J&J’s Problems, Pfizer’s Options And Switch Outlook Top “The Tan Sheet” Topics In 2011
This article was originally published in The Tan Sheet
Executive Summary
Readers of “The Tan Sheet” in 2011 showed the most interest in stories about Johnson & Johnson’s OTC quality issues, Pfizer’s consumer business maneuvers and Rx-to-OTC switch outlooks. Other hot topics included omega-3 drug development, supplement GMP strategies and state pseudoephedrine laws.
Johnson & Johnson’s responses to enforcement against quality control problems at its McNeil Consumer Healthcare business held drug and dietary supplement industry stakeholders’ attention again in 2011.
Pfizer Inc. also grabbed many readers of “The Tan Sheet” in 2011, as it weighed plans for the future of its OTC and nutritional products business.
Additionally, data from "The Tan Sheet" website show that our readers remain highly interested in our reporting on the outlook for Rx-to-OTC switches.
1. J&J Deflects Damage From OTC Quality Issues
In addition to regulatory and congressional scrutiny, McNeil’s problems prompted a lawsuit by J&J shareholders, alleging breaches of fiduciary duty by the board of directors. However, a J&J special committee working with an independent counsel said organizational and middle management changes were the root causes of the OTC manufacturing and quality control lapses, which manifested in recalls of products in the Tylenol, Motrin, Zyrtec and Benadryl lines beginning in 2009 and continuing through 2011 (Also see "J&J Directors Find Root Causes But Little Blame For OTC Quality Issues" - Pink Sheet, 25 Jul, 2011.).
In a report made public in July, the special committee of four J&J directors found the board and senior management acted in the company's best interests and were not responsible for the OTC problems. A federal judge ruled in December that the shareholders’ lawsuit will proceed, but dismissed claims against J&J Chairman and CEO William Weldon and McNeil President Peter Luther.
Hot Topics Of 2011In The OTC Drug And Dietary Supplement Markets*
- J&J Deflects Damage From OTC Quality Issues
- Pfizer Stirs OTC Pot
- Switch Forecast: Difficult
- No Fish Story About Pharma’s Omega-3 Plans
- Complaints Can Point To GMP Problems
- States Tinker With PSE Laws
- Suit Alleges J&J Violated Listerine Marketing Deal
- Novartis Nudges OTC Importance
- Capsugel’s Carpe Diem
- Micro-Steps In Evolving Probiotics Regs
*Based on “The Tan Sheet” website data on the number of readers accessing stories on these topics.
J&J touted it would restore its consumer product business’s reputation and manufacturing quality even as the firm continued absorbing regulatory black eyes. The firm in March announced a reorganization of its consumer businesses, naming Pat Mutchler group chairman of U.S. OTC, McNeil Nutritionals, Wellness & Prevention. The change separated the U.S. OTC business – McNeil – from other consumer divisions "in order to give focused attention to quality and compliance, and the critical task of restoring" McNeil brands, J&J said (Also see "J&J Separates U.S. OTCs In "Unorthodox" Reorg To Get McNeil Back On Track" - Pink Sheet, 4 Apr, 2011.).
The reorganization came soon after J&J agreed to give FDA tight oversight of McNeil’s manufacturing operations under a consent decree filed after the firm's quality-control changes failed to satisfy the agency. The March decree requires independent audits for five years at three McNeil plants, and authorizes FDA to extend the requirement (Also see "FDA Enforces Consent Decree Over J&J/McNeil's OTC Manufacturing" - Pink Sheet, 14 Mar, 2011.).
2. Pfizer Stirs OTC Pot
The largest pharma firm made headlines in the OTC sector in 2011 simply by leaving everyone guessing as to its next move. Pfizer in March said it would consider moves to become a pure-play pharma firm and in July announced it would hold on to its consumer business but divest other non-pharma assets, including nutritionals (Also see "Pfizer's OTC, Nutritional Businesses Could Be Looking For A New Home" - Pink Sheet, 21 Mar, 2011.).
The likely key driver in Pfizer’s decision to remain in the OTC business is an Rx drug – the blockbuster cholesterol treatment Lipitor. After saying it would consider filing a new drug application with FDA to switch Lipitor (atorvastatin) with generics entering the Rx market, Pfizer executives in November said the firm eventually will pursue a switch, but only after maximizing Rx revenues from the statin product (Also see "Pfizer Will Delay Lipitor Switch Until Rx Revenues Fade" - Pink Sheet, 7 Nov, 2011.).
