Genzyme's Allston plant troubles lead to third drug shortage

By Julie M. Donnelly / Wednesday, May 26, 2010
http://www.masshightech.com/stories/2010/05/24/daily34-
Genzymes-Allston-plant-troubles-lead-to-third-drug-shortage.html

The U.S. Food and Drug Administration enforcement action against Genzyme Corp. will result in a third drug shortage for the company, restricting patient access to its thyroid cancer medicine.

The so-called consent decree, officially announced Tuesday, will cost Genzyme $175 million in upfront payments against sales of drugs during the time when its Allston manufacturing plant was not operating in accordance with FDA regulations. The action also includes an ongoing, multi-year remediation of the plant, which will result in a shortage of the drug Thyrogen, used in the treatment and follow-up diagnosis of thyroid cancer.

The FDA has sent a letter to health-care providers describing the impending shortage. In it, the regulator explains that it will restrict distribution of the drug to certain types of patients who are most in need of the drug, until Genzyme either corrects the manufacturing problems at the Allston plant or transfers certain manufacturing procedures to other facilities.

Genzyme reviewing complaints

By Robert Weisman, Boston Globe Staff / May 12, 2010
http://www.boston.com/business/healthcare/articles/
2010/05/12/genzyme_reviewing_complaints/

Genzyme Corp. yesterday said it is looking into stockowner allegations that some company officials sold Genzyme shares based on information that wasn't available to all investors.

In a filing with the Securities and Exchange Commission, the Cambridge biotechnology company said some shareholders had alleged that "certain of our directors and executive officers took advantage of their knowledge of material non-public information about Genzyme to illegally sell stock they personally held in Genzyme.''

A company spokesman said Genzyme has formed a panel of three independent directors and hired independent legal counsel to investigate the allegations, which were first disclosed to regulators in November. The company didn't identify executives or directors who are the subjects of the inquiry.

Widow mad at Genzyme
Faults co. over factory woes, effect of drug limits on husband

By Christine McConville / Boston Herald / Thursday, April 22, 2010
http://www.bostonherald.com/business/healthcare/view.bg?articleid=1249137

Genzyme Corp. said yesterday it is facing a $175 million federal fine due to manufacturing problems at its Allston plant, but an even bigger concern may be people like Janet Lee Schubert, who claims her husband, William, died because of a drug shortage caused by the plant's shutdown.

"We experienced the best and the worst of the medical system," Schubert said, referring to Genzyme's expensive, but life-saving treatment, Fabrazyme, for her husband's Fabry's disease and then its sudden shortage.

Schubert blames Genzyme for her husband's death, saying the company did not know that a reduced dosage of Fabrazyme, an enzyme replacement therapy that costs $200,000 a year, would harm her husband when they started rationing the drug last year.

…

Schubert also said the company misjudged when full dosages would be available and should have done more to inform patients about an alternative treatment. …

Schubert's wife blames Genzyme for not doing more to help patients find another treatment or deal with the Fabrazyme shortage.

… To Schubert, that cost is her husband's life.

"They decided to charge $200,000 a year for their drug" and couldn't keep the plant functioning, she said. "That's crazy."

Genzyme expects lingering drug shortage, $175m fine

By Todd Wallack, Globe Staff | April 22, 2010
http://www.boston.com/business/healthcare/articles/2010/04/22/
genzyme_expects_lingering_drug_shortage_175m_fine/

Genzyme Corp. said yesterday that patients will continue to experience shortages of two drugs it makes to treat rare genetic disorders and that the company expects to face a federal fine of at least $175 million as a result of quality-control problems at its Allston plant.

The fine would be the first in Genzyme's 29-year history and indicates the Food and Drug Administration believes the company compromised patients' safety by violating stringent manufacturing rules. While some other drug makers
have been hit with hefty fines in the past, such penalties are rarely imposed.
Genzyme, the state's largest biotechnology company, said the latest production glitch involved an electrical outage that affected a system used to supply the plant with ultrapure water.

The resulting delay will probably extend for several months the existing shortages of Cerezyme and Fabrazyme, drugs that are needed by a few thousand patients around the world suffering from Gaucher and Fabry diseases.

