Late last week, Cephalon disclosed yet another government investigation
into its handling of one of its drugs. The latest probe is being conducted
by the US Department of Justice into “certain promotional practices”
concerning the Nuvigil and Provigil medications, which are used to treat
sleeping disorders (read this).
The disclosure followed by just a few days a subpoena from the US Attorney
in New York requesting documents pertaining to off-label issues and
clinical trial work for the Treanda medication, which is approved to treat
chronic lymphocytic leukemia (back story).
And earlier this year, the US Postal Service began an investigation into
its Fentora pain med for cancer patients. There were no further details,
but you may recall that, in 2008, Cephalon paid $425 million to settle
charges that it promoted Actiq, a drug similar to Fentora, for off-label
marketing (read this).
And so, all four major medicines that Cephalon actively markets are under
investigation by this or that federal agency. Not surprisingly, Teva
Pharmaceuticals, which agreed to pay $6.8 billion to acquire Cephalon, says
there is no reason for concern, even though Cephalon signed a five-year
Corporate Integrity Agreement in 2008 to settle off-label marketing charges
(look here).
“I don’t have all the facts, because we are still operating as separate
companies,” Bill Marth, who heads Teva’s US operations, told The
Philadelphia Inquirer. “That said, with the due diligence we’ve done, the
corporate integrity agreement (with the federal government) is very strict
and they (Cephalon) have a robust compliance program. I realize there are
investigations from time to time, but I believe they have probably done a
very good job…I don’t think there is a Cephalon problem. We’re excited
about the transaction. We still anticipate it closing in mid-October and I
don’t think it will impact that at all.”
To cope, Teva could attempt to bolster investor confidence by inferring
that a new regime will soon be put in place and that, regardless of various
federal probes, the products offer ongoing sales potential. The bottom line
is, after all, the bottom line. Whether that line of reasoning - should
Teva offer such an explanation - would hold up is unclear, since much of
the Cephalon team will remain in place.
For instance, Kevin Buchi, who is currently the Cephalon ceo, will now head
all global branded products, although commercial activities will not be a
big part of his portfolio, a Cephalon spokeswoman explains. In any event,
he has worked at Cephalon for almost 20 years, most recently, as chief
operating officer and this involved overseeing global sales and marketing
functions.
Among the others is Leslie Russell, the Cephalon chief medical officer, who
will head up global branded R&D. Then, there is Bill Campbell, the vp of
sales and marketing for pain meds at Cephalon, who will become general
manager of oncology. Another exec is Mike Durkacz, the CNS vp at Cephalon,
who will become general manger of CNS.
There is nothing to suggest specific Cephalon execs warrant individual
scrutiny, but the mounting number of probes of nearly the entire product
portfolio could, nonetheless, complicate the acquisition. The Cephalon
spokeswoman, however, noted that the CIA required strict compliance and the
marketing efforts for these meds were fully vetted.
into its handling of one of its drugs. The latest probe is being conducted
by the US Department of Justice into “certain promotional practices”
concerning the Nuvigil and Provigil medications, which are used to treat
sleeping disorders (read this).
The disclosure followed by just a few days a subpoena from the US Attorney
in New York requesting documents pertaining to off-label issues and
clinical trial work for the Treanda medication, which is approved to treat
chronic lymphocytic leukemia (back story).
And earlier this year, the US Postal Service began an investigation into
its Fentora pain med for cancer patients. There were no further details,
but you may recall that, in 2008, Cephalon paid $425 million to settle
charges that it promoted Actiq, a drug similar to Fentora, for off-label
marketing (read this).
And so, all four major medicines that Cephalon actively markets are under
investigation by this or that federal agency. Not surprisingly, Teva
Pharmaceuticals, which agreed to pay $6.8 billion to acquire Cephalon, says
there is no reason for concern, even though Cephalon signed a five-year
Corporate Integrity Agreement in 2008 to settle off-label marketing charges
(look here).
“I don’t have all the facts, because we are still operating as separate
companies,” Bill Marth, who heads Teva’s US operations, told The
Philadelphia Inquirer. “That said, with the due diligence we’ve done, the
corporate integrity agreement (with the federal government) is very strict
and they (Cephalon) have a robust compliance program. I realize there are
investigations from time to time, but I believe they have probably done a
very good job…I don’t think there is a Cephalon problem. We’re excited
about the transaction. We still anticipate it closing in mid-October and I
don’t think it will impact that at all.”
To cope, Teva could attempt to bolster investor confidence by inferring
that a new regime will soon be put in place and that, regardless of various
federal probes, the products offer ongoing sales potential. The bottom line
is, after all, the bottom line. Whether that line of reasoning - should
Teva offer such an explanation - would hold up is unclear, since much of
the Cephalon team will remain in place.
For instance, Kevin Buchi, who is currently the Cephalon ceo, will now head
all global branded products, although commercial activities will not be a
big part of his portfolio, a Cephalon spokeswoman explains. In any event,
he has worked at Cephalon for almost 20 years, most recently, as chief
operating officer and this involved overseeing global sales and marketing
functions.
Among the others is Leslie Russell, the Cephalon chief medical officer, who
will head up global branded R&D. Then, there is Bill Campbell, the vp of
sales and marketing for pain meds at Cephalon, who will become general
manager of oncology. Another exec is Mike Durkacz, the CNS vp at Cephalon,
who will become general manger of CNS.
There is nothing to suggest specific Cephalon execs warrant individual
scrutiny, but the mounting number of probes of nearly the entire product
portfolio could, nonetheless, complicate the acquisition. The Cephalon
spokeswoman, however, noted that the CIA required strict compliance and the
marketing efforts for these meds were fully vetted.