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Executive Summary

QUANTUM PHARMICS PERMANENTLY HALTS GENERIC DRUG PRODUCTION and shipping operations. On Dec. 22, Quantum sent out termination notices to 38 of the 70 employees still at the firm, including the remaining employees in manufacturing and distribution jobs. The action was taken as a result of Quantum's agreement with FDA in November to withdraw 25 ANDA applications affecting 21 of the company's 22 products. A spokesperson from American Home Products said that no decision has been made on the future of the generic subsidiary, but that Quantum's fate is under discussion. AHP acquired a controlling interest in Quantum in March 1986 and later completed the acquisition. The generic drug company was founded in April 1983 by several former execs from the now defunct Premo Company. The spokesperson said the action was the "appropriate thing to do under the circumstances." However, the parent company refrained from dismantling Quantum's R&D program; according to the spokesperson, the generic firm's remaining 32 employees will continue to work on a number of R&D projects. Quantum's regulatory situation with FDA reached a nadir in November when the agency informed the company that it was initiating proceedings to withdraw approval of 25 Quantum ANDAs. FDA also said that it intended to change the therapeutic equivalence rating for the products from "AB" (therapeutically equivalent) to "BX" (therapeutically inequivalent). FDA said it was taking the actions because "untrue statements, discrepancies and omissions exist concerning the production and testing of lots used to support approval of the applications." AHP said that it subsequently agreed with FDA's plans to withdraw the applications ("The Pink Sheet" Nov. 20, p. 11). Quantum's troubles began in September when the company was inspected by FDA as part of the agency's program to inspect the top 20 generic manufacturers in an effort to determine the extent of the generic scandal. In the midst of the inspection, Quantum announced that it was suspending production and distribution of its entire generic line of 21 products, except for a "grandfathered" analgesic, phenazopyridine HCl, used in urinary tract infections ("The Pink Sheet" Sept. 25, p. 7). At the time, American Home Products said it was temporarily halting production and distribution in order to facilitate FDA's ongoing inspection and an internal audit of the manufacturing plant. However, a few days later, FDA announced that it had found discrepancies in three of Quantum's ANDAs. The pre-Christmas lay-offs were Quantum's second round of employee cuts since its problems with the FDA surfaced in September. At that time, the company dismissed 50 employees, or about one-half of the firm's total number of employees.

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