[Ip-health] Wall Street Journal: Novartis CEO Battles Fallout From Data Manipulation

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 19 02:55:25 PDT 2019



Novartis CEO Battles Fallout From Data Manipulation

Issue with Zolgensma, world’s most expensive drug, comes as Vas Narasimhan
tries to rebuild trust in pharmaceutical giant

Novartis Chief Executive Vas Narasimhan is invested in the success of
Zolgensma, which forms a pillar of his strategy to pivot the company toward
cutting-edge medicines. PHOTO: JASON ALDEN/BLOOMBERG NEWS
By Denise Roland and Tom Burton
Aug. 18, 2019 7:00 am ET

Novartis AG Chief Executive Vas Narasimhan has spent part of his 18 months
at the helm of the drug giant cleaning up issues that emerged before his
watch. Now, he is facing a storm of his own making.

Dr. Narasimhan said on a call with analysts earlier this month that the
company kept a data-manipulation issue under wraps while the Food and Drug
Administration completed its review of Novartis’s Zolgensma, the world’s
most expensive drug. The Swiss company has said it wanted to finish its own
review before alerting the FDA, which it eventually did.

That timeline, however, has now triggered scrutiny by the regulator and
drawn the ire of a handful of prominent politicians, casting a shadow over
Dr. Narasimhan’s short tenure as CEO.

“He’s certainly in big danger of losing credibility,” said Brad Loncar, an
investor who runs an exchange-traded fund of biotech companies. “They’ve
handled this in just about the worst way possible.” Mr. Loncar doesn’t own
shares in Novartis.

The FDA has referred the Zolgensma matter to its Office of Criminal
Investigations to begin a preliminary inquiry, according to a person
familiar with the events. Submitting false data to the agency as part of a
new-drug application could be a crime if investigators prove the actions
were intentional and not an oversight.

Zolgensma treats spinal muscular atrophy and costs $2.1 million for a

Novartis says it hasn’t been notified of the referral. The FDA declined to

“Submitting complete information to the FDA is sacrosanct to the agency,”
said David Gortler, a former FDA official.

The manipulation occurred at AveXis, a separate company that developed the
drug and that Novartis later bought. Dr. Narasimhan has said that the lag
in telling the FDA about the issue was unrelated to the approval timeline
for Zolgensma. Novartis has said those responsible for the manipulation are
being ousted.

“We tried to do all of the right things,” Dr. Narasimhan said on the
analyst call. He declined to comment for this article.

The episode is especially testing for Dr. Narasimhan because he has made it
his goal to rebuild trust in the company. One of his first tests as CEO was
handling the revelation that Novartis paid $1.2 million to Michael Cohen,
President Trump’s former personal lawyer, for what the company called
insight into the administration’s health-care policy. He called the
decision—which was made before he became CEO and in which he says he wasn’t
involved—a mistake.

He is also presiding over negotiations with the U.S. to settle a
long-running lawsuit alleging Novartis treated doctors to lavish dinners
and other events in return for boosting prescriptions. The company recently
set aside $700 million for a settlement.

Dr. Narasimhan, a 42-year-old Harvard-educated medical doctor, made a
splash at Novartis after taking the top job. He promised a technology-led
reboot of the company’s research and development and moved quickly to shed
lower-growth businesses.

Shares in July hit their highest level since 2015, though they have
retreated somewhat since. After the data manipulation issue was disclosed
by the FDA earlier this month, shares fell 2.5%.
Dr. Narasimhan is deeply invested in the success of Zolgensma, which forms
a pillar of his strategy to pivot the company toward cutting-edge
medicines. The $8.7 billion acquisition of AveXis, which developed
Zolgensma and where the manipulation occurred, was one of his first big
bets as CEO.

The drug is one of the first gene therapies to go on sale in the U.S., but
it has also attracted scrutiny for its price tag—at $2.1 million for the
one-time treatment. It treats spinal muscular atrophy in small children by
providing a working version of the faulty gene that causes the condition.

According to Novartis’s account of the data manipulation, the issue was
first raised internally in March. Dr. Narasimhan learned about the issue in
early May, he told analysts on the call.

That data—although a small set—formed part of the dossier submitted to the
FDA to seek approval for the drug. Dr. Narasimhan said he decided to run an
internal investigation to determine whether the FDA file needed an update.

Weeks later, on June 28, Novartis told the FDA, which by then had approved
the therapy. The agency has said the treatment can stay on the market since
the issue doesn’t change its view that Zolgensma is safe and effective.

The disclosure has caused a firestorm in Washington, at a time when drug
prices have become a hot-button political issue. Five senators, including
Democratic presidential candidates Sens. Elizabeth Warren of Massachusetts
and Bernie Sanders of Vermont, recently wrote a letter to the FDA, urging
the agency to make a forceful response to Novartis.

Separately, Sen. Chuck Grassley (R., Iowa) wrote to Dr. Narasimhan
demanding information about the decision-making process and calling the
episode reprehensible.

FDA officials are expected to meet congressional staff to discuss the issue
in the coming week, according to an agency official.

Write to Denise Roland at Denise.Roland at wsj.com and Tom Burton at
tom.burton at wsj.com

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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