medicare payment decisions for newly approved medical devices. To date, the Centers for Medicare & Medicaid Services (CMS) initiates its review of a medical device only once the product receives FDA approval. According to the pilot program, the CMS review will now be conducted in parallel with the FDA’s, thereby avoiding a scenario in which a product receives FDA approval but fails to get coverage under Medicare.10

CDRH releases a report to showcase scientific activity that supports the medical device industry

The FDA’s Center for Devices and Radiological Health (CDRH) has released a report highlighting CDRH activities that support the medical device industry while maintaining product safety and effectiveness. The FDA’s efforts cited in the report range from providing device designers with computer models of cardiovascular devices to developing standard tests for the durability and performance of spinal disc implants.11

FDA plans to issue final guidance on warnings and precautions for drug labeling

The FDA plans to issue its final guidance on various practices drugmakers should adopt for drug warnings and precautions on labeling. The guidance is expected to help drugmakers decide whether any adverse reactions need to be included in the warnings or precautions section or in a boxed warning. Further, it is likely to facilitate decision-making on the inclusion of contraindications on the label. Per the guidance, a causal connection between a drug and an adverse event is needed for the adverse event to be mentioned under the warnings and precautions section of a label.12

FDA’s final guidance cites no clarification on the inclusion of PCIDs in drug labeling

Despite several requests by drugmakers and sponsors of clinical studies, the FDA has given no clear instruction on whether drugmakers will be required to reveal physical-chemical identifiers (PCIDs) in the labeling of solid oral dosage form drug products. The FDA says laws and regulations governing drug labeling appear to be unclear in this regard and, thus, has left the final judgment to drugmakers or sponsors. The agency has said it “does not intend to object” if a sponsor chooses not to include PCIDs in the list of ingredients on a drug’s label.13

Compliance Florida drug companies face injunction due to multiple violations

The District Court for the Middle District of Florida has entered a consent decree that bars Hill Dermaceuticals, Inc. and Hill Labs, Inc. (collectively, Hill), and individuals Jerry S. Roth and Rosario G. Ramirez, from introducing adulterated drugs into interstate commerce. Government action in this case resulted from multiple violations of current good manufacturing practices (cGMP) documented during the FDA’s inspections of Hill. Additionally, the US Government alleges that Hill submitted false statements on multiple occasions in support of its submissions to the FDA. Provisions in the consent decree prevent Hill from introducing adulterated drugs into interstate commerce. Additionally, to ensure the authenticity of the data submitted, certain elements of the FDA’s Application Integrity Policy have also been included in the consent decree.14

FDA warns Dental Technologies of cGMP and other violations

The FDA has warned Dental Technologies, Inc. of cGMP violations and the manufacture of unapproved prescription drugs at its facilities. The FDA has issued a warning letter stating that Dental Technologies failed to conduct at least one specific identity test for glycerin USP as well as a thorough investigation of batch failures. Additionally, the FDA inspection found that microbial testing for Pseudomonas aeruginosa in water samples was inadequate, and that unapproved products — acidulated phosphate fluoride foam

9 “Pending FDA changes for stability testing upset generic-drug makers,” Washington Drug Letter, 10 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 10 Alina Selyukh, “FDA, Medicare to review medical devices in tandem,” Reuters Health E-Line, 7 October 2011, via Factiva, © 2011 Reuters Limited. 11 FDA works to improve science used to approve medical devices,” PR Newswire, 3 October 2011, via Factiva, © 2011 PR Newswire Association LLC. 12 David Pittman, “FDA issues final guidance on drug warning labeling,” Drug Industry Daily, 12 October 2011, via Factiva, © 2011, Washington Business Information, Inc. 13 Sarah Karlin, “FDA won’t object if PCIDs are left out of drug labeling, final guidance states,” Drug Industry Daily, 12 October 2011, via Factiva, © 2011, Washington Business Information, Inc. 14 “FDA enters consent decree of permanent injunction against Florida drug companies: Multiple violations prompt government action,” US Food and Drug Administration News, 28 September 2011, via Factiva, © 2011 Elsevier Engineering Information.