Genzyme to pay FDA $175M enforcement fine

By Julie M. Donnelly / Mass High Tech / Wednesday, April 21, 2010
http://www.masshightech.com/stories/2010/04/19/
daily19-Genzyme-to-pay-FDA-175M-enforcement-fine.html

Genzyme suffered a large loss in the first quarter of 2010 versus the same time period last year, due in large part to a $175 million charge the company will pay the government to settle enforcement actions over its troubled Allston manufacturing plant.

… The U.S. Food and Drug Administration has slapped the company with a consent degree, a serious enforcement action, following a litany of manufacturing problems that resulted in a shortage of two of the company's successful products, Fabrazyme and Cerezyme.

… The consent decree also requires Genzyme to move its fill/finish operations - the last stages of production where vials of drugs are filled and labeled - to another location. If Genzyme fails to do so by deadlines yet to be determined by the FDA, the company would pay fines equal to 18.5 percent of revenues from sales of products manufactured in Allston after the deadlines. The FDA will approve a remediation plan for the plant, and if the company does not meet compliance deadlines, Genzyme would pay fines of $15,000 per day, per violation. Genzyme said negotiations with the FDA over the terms of the consent decree will be finalized in the second quarter. At that point, the company will provide updated guidance.

Genzyme Drug Shortage Leaves Users Feeling Betrayed

By ANDREW POLLACK / New York Times / April 15, 2010
http://www.nytimes.com/2010/04/16/business/16genzyme.html

Because of a drug factory shutdown, Jeannine Lipez of Lock Haven, Pa., says she can no longer even walk across the street without getting spasms in her left leg and will probably need an operation to replace an artery.

Carol Fink of Yountville, Calif., says lack of the medicine she needed left her constantly in pain, sapped her energy and made her thinking fuzzy.

For Dr. William Schubert, an obstetrician and gynecologist in Pocatello, Idaho, the factory shutdown may have contributed to an even worse outcome. Even as his wife and doctor raced to find doses of the drug he needed, Dr. Schubert's heart deteriorated rapidly. He died on March 6, at the age of 63.

These people, and thousands more in this country and abroad, have been hard hit by a shortage of drugs made by the biotechnology company Genzyme to treat two rare inherited diseases.

… After Dr. Schubert was found to have Fabry disease five years ago, he and his wife sold their house and bought a smaller one to help them afford the nearly $4,000 a month in premiums their insurer began charging them to cover the drug. "We had invested everything in that, emotionally and financially," his widow, Janet Schubert, said.

… After Ms. Schubert heard about Replagal, she said, the Fabry specialist at the University of Utah who supervised her husband's care tried but failed to make his university a clinical trial site for the drug. Four weeks later, their family physician in Idaho began requesting individual use of the drug for Dr. Schubert.

For various reasons, the Replagal did not arrive until nearly a month later, on Feb. 24. Dr. Schubert received an immediate infusion. But by then, his condition had deteriorated.

"He said before he died, 'You need to tell this story; this is horrible,' " Ms. Schubert said. "There are just too many things that fell down."

Genzyme Expects FDA Enforcement Action
Company Is Likely to Lose Oversight of Beleaguered Allston, Mass., Facility Until It Complies With Regulations

By THOMAS GRYTA/Wall Street Journal /March 25, 2010
http://online.wsj.com/article/SB10001424052748703312504575141532302838378.html

Genzyme Corp. expects the Food and Drug Administration to take action at its beleaguered Allston, Mass., plant to make sure products are made within regulations, following multiple manufacturing setbacks.

While production will continue at the plant, the agency likely will seek a consent decree with the Cambridge, Mass., biotech that would have someone else overseeing the operations and lead to increased costs until the plant is deemed to be compliant.

Consent decrees, basically negotiated injunctions, generally last at least five years, but they can extend longer if there are continued incidents that cause delays.

Although Genzyme said there wasn't a single event, action or meeting that led to the FDA decision, the agency's last inspection of the Allston facility produced 49 separate observations. That long list of problems occurred after the site had failed to pass multiple regulatory inspections dating back to 2008.

At Freddie Mac, Chief Discarded Warning Signs

By Charles Duhigg
The New York Times / August 5, 2008
http://www.nytimes.com/2008/08/05/business/05freddie.html?em

The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others.

That chief executive, Richard F. Syron, in 2004 received a memo from Freddie Mac's chief risk officer warning him that the firm was financing questionable loans that threatened its financial health...

