Glaxo Accused of Hiding Drug DefectsJun 3, 2004 | Australian Financial Review Aggressive New York State Attorney-General Eliot Spitzer is suing drug giant GlaxoSmithKline over alleged fraudulent research, adding to the woes of the global pharmaceutical industry.
Already reeling from a lack of new wonder drugs in the pipeline and the ending of patents on a number of blockbuster sellers, Mr Spitzer's move is sure to put further pressure on share prices in the industry.
Mr Spitzer has filed a lawsuit accusing British company GlaxoSmithKline of "repeated and persistent fraud" for concealing problematic issues of efficacy and safety when children use the company's blockbuster antidepressant, Paxil. Glaxo has denied the allegations.
Mr Spitzer has become well known to Wall Street in recent years. He has forced reforms on equity analysts at investment banks and of trading practices at mutual funds. Most recently he sued former New York Stock Exchange chairman Dick Grasso to recoup some of the $US200million ($289million) remuneration he received in his final few years at the Big Board.
The Attorney-General's civil lawsuit, filed in the New York state supreme court, contends that Glaxo hid the fact that in some of its trials Paxil failed to perform better than a placebo, and in some cases was more likely to cause suicidal thinking.
The furore over the unpublished negative studies has been building as adverse data about antidepressant use in children has emerged. Glaxo submitted the unpublished studies to drug regulators in the United States and other countries in 2002 four years after the company began to get results about Paxil's efficacy and safety when used by children, according to the lawsuit.
Because of concerns about suicidal behaviour, United Kingdom drug regulators announced in June 2003 that Paxil "should not be used in children and adolescents under the age of 18 years" to treat depression.
This year, the US Food and Drug Administration warned that depressed patients of all ages taking antidepressants should be watched closely, but it is still re-examining data from the various trials.
The New York lawsuit describes five Glaxo studies of Paxil use among children and adolescents. Two of the studies failed to show that Paxil was more effective than a placebo for treating depression in children and adolescents.
In one, the placebo actually outperformed Paxil on a primary efficacy measure, the lawsuit said. And three of the studies showed that certain suicide-related behaviours were about twice as likely among the Paxil users.
An internal Glaxo document said the company would have to "effectively manage the dissemination of these data in order to minimise any potential negative commercial impact", according to the lawsuit. That document recommended that Glaxo prepare and publish a full article only on the one study, out of five, that had some favourable conclusions.
A Glaxo spokesman in London said the company had acted responsibly in the conduct of clinical trials and was working with Mr Spitzer's office. Glaxo's shares fell 2.9 per cent on the London Stock Exchange and 3.2 per cent on the New York Stock Exchange.
The announcement comes at a tough time for the industry. The patents on many blockbuster drugs have expired, or will in coming years, meaning the companies now have to compete with generic drug makers.
New drug approvals by the US Food and Drug Administration have also slowed to a trickle and many industry manufacturing facilities are old. Prescription trends in the US, which is easily the world's biggest market, have also been surprisingly weak.