3. Switch Forecast: Difficult
Pfizer will face high research hurdles to convince FDA to approve a Lipitor switch, but cholesterol drugs and other pharmaceutical therapies targeting chronic conditions will be key drivers for OTC sales growth, Pfizer Consumer Healthcare President Paul Sturman said in May. Additionally, the future of OTC switches of drugs for chronic conditions could "fundamentally help" alter the health care environment and lower costs, Sturman said (Also see "Pfizer Consumer Chief Sees Chronic Conditions In OTC Future" - Pink Sheet, 30 May, 2011.).
FDA’s drug center director, Janet Woodcock, in April also touted the benefits of making drugs indicated for chronic conditions more accessible to consumers. But Woodcock observed that behind-the-counter switches would be the most effective method to make such Rx drugs available without a prescription (Also see "CDER Director Sees Behind-The-Counter Switches As Best Bet" - Pink Sheet, 11 Apr, 2011.).
The difficulties sponsors have encountered with first-in-class switches, including for cholesterol treatments, should provide directions for future switches to succeed, according to researchers led by Bill Soller, professor and executive director of the Center for Consumer Self Care at the University of California, San Francisco, School of Pharmacy.
In research published online Sept. 30 by the journal SelfCare, Soller and his colleagues list questions – “OTC Considerations” – based on switch principles FDA set in 1990 and 1998 and questions to post-2002 advisory committees that evaluated first-in-class switches (Also see "OTC Switch “Blueprint” Could Help Regulatory Navigation – Researchers" - Pink Sheet, 24 Oct, 2011.).
The forecasts for difficult switches does not dampen private label leader Perrigo Co. PLC’s outlook for eventually filing abbreviated NDAs to follow brand-name switches into the market. The firm’s list of categories and products it monitors closely for potential switches and future additions to its OTC product pipeline drew our readers’ attention in January (Also see "Potential Rx-to-OTC Switches" - Pink Sheet, 17 Jan, 2011.).
Likewise, Merck & Co. Inc. made a bullish move in the arena for potential switches, such as allergy drug Clarinex and cholesterol treatment Zetia, by exiting its OTC joint venture with J&J. Merck in September sold to J&J subsidiary McNeil-PPC its 50% stake in the JV, which was McNeil Consumer Pharmaceuticals Co.
Merck said it sold its share partly to attain “greater freedom to operate in the OTC consumer sector” and “to fully exploit its pipeline of Rx-to-OTC switches.”
4. No Fish Story About Pharma’s Omega-3 Plans
The emergence of one of the most-used dietary supplement ingredients, omega-3 fish oil, as a prescription drug ingredient could have both positive and negative implications for supplements (Also see "Will The Rising Tide Of Rx Omega-3s Float The Fish Oil Supplement Market?" - Pink Sheet, 24 Jan, 2011.).
Lovaza, which GlaxoSmithKline PLC markets in the U.S. under license from Pronova BioPharma ASA, is indicated for very high triglyceride levels and is the only FDA-approved omega-3-based pharmaceutical.
While Glaxo's marketing muscle behind Lovaza is also raising consumer awareness of omega-3s in general, the firm strives to distance it from supplements, stating on the product’s website, “You can't get it at a health food store."
Supplement industry stakeholders say so far the success of Lovaza and other fish oil drugs under development indirectly helps omega-3 nutritionals. Meanwhile, Pronova further blurred the line between the two worlds by recently announcing its expansion into supplement manufacturing (Also see "Pronova Hopes Rx Omega-3 Success Translates To Supplements" - Pink Sheet, 28 Nov, 2011.).
5. Complaints Can Point To GMP Problems
For pointers on tightening their compliance with FDA’s good manufacturing practices final rule, dietary supplement firms can look to complaints from consumers.
During the American Herbal Products Association’s November teleconference on firms’ responses to variances from their written GMPs, Staci Eisner, VP of quality at botanical ingredient supplier Cortex Scientific Botanicals, said some firms have “a tendency to see [a complaint] as kind of a pain,” and to give low priority to complaints that seem trivial (Also see "GMP Complaint Procedures Can Flag Broader Problems" - Pink Sheet, 7 Nov, 2011.).
However, failure to fully investigate and document a complaint is a GMP violation, and could allow a quality-control problem to continue unnoticed. If investigated, those complaints could reveal systemic problems.
6. States Tinker With PSE Laws
State lawmakers’ interest in making all pseudoephedrine-containing drugs Rx-only remains on “The Tan Sheet” readers’ radar. While Mississippi in 2010 became the second state after Oregon to require prescriptions for all PSE drugs, numerous state legislatures in 2011 considered making the change or imposing other changes, including implementing electronic tracking of sales, to tighten distribution of nonprescription drugs containing an ingredient that can be used to make methamphetamine (Also see "State Pseudoephedrine Legislation" - Pink Sheet, 25 Apr, 2011.).