Those and other choices initially paid off for Mr. Syron, who has collected more than $38 million in compensation since 2003.

But when housing prices began declining in 2006, choices at Freddie Mac and Fannie Mae proved disastrous. Stock prices at both companies have fallen by more than 60 percent since February, destroying more than $80 billion of shareholder value.

More than two dozen current and former high-ranking executives at Freddie Mac, analysts, shareholders and regulators said in interviews that Mr. Syron had ignored recommendations that could have helped avoid the current crisis.

Harvard and Genzyme expansions - not worth a comparison

By Harry Mattison
Allston Brighton Community Blog / June 9, 2008
http://allston02134.blogspot.com/2008/06/harvard-and-genzyme-expansions-not.html

One might think that a major difference between Harvard and Genzyme is that tax-exempt Harvard pays no property tax while for-profit Genzyme does. But a review of the City's assessing data shows that Boston collects no tax from Genzyme. This is because the City gave a Chapter 121A exemption to Genzyme to support its development. So while the Genzyme building and land are valued at $19 million, Genzyme had a $2.9 billion profit in 2007, and Genzyme would otherwise pay the City $500,000 a year in taxes, in this regard Harvard and Genzyme are the same - they both get a tax-free ride while residents and other businesses shoulder the burden of funding Boston's $2.4 billion budget.

How Town Hurts Gown
If Boston doesn't do more to support higher ed, say goodbye to our position as America's premier college city.

By Tom Keane
Boston Globe / June 8, 2008
http://www.boston.com/bostonglobe/magazine/articles/2008/06/08/how_town_hurts_gown/

And then there is the insistent demand for "community benefits" whenever a school does expand. Harvard, for example, agreed to pay $25 million to be allowed to build a new science center in Allston.

Contrast this with the way we treat private businesses. When Genzyme recently began expanding its own operations in Allston, it paid nothing in community benefits.

Cutting Dosage of Costly Drug Spurs a Debate

By Andrew Pollack
The New York Times / March 16, 2008
http://www.nytimes.com/2008/03/16/business/16gaucher.html

When a drug can cost more than $300,000 a year, the right dose becomes a matter of public debate.

The drug in question, Cerezyme, is used to treat a rare inherited enzyme deficiency called Gaucher disease. Some experts say that for most patients, as little as one-fourth the standard top dose would work, saving the health care system more than $200,000 a year per Gaucher patient.

"It is economic malpractice to give a much higher dose of an expensive drug than is required," said Dr. Ernest Beutler, an authority on Gaucher disease at the Scripps Research Institute...

With Cerezyme, which is made by Genzyme, the profits are sizable...Sales of Cerezyme totaled $1.1 billion last year, making it a blockbuster by industry standards...The company says it needs the high price to make a sustainable business of serving such a small number of patients and to pay for research on new products...

But critics say the company's development costs were minimal, because the early work on the treatment was done by the National Institutes of Health, which gave Genzyme a contract to manufacture it. And analysts estimate the current cost of manufacturing the drug to be only about 10 percent of its price.

Genzyme to pick Allston as plant site

By Marie Gendron and David Callaway
The Boston Herald / December 5, 1991

Genzyme Corp. is expected to announce today that it has chosen the Allston Landing as the site to build its $75 million manufacturing plant, the Herald has learned.

The long-awaited decision ends more than three months of competition by Boston, Cambridge and Worcester for the plant, which will eventually house 200 employees.

Neither Genzyme nor city officials would confirm that Allston has been chosen. A press conference has been scheduled for today.

But sources said a dazzling array of benefits for the company promised by Boston Mayor Ray Flynn and Boston real-estate officials helped Genzyme make its final decision. Among those promises were:

A change in the city's zoning code allowing Genzyme to build in Allston without seeking additional zoning relief. This amendment was signed into law by the mayor last month.

Appointment of a city "ombudsman" to oversee the project's progress and eliminate any obstacles.

Granting of 121A tax status for the project to assure Genzyme 's taxes would not increase for 15 to 40 years.

A 40 percent discount from Boston Edison for Genzyme 's first year of operation plus a subsidy by Edison and Boston Gas for equipment Genzyme purchases.