Legislative and regulatory matters

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and oral solution — were being manufactured and sold by Dental Technologies.15

FDA raises concerns over GMP issues at BMS, Schering-Plough and Abbott plants

The FDA has issued a letter regarding inadequate GMPs at the Puerto Rican manufacturing plants of Bristol-Myers Squibb Co. (BMS), Schering-Plough Corporation (merged with Merck & Co., Inc.) and Abbott Laboratories. The FDA’s inspection of Schering-Plough’s Las Piedras facility claimed inadequate specifications for sampling in-process material, while inspections of Abbott’s Barceloneta facility suggest repeated instances of unusual extraneous matter in the adalimumab released from the facility. The FDA also found GMP deviations — including environmental monitoring deviations in filling areas, improper sanitation of air-sampling devices and inadequate air-flow patterns in the filling line enclosure area — at BMS’ facilities. Abbott confirmed that the FDA approved the measures the company adopted in response to the issues raised by the agency. A BMS representative said the company submitted its response to the FDA’s letter and has addressed the agency’s concerns.16

FDA issues GMP warning letter against Uriel Pharmacy

The FDA has issued a warning letter against Uriel Pharmacy, Inc. for a number of cGMP violations. The letter asserts that Uriel was not timely in its investigation of failed product batches. It also asserts, among other violations, that Uriel failed to demonstrate that

glassware used for sterile injectables was rendered non-pyrogenic and that the company did not establish procedures to prevent microbial contamination.17

Cephalon receives subpoenas for three drugs

Cephalon Inc. has received two subpoenas from federal prosecutors. The latest subpoena asks the company to submit documents related to promotional practices in regard to its sleep drugs Nuvigil® and Provigil®. The earlier subpoena was for records on the cancer drug Treanda®.18

J&J agrees to pay a fine of $85 million for the off-label promotion of its heart drug

Johnson & Johnson’s subsidiary Scios, Inc. has agreed to pay a criminal fine of $85 million for promoting its heart drug, Natrecor®, for off-label indications. Scios has plead guilty to misbranding Natrecor for infusing chronic congestive heart failure patients despite the drug being approved for only the intravenous treatment of patients suffering from acutely de-compensated congestive heart failure.19

FDA issues warnings on Pfizer’s drug websites

Pfizer, Inc. has received a warning letter from the US Food and Drug Administration’s Division of Drug Marketing, Advertising, and Communications for providing misleading information on the websites of its four drugs — Lipitor®, Caduet®, Chantix® and Norvasc®. The letter states that the websites do not contain

15 Johnathan Rickman, “FDA cites cGMP violations, unapproved new drugs at Dental Technologies,” Drug Industry Daily, 5 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 16 David Pittman, “FDA flags GMP issues at pharma giants’ Puerto Rico plants,” Drug GMP Report, 3 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 17 David Pittman, “FDA slaps OTC drugmaker Uriel with GMP warning letter,” Washington Drug Letter, 3 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 18 Cephalon hit with second subpoena in two weeks for sleep drugs,” Washington Drug Letter, 10 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 19 Sarah Karlin, “J&J to pay $85 million fine as part of Natrecor off-label plea agreement,” Drug Industry Daily, 7 October 2011, via Factiva, © 2011 Washington Business Information, Inc.

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information about the risks associated with the use of these drugs. Pfizer says it has removed the misleading content from its Lipitor website and is examining the content on the websites of the other drugs.20

Health care fraud FDA identifies common scams in drug counterfeiting and diversion cases

