GSK fights regulatory red tape

Scrutiny includes FDA review of seven of company's drugs

Regulatory setbacks have already made this a tough year for GlaxoSmithKline, and there could be more bad news from the Food and Drug Administration over the next two days.

Today, a panel of FDA experts will review data on the flu drug Relenza to determine whether it needs to carry a warning about the risk of neurological problems the drug can cause in children, including hallucinations and convulsions. The panel will also address similar problems with Tamiflu, a rival flu drug made by the Swiss company Roche.

Then Wednesday, the panel will go over data that raise concerns that GSK's asthma drugs Serevent and Advair may also cause serious problems in children.

That brings the number of GSK medicines that have run into regulatory difficulties or delays to seven this year. Sales of diabetes pill Avandia, GSK's second-best seller, are expected to be down by more than $1 billion for the year, because the drug was linked six months ago to a higher risk of heart attack. Analysts estimated that the damage from the other regulatory problems represents a fraction of the lost Avandia sales, but they are closely monitoring whether the steady drip of bad news is adding up.

The FDA added yet another drip Monday, when it asked GSK to pull promotional material for Tykerb, a promising breast cancer pill that was approved for sale March 13. The FDA said the materials suggested that the drug was safer and worked better than had been proven in studies.

GSK's regulatory setbacks are "a reflection of a more conservative FDA," said Mary Anne Rhyne, a company spokeswoman. The entire pharmaceutical industry is struggling with heightened regulatory scrutiny, Rhyne said.

The Advair and Serevent data will be presented to the panel because of a regulatory requirement, not because the information raised new safety concerns.

After revising its treatment guidelines for asthma, the National Institutes of Health still recommends Advair, which contains the same active ingredient as Serevent, as the preferred treatment for patients 4 years old and older with moderate to severe asthma, Rhyne said.

"We believe [the guidelines] reflect the current safety information," she added.

Meanwhile, the FDA has acknowledged that the side effects caused by Relenza and Tamiflu could be the result of an unusual flu strain or a rare genetic reaction. According to GSK, clinical studies have not shown any significant behavioral issues with Relenza.

The FDA has increasingly zeroed in on drug safety since the drug maker Merck pulled the painkiller Vioxx three years ago when a study suggested the medicine doubled the risk of heart attack.

Since then regulatory approval for new drugs has slowed and fewer new treatments have passed regulatory approval, FDA numbers show. Safety concerns about drugs already on the market have led to tougher warnings on the drugs' packaging information. In March, Swiss pharmaceutical company Novartis pulled its gastrointestinal drug Zelnorm, because the medicine was linked to an increased risk of heart problems.

Analysts don't expect the scrutiny to loosen any time soon.

"That's the new reality," said Linda Bannister, a pharmaceutical analyst with Edward Jones.

To make up for lost sales and mounting pressure from cheaper generic drugs, GSK and many other drug makers are countering with acquisitions and layoffs.

The British company, which has a U.S. headquarters in the Triangle and employs about 6,000 in the area, announced last month that it plans to close sites and cut jobs to save up to $1.4 billion in annual costs over the next three years. GSK has yet to release how many jobs might be cut in the Triangle.

Last week, GSK announced it would buy Reliant Pharmaceuticals, a New Jersey company with $341 million in sales the first nine months of the year, for $1.65 billion. On Monday, GSK announced it has bought the rights to sell Merck's cholesterol-lowering drug Mevacor in the United States. The drug still needs FDA approval to be sold without a prescription and the two companies did not release financial details about the deal.

To protect its stock price, GSK kicked off a massive $24 billion stock buyback program in July. But its American depositary receipts, which are like stock, have lost about 13 percent in the past six months. The ADRs closed at $50.19 Monday, down 60 cents.