Bond issues from several city and state agencies that would provide cheap capital for the company.

One source, who asked not to be named, said the acquisition price for the Allston site was "competitive" with other sites the company considered. Genzyme will reportedly sign a long-term lease with the Massachu-setts Turnpike Authority for between $16 and $18 per square foot.

One Allston-Brighton community activist said he was pleased Genzyme chose the neighborhood, but said he was concerned the city may have given away too much in the deal.

"It seemed to be a competition for who could give Genzyme the most goodies," said Paul Creighton, executive director of the Allston-Brighton Area Planning Action Council. "Let's hope we get some of them back."

Genzyme announced last week it will stay in Massachusetts, ending six months of aggressive lobbying by the Weld administration that pitted the state against North Carolina, Pennsylvania and New Jersey.

Weld finally won the committal by personally promising Genzyme he would work to keep corporate taxes at current levels, expand the investment tax credit and maintain fiscal stability in the state.

Weld said he believes the fact that Genzyme will stay in Massachusetts will enhance the so-called "cluster" notion that technology companies flock to places where there is a high degree of technological expertise.

HEDGE FUNDS
Genzyme Chief May Not Go Gently

The New York TImes / February 23, 2010
http://dealbook.blogs.nytimes.com/2010/02/23/genzyme-chief-may-not-go-gently/

"A series of stumbles, particularly manufacturing problems, has sent Genzyme's stock to its lowest level in five years, angering investors and leaving patients without medicines they desperately need.

"The pressure on Mr. Termeer intensified Monday with the news that Carl C. Icahn, the billionaire activist investor, is seeking a seat for himself and three associates on Genzyme's nine-member board at the company's annual meeting in May…

"Genzyme's first product was Ceredase, an enzyme to treat Gaucher disease, a rare inherited enzyme deficiency. In what became Genzyme's hallmark, Mr. Termeer decided to charge about $200,000 a year for the product, an unheard-of amount.

"The company argued it needed to charge such high prices because there were only about 10,000 patients in the world with the disease. Critics, however, were outraged, pointing out that federal scientists made most of the discoveries and did the early development of the drug.

"Despite the criticism, Genzyme held its ground with that and other drugs for rare diseases. And other companies adopted the same business model.

"So there are now more drugs for diseases the pharmaceutical industry once ignored. But many patients struggle to pay for the drugs, sometimes exhausting their health insurance."

Genzyme doesn't give chief a bonus
Woes at Allston plant cited for decision

By Robert Weisman
Boston Globe / March 12, 2010
http://www.boston.com/business/healthcare/articles/2010/03/12/genzyme_doesn't_give_chief_a_bonus/

"Genzyme Corp.'s embattled chief executive, Henri A. Termeer, did not receive a bonus last year because of production problems at the company's Allston Landing plant…"

Genzyme discloses contamination at Ireland plant

By Julie M. Donnelly
Boston Business Journal / Friday, March 12, 2010
http://boston.bizjournals.com/boston/stories/2010/03/08/daily54.html

"Genzyme Corp. on Friday notified customers using its drug Cerezyme that an impurity was found in a vial manufactured at the company's plant in Waterford, Ireland…
"The news is a blow to Genzyme's efforts to eradicate manufacturing problems following the temporary shutdown of its plant in Allston, Mass., due to the discovery of an on-site virus last summer…"

Genzyme spent $750k lobbying government in 4Q

Associated Press / March 19, 2010
http://www.boston.com/business/ticker/2010/03/genzyme_spent_7.html

"Biotech drugmaker Genzyme Corp. spent $750,000 lobbying the federal government in the fourth quarter…"

Genzyme setback could boot Icahn's chances

Boston Globe Staff / March 25, 2010
http://www.boston.com/business/ticker/2010/03/genzyme_setback.html

"The government's decision to fine Genzyme Corp. could boost billionaire investor Carl Ichan's efforts to win four seats on the biotechnology company's board, Bloomberg News reported.

"Yesterday the Cambridge biotech said the US Food and Drug Administration plans to bring enforcement action against the company - which will likely include financial penalties and increased supervision of its troubled Allston plant.

"Genzyme was forced to temporarily suspend operations at the plant after it was infected by a virus last June. And late last year, inspectors found some drugs were contaminated by bits of steel, rubber and other materials…"