An evaluation of approximately 50% of all counterfeit cases from the FDA’s Office of Criminal Investigations between 2003 and 2008 has revealed commonly used drug counterfeiting and diversion schemes. These include pharmacists disguising imported drugs as branded products and then selling them to the public; intercepting genuine drugs from wholesalers and reintroducing drugs to pharmacies and individuals; and illegally obtaining genuine drug samples from physician offices and then repackaging and selling them to the public. According to the FDA’s analysis, pharmaceutical wholesalers constitute 27% of suspects in such cases, followed by pharmacists with 13% and physicians with 9%. The five drugs most often associated with counterfeit and diversion cases include Eli Lilly & Co.’s Zyprexa®, Johnson & Johnson’s Risperdal®, and Pfizer, Inc.’s Viagra®, Lipitor® and Zoloft®. The study suggests that capsules and tablets are the dosage forms most commonly counterfeited.21

Other legislative and regulatory matters Obama signs Patent Reform Bill

President Barack Obama signed the America Invents Act on 16 September 2011. The Act changes the US patent system from a first-to-invent system to a first-inventor-to-file system, establishes a first window post-grant review and allows third parties to submit

information relevant to pending applications. President Obama believes this reform will accelerate the patent process and minimize the time needed to launch innovations in the market.22

HHS’ OIG will investigate REMS compliance and drug pricing

The US Department of Health and Human Services (HHS) Office of Inspector General (OIG) will evaluate how compliant drugmakers are with risk evaluation and mitigation strategies (REMS) assigned to their products. The report is likely to be finalized in HHS’ next fiscal year. The OIG also plans to assess drug pricing standards in Medicare Part D to assess whether drug prices and rebates are rising faster than inflation and identify discrepancies in negotiated amounts. Plans are also under way to identify challenges in the IND review process and determine whether consumer complaints are suitably recorded and investigated.23

Pharma trade groups oppose Obama Administration’s deficit-reduction plan

The Biotechnology Industry Association (BIO) has expressed concern over President Obama’s deficit-reduction proposal, provided for in the 2009 Affordable Care Act, which would cut the data-exclusivity period for biologics from 12 years to 7 years. According to the Obama Administration, 12 years of exclusivity hampers innovation. However, industry stakeholders feel the change is unsettling for a standard settled in US law.

BIO and PhRMA are also against a Medicare Part D rebate for dual-eligibles. According to recent estimates, a $20 billion cut in industry revenues could result in 260,000 job losses in the biopharmaceutical sector. Concerns over the increased authority of the Independent Payment Advisory Board , which could enact changes to Medicare without congressional oversight, have also been raised.24

Legislative and regulatory matters

20 Aparna Krishnan, “Pfizer’s drugs web page criticized by FDA,” IHS Global Insight Daily Analysis, 5 September 2011, via Factiva, © 2011 IHS Global Insight Limited. 21 David Pittman, “FDA spots common schemes in drug diversion cases,” Washington Drug Letter, 26 September 2011, via Factiva, © 2011 Washington Business Information, Inc. 22 “House Version of patent bill enacted without changes,” Telecommunications Reports, 1 October 2011, via Factiva, © 2011 Aspen Publishers. 23 David Pittman, “OIG launching investigations into REMS compliance, drug pricing in coming year,” Drug Industry Daily, 7 October 2011, via Factiva, © 2011 Washington Business Information, Inc. 24 ”BIO, PhRMA take issue with Obama’s deficit reduction plan,” Drug Industry Daily, 21 September 2011, via Factiva, © 2011 Washington Business Information, Inc.

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Litigation and enforcement updates

25 AstraZeneca, Handa Pharmaceuticals settle US patent infringement litigation,” Nordic Business Report, 30 September 2011, via Factiva, © 2011 M2 Communications. 26 “Medicines Co. rises after settling lawsuit with Teva over generic version of its drug Angiomax,” Associated Press Newswires, 3 October 2011, via Factiva, © 2011 The Associated Press. 27 David Pittman, “Generic-Drug Maker’s Antitrust Lawsuit on Bayer’s Yaz, Yasmin Dismissed,” Drug Industry Daily, 30 September 2011, via Factiva, © 2011 Washington Business Information, Inc. 28 “Medical supplier Hill-Rom makes fraud settlement,” Associated Press Newswires, 27 September 2011, via Factiva, © 2011 The Associated Press.

