A month after Genzyme revealed FDA was likely to hit the company with a consent decree after numerous issues at its Allston, Mass., plant, we’re finally starting to get an idea of just how much it will cost the company to resolve its manufacturing mess. In its first-quarter earnings statement this morning, Genzyme said it had received a draft consent decree that called for it to hand over $175 million in past sales of products made at troubled Allston facility. Investment bank Leerink Swann said the figure was in line with expectations.
A consent decree is a rare action taken by FDA after a company has had repeated, egregious quality issues at a manufacturing site. It generally calls for an independent party to inspect and assess a plant’s operations over time to guarantee it is up to good manufacturing practices (GMP).
FDA decided to go beyond the typical warning letters it issues about GMP violations after Genzyme had to repeatedly stop and restart manufacturing at Allston. The production issues caused prolonged periods of limited shipments of Cerezyme, for Gaucher disease, and Fabrazyme, for Fabry disease.
Genzyme could take another financial hit if it doesn’t move its fill/finish operations from the Allston site by a yet to be determined deadline. FDA will take 18.5% of sales from any drugs made at the site after the deadline. The biotech also said first-quarter sales were down 7% to $1.07 billion due to the limited shipments of Cerezyme and Fabrazyme.
Making biologics is no cake walk, and initially it seemed appropriate to give Genzyme some leeway as it worked to overcome its manufacturing woes. But the big biotech made the additional mistake of not having an inventory on hand when the issues at its facility occurred. To remind readers, the diseases Genzyme tackles are rare, and no alternative treatments are approved for Gaucher and Fabry. As a result, any available supplies of Cerezyme and Fabryzme had to be meted out to patients, who then had to cut back their doses until the shortage let up. For a good look at how the move affected patients taking Genzyme’s drugs, check out this recent story in NY Times.
To make matters worse, full shipments of Cerezyme have again been delayed, this time due to a power failure in the city that caused issues with Allston’s water system. As a result, Genzyme will continue to ship Cerezyme at 50% its normal level for the next two to three months.