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SMITHKLINE's CHOICE OF RUGBY-DARBY FOR DYAZIDE DISTRIBUTION QUESTIONED BY REP. DINGELL; SKB CITES GENERIC FIRM's "SOPHISTICATED" DISTRIBUTION NETWORK

Executive Summary

House Oversight Subcommittee Chairman Dingell (D-Mich.) is looking into SmithKline Beecham's selection of Rugby-Darby as the exclusive distributor of a generic version of SmithKline's Dyazide (hydrochlorothiazide/triamterene). In a Jan. 2 letter to SmithKline Beecham Chairman Henry Wendt, Dingell said his subcommittee "must inquire into SmithKline's decision to produce a generic version of Dyazide and its choice of Rugby-Darby as the exclusive distributor." The Michigan Democrat is apparently concerned about Rugby's earlier relationship with Bolar covering the distribution arrangement for that firm's since- withdrawn generic Dyazide and problems at Rugby-Darby's manufacturing subsidiary, Chelsea Labs. Dingell noted in his letter to SmithKline that "Rugby-Darby was involved in a special profit-sharing arrangement with Bolar Pharmaceutical regarding the distribution of its now-discredited generic version of Dyazide." In addition, Dingell said that Rugby- Darby's "manufacturing arm, Chelsea Labs, we believe is under criminal investigation for activities relating to the generic drug approval process." Rugby-Darby's ties with Bolar also include a development agreement covering generic sucralfate that has since been severed. In a Jan. 8 statement, SmithKline Beecham said it chose Rugby- Darby as its generic distributor "because it has the largest and most sophisticated [generic drug] distribution network in the nation." The arrangement was announced last August ("The Pink Sheet" Aug. 27, p. 3), and was designed "to meet the demand for a reliable, low-cost generic version of the product." Rugby-Darby reports that it has not been notified that Chelsea is under criminal investigation. The generic firm also asserts that it was not "involved in a special profit-sharing arrangement with Bolar," as Dingell indicated, but purchased generic Dyazide from Bolar for distribution under its own and private-label names. SmithKline Beecham has initiated litigation against Bolar and Schein, the firms that shared the marketing rights to one of two since-discredited generic Dyazide products. Under the agreement, Bolar owned the ANDA and Schein aided in obtaining FDA approval. SmithKline also has sued Vitarine, which marketed another generic version of Dyazide under its own since-revoked ANDA. Like the Bolar product, Vitarine's generic drug was approved based on a fraudulent bioequivalence study of countries where SmithKline's product was passed off as the generic. Rugby-Darby was not named as a defendant by SmithKline in either suit, seeking treble damages for lost revenue caused by unfair competition. Dingell also questioned SmithKline Beecham about its decision not to reformulate Dyazide in the U.S. in order to make the product more bioavailable. "SmithKline distributes abroad a better, or at least different and easier to copy, formulation of Dyazide than it does in the U.S.," the letter states. "The effect of this marketing practice has been to discourage other firms from developing and manufacturing a generic version of what was once the largest selling hypertension drug in this country," Dingell said. He asked the firm to supply all its records relating to its decision to license Dyazide and its selection of Rugby-Darby as the exclusive generic distributor. The congressman also requested all records since 1987 "regarding the possibility of reformulation of Dyazide for the U.S. market," and he asked SmithKline to prepare a list of countries in which Dyazide is sold in a formulation identical to that used in the U.S. and a list of countries where the formulation differs. The subcommittee is "not requesting the specific proprietary formulations at this time," he noted. A deadline of Jan. 25 is set for SmithKline's reply. SmithKline Beecham's statement suggests that Dyazide has not been reformulated in the U.S. because it is "well established" in the physician community with its original formulation. "Dyazide has been available in the U.S. since 1965," the firm said. It has been used safely and effectively by millions of patients." The company added that it will "continue to cooperate with the subcommittee in its generic drug investigation."
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