Intellectual propertyAstraZeneca-Handa Pharmaceuticals settle patent case over generic Seroquel XR®

AstraZeneca plc has reached a settlement with Handa Pharmaceuticals LLC over AstraZeneca’s anti-psychotic drug, Seroquel XR®. Handa had filed an ANDA for the launch of a generic version of the drug’s extended-release tablets. However, because Seroquel XR is protected by patents and exclusivity rights until November 2017, AstraZeneca filed a patent-infringement lawsuit against the company. Under the terms of the settlement, Handa will be allowed to launch the generic version of Seroquel XR in the US on 1 November 2016 or earlier upon certain circumstances. The financial terms of the deal have not been disclosed.25

Settlements and rulingsThe Medicines Company and Teva settle patent case over Angiomax®

The Medicines Company (TMC) has settled a patent-infringement lawsuit against Teva Pharmaceutical Industries Ltd. over its anti-clotting drug, Angiomax®. Teva, which was seeking approval to market a generic version of the drug, has agreed not to start selling the generic version before 30 June 2019 and to supply TMC with the drug’s active ingredient. Angiomax contributes close to 100% of TMC’s revenues, and this settlement is expected to give the company at least four more years of patent exclusivity on the drug.26

Court dismisses Sandoz’s and Watson Pharmaceuticals’ antitrust lawsuit against Bayer’s oral contraceptives

Sandoz International GmbH’s and Watson

Pharmaceuticals Inc.’s bid to declare Bayer AG’s family of oral contraceptives — including Yaz® and Yasmin® — anticompetitive has been dismissed in federal court. Both contraceptives collectively accounted for 29% of the market share in 2008, far below 50% as Sandoz claimed, and less than enough to assert monopolization, said the federal court judge. Further, the court declared that Sandoz could not provide sufficient evidence to prove that no two-drug combination can substitute for Yaz and Yasmin.27

Medical equipment supplier Hill-Rom agrees to pay $41.8 million to settle allegations of fraud

Medical equipment supplier Hill-Rom Company Inc., while denying any wrongdoing, agreed to pay $41.8 million to settle allegations that it submitted false claims to Medicare for specialized medical equipment. Federal prosecutors consider this to be a record civil fraud recovery for the US Attorney’s office in Knoxville.28

8 Smoke Detector® report Life sciences January 2012

Legislative and regulatory matters

Medical device manufacturer Guidant will pay $9.25 million to settle false-claim allegations

Guidant LLC, a Boston Scientific Corp. subsidiary, has agreed to pay $9.25 million to settle allegations that it falsely promoted its pacemakers and defibrillators. Guidant was accused of making false claims about credits it gives when products under warranty need replacement that resulted in Medicare overpaying for pacemakers and defibrillators. The whistleblower in the case is slated to receive more than $2.3 million from the settlement.29

Novartis and Watson agree to pay $145 million to settle false-claim allegations

Watson Pharmaceuticals Inc. and Novartis AG have agreed to collectively pay the US Government $145 million to settle allegations of submitting false claims to Medicaid. Watson Pharmaceuticals will pay $79 million, while Novartis will pay $66 million. The whistleblower in the case, Ven-A-Care of the Florida Keys, Inc., accused the companies of misleading federal and state governments to overpay for Medicaid-reimbursed drugs. Since 2000, Ven-a-Care has earned more than $380 million in reimbursements from at least 18 false claims lawsuits.30

Other litigations and enforcement updatesUS authorities step up enforcement against corporate officials

US authorities have recently increased their application of the “responsible corporate officer doctrine,” a legal principle used to prosecute corporate executives for corporate violations of US food and drug laws. Since Congress approved criminal sanctions against corporate officers in 1938 under the Food, Drug and Cosmetic Act, the Supreme Court has interpreted the law to allow personal and criminal prosecutions of executives without evidence that they were

aware of a crime being committed. The use of the doctrine has been low since the 1980s until an uptick in prosecutions applying the doctrine began in the past few years. Of note is that the US government states its Justice Department will focus on cases where it believes executives are responsible for the offense(s) of interest.31

PharmAthene, Inc. wins a 50% profit share in the global sales of a smallpox antiviral therapy

The Delaware Chancery Court has ruled in favor of PharmAthene, Inc. in a litigation case against SIGA Technologies Inc., citing the former’s stake in ST-246, an orally available smallpox antiviral drug candidate. According to the ruling, once SIGA earns $40 million in net profits from sales of ST-246, PharmAthene will receive 50% of all net profits from such sales thereafter, from the point of the judgment until the expiry period of 10 years following the first commercial sale of any product derived from ST-246.