But Arkansas was the only state to make a change affecting retail access as lawmakers in April passed a law to limit sales of OTC PSE products to consumers with in-state identification and require a pharmacist to assess a consumer's need for the products (Also see "OTC Pseudoephedrine Purchases In Arkansas Require In-State Identification" - Pink Sheet, 4 Apr, 2011.).
7. Suit Alleges J&J Violated Listerine Marketing Deal
Another OTC-related lawsuit filed against J&J does not allege quality control lapses, but that the firm violated a marketing agreement with Oral Cancer Prevention International Inc. to stifle publicity about a potential link between Listerine and oral cancer. OCPI says the deal called for former J&J subsidiary OraPharma sales representatives to market OralCDx to dentists alongside the mouthwash and OraPharma’s oral antibiotic Arestin (Also see "Suit Alleges Potential Cancer Link Scared J&J Away From Listerine Marketing Deal" - Pink Sheet, 6 Sep, 2011.).
In the lawsuit filed in July in the U.S. District Court for the District of New Jersey and seeking $210 million in damages, OCPI says OraPharma entered into a sales agreement in 2009 to market the firm’s OralCDx, an in-office test for oral cancer. But OCPI alleges that in December 2009 the J&J business that makes Listerine – McNeil-PPC – “prevailed upon J&J to direct OraPharma” to pull out of the marketing pact due to concerns about the implications of an Australian study published in 2008 that linked oral cancer to mouthwashes with a high alcohol content, such as Listerine.
8. Novartis Nudges OTC Importance
Like other diversified pharma companies, Novartis AG reemphasized the importance of its OTC business via a strategic reorganization. The firm in February gave its OTC unit a direct line to the CEO in a realignment designed to strengthen and streamline the consumer businesses (Also see "Novartis Makes Room For OTC Division Head On Executive Committee" - Pink Sheet, 21 Feb, 2011.).
Naomi Kelman became head of the Novartis OTC Division and a member of the Swiss company's executive committee, leaving J&J, where she had led the Diabetes Care and LifeScan Inc. businesses. Novartis Consumer Health split into OTC and Animal Health divisions, and combined its CIBA Vision with recently acquired Alcon to form the world's largest eye care business.
9. Capsugel’s Carpe Diem
Capsugel in 2011 began operating independent of a pharma parent when Pfizer divested the world’s largest manufacturer of empty capsules for the pharmaceutical and dietary supplement industries to private equity firm Kohlberg Kravis Roberts & Co. in a $2.38 billion deal.
“The future is ours,” Capsugel President and CEO Guido Driesen said in an interview (Also see "Capsugel CEO Driesen Plots Post-Pfizer Course" - Pink Sheet, 28 Nov, 2011.).
Driesen, who began with Capsugel as a quality assurance engineer nearly 30 years ago when it was a division of Warner-Lambert Co., said as a standalone company, Capsugel has “a much better opportunity to realize our full value and potential versus being a division of a larger organization.”
10. Micro-Steps In Evolving Probiotics Regs
With the "phenomenal" safety record of probiotics, microbiologist Gary Huffnagle said he "can easily imagine" OTC drugs containing the bacteria. But the development of OTC drugs based on probiotics requires a regulatory system more receptive to research on the microorganisms' use as therapeutic ingredients, said the professor of internal medicine, microbiology and immunology at the University of Michigan Medical School.
FDA's current framework for investigational new drugs has proven an obstacle for probiotics research, Huffnagle said in May at the Consumer Healthcare Products Association's Regulatory & Scientific Conference. "We have need for a new regulatory rubric because it does not help us as researchers to answer the questions that are needed," he said (Also see "OTC Probiotics Face Challenging Regulatory Framework" - Pink Sheet, 23 May, 2011.).
Meanwhile, Health Canada in August narrowed the monograph for natural health products containing probiotics to five strains for which manufacturers can make specific health claims. Canada’s evolving regulatory framework for probiotics may offer lessons for the U.S., where a working group backed by the National Institutes of Health tasked with examining the state of probiotics regulation sees opportunities for FDA to tweak its stance on probiotics and provide a pathway for better-characterized probiotics in foods and supplements (Also see "Health Canada Responds To Probiotics Proliferation With Revised Regulation" - Pink Sheet, 31 Oct, 2011.).