29 ”Medical device manufacturer to pay $9.25m in false claims settlement,” Associated Press Newswires, 26 September 2011, via Factiva, © 2011 The Associated Press. 30 “Drug companies agree to $145 million in settlements with government,” Health Law Week, 23 September 2011, via Factiva, © 2011 Strafford Publications, Inc. 31 Vanessa O’Connell and Michael Rothfeld,“U.S. targets drug execs — law allows courts to hold corporate officials responsible for pharma violations,” The Wall Street Journal, 13 September 2011, via Factiva, © Dow Jones & Company, Inc.

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New website gives access to drugmakers’ payment disclosures

Nonprofit corporation ProPublica has released “Dollars for Docs,” a website that offers a look into data on payments to health care professionals. The database was compiled using the disclosures of 12 companies that represent more than 40% of US drug sales. The database features more than 500,000 payments — recorded between 2009 and 2011 and amounting to over $760 million — for promotional speaking, consulting, research, travel, meals and educational items. The website, projects.propublica.org/docdollars, includes a doctor-search facility and information on companies and their drug lists.32

Quality of drugs manufactured offshore is at greater risk than those manufactured in the US, reveals study

Drugs manufactured at companies’ offshore facilities are likely to have more quality concerns than those manufactured in the US, a new study suggests. Titled Quality Risk

in Offshore Manufacturing: Evidence from the Pharmaceutical Industry, the study used FDA inspection reports dating from 1994 to 2007 as one of its primary sources of information. The sample comprised 30 pairs of regulated drug facilities in mainland US and Puerto Rico. Facilities in the latter were observed to carry significantly more risk than corresponding plants in mainland US. Local populations’ skills and cultural differences were cited as potential factors contributing to this quality risk.

The study suggests that pharmaceutical executives include increased monitoring costs and the heightened probability of adverse events in their analyses when selecting production locations, as quality risk is difficult to effectively manage long-distance. The rotation of manager and line employees from mainland plants has also been suggested to allay offshore quality issues. The study further suggests the FDA should be given the authority to conduct unannounced, on-site inspections at international sites.33

Drug industry remains divided on special consideration for orphan drugs

The drug industry remains divided on whether the FDA should release a policy statement stating that orphan drugs should be given special consideration. Some believe this is critical to boost investment in the high-risk sector, while others feel it is unnecessary. According to an industry representative at the National Organization for Rare Disorders (NORD) and Drug Information Association conference on rare diseases and orphan products in Washington, DC, industry seeks further clarity on whether the use of validated surrogates to prove efficacy is acceptable at the agency.34

Industry news

32 “The money trail between firms, doctors,” The Washington Post, 18 September 2011, via Factiva, © 2011 The Washington Post Co. 33 “Manufacturing Outside US Shows Higher Risk of Drug Quality Problems—Study,” IHS Global Insight Daily Analysis, 9 September 2011, via Factiva, © 2011, IHS Global Insight Limited; Cheaper Offshore Manufacturing May Not Be Worth Risks, Study Says,” The Food & Drug Letter, 7 October 2011, via Factiva, © 2011, Washington Business Information, Inc. 34 “Drug industry reps diverge on need for FDA policy statement on orphan products,” Drug Industry Daily, 13 October 2011, via Factiva, © 2011 Washington Business Information, Inc.; “Drug industry says orphan-sector push has prompted a more receptive FDA,” Drug Industry Daily, 13 October 2011, via Factiva, © 2011 Washington Business Information, Inc.

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