Are mergers and acquisitions the best path to public health in California?
Novartis never left
Bill Hatch – Nov. 5, 2005
At a county health clinic in Merced last week, hundreds of people, mostly elderly, waited for about an hour, in and out of doors, for their flu shots, made available for $2 due to a law authored by Valley Assemblyman John Thurman, D-Modesto, years ago. We quipped in the line that no one not old enough to remember John belonged in the line.
We were lucky, according to the Sacramento Bee Nov. 5 story, Flu-shot supplies lagging for US:
Despite assurances of plentiful supplies of flu vaccine, manufacturing delays combined with high demand have left many local health care providers without the shots.
The first three weeks of November marks the peak season for flu-shot awareness, but many doctors who ordered vaccine last spring still have not received their supplies, and some larger public providers are curtailing or canceling flu shot clinics.The problems can be traced, in large part, to Chiron Corp. of Emeryville, the company that was unable to ship about 50 million doses of flu vaccine to the U.S. market last year because of manufacturing problems at its plant in Liverpool, England.
Bee medical writer, Dorsey Griffith, continues, getting the requisite quote from a company flak:
"We are very aware that everyone has been skeptical, impatient and frustrated with us," Chiron spokeswoman Alison Marquiss said Friday. "We will continue to ship (vaccine) through November. There is definitely more to come."
Chiron's delays and reduced output this year were caused by the time-consuming process of fixing the problems that led to last year's production line crisis. That crisis halved the U.S. supply of vaccine, leading to nationwide rationing and redistribution.
"Certainly we are behind from where we would be in a normal year," Marquiss said. "The past year has been a rebuilding year for us."
(see full Sacramento Bee article below)
The production line crisis occurred when then Chiron CEO Howard Pien, 47, who acquired PowerJect Parmaceuticals in Liverpool, England, two months later, to expand Chiron’s vaccine production. (1)
The crisis was not caused by machinery breaking down or reported labor problems. It was caused by criminal investigations by two governments, the UK and the US, into vaccine contamination (2). Chiron’s May 6 quarterly report to the Securities and Exchange Commission contained this information about the crisis: (3)
FLUVIRIN® Influenza Virus Vaccine Recent Events
During the third quarter of 2004, in conducting final internal release procedures for our FLUVIRIN influenza virus vaccine, our quality systems identified lots that did not meet product sterility specifications. As a result, we determined at that time to delay releasing any FLUVIRIN vaccine doses pending completion of internal investigations. On October 5, 2004, the U.K. regulatory body, the Medicines and Healthcare products Regulatory Agency, or MHRA, sent us a letter prohibiting us from releasing any FLUVIRIN® influenza vaccine doses manufactured at our Liverpool facility since March 2, 2004 and suspending our license to manufacture influenza virus vaccine in our Liverpool facility for three months (later extended for an additional three months). In that letter, the MHRA asserted that our manufacturing process did not comply with U.K. good manufacturing practices regulations. Following the MHRA's decision and an inspection by the Food and Drug Administration, or FDA, the FDA sent us a warning letter citing violations of good manufacturing practices. We provided the FDA with a written response to the warning letter on January 7, 2005. As a result of the suspension of our license, we did not release any FLUVIRIN product during the 2004-2005 influenza season.
On March 2, 2005, the MHRA notified us that it had lifted the license suspension, giving Chiron clearance to initiate full production of FLUVIRIN® vaccine, conditioned on the understanding that Chiron's commitment to its remediation plan will continue and will be subject to further inspections by the MHRA. The FDA is still expected to conduct a full inspection to determine whether deficiencies noted in the warning letter the FDA issued in December 2004 have been resolved. If we fail to adequately address the matters discussed in the warning letter, the FDA may modify our U.S. license in an adverse manner, take action that could result in imposition of fines, require temporary or permanent cessation of future selling of FLUVIRIN vaccine or take other action that could reduce our ability to market FLUVIRIN vaccine.
We received a grand jury subpoena issued by the U.S. Attorney's Office for the Southern District of New York in October 2004 requesting production of certain documents relating to FLUVIRIN vaccine and the suspension by the MHRA of our license. In February 2005, after having previously commenced an informal inquiry, the Securities and Exchange Commission, or SEC, notified us that it would commence a formal investigation into whether we or our employees have violated any federal securities laws in connection with these developments regarding FLUVIRIN vaccine, and in April 2005, we received a subpoena from the SEC requesting production of certain documents relating to our Liverpool facility and FLUVIRIN vaccine. We also received a voluntary request for information from the United States House of Representatives Committee on Energy and Commerce requesting production of certain documents.
Incidently, it was the same story last year, when a little remembered shortage in flu vaccine occurred, for the same reason. (7)
But Chiron got a contract for $68 million to produce avian flu vaccine, reported on Oct. 28 (4). Novartis, which owned 40 percent of Chiron, paid $5.1 billion, reported on Oct. 31, to buy Chiron completely “as governments raise spending on influenza treatments.” (5)
By taking control of Chiron, Novartis will get a bigger say in development of vaccines for influenza and other illnesses, including bird flu. Chiron caused a shortage of flu treatments last year in the U.S. when it was forced to shut a U.K. plant because of contamination. Novartis pledged to fix the business, which is in an area that some companies abandoned because of production headaches and its lower profits.
``As other players have moved out of the vaccines business, it has become more interesting for others to go in,'' Luis Correia, a fund manager at Clardien Bank in Zurich who helps manage about $550 million, including Novartis shares. ``The manufacturers that are left gain a lot of pricing power and interest has also risen in the face of pandemic risks.''
Novartis stock has been the second-worst performing of Europe's five biggest pharmaceuticals companies since January. Novartis shares rose 65 centimes, or 1 percent, to 68.5 Swiss francs at 1:33 p.m. in Zurich.
It was announced Saturday that Chiron CEO Piel ad been replaced:
Dr. Joerg Reinhardt, 49, a German citizen who now serves as Novartis' global head of pharmaceutical development, would take over as chief executive officer of the new division that would be carved from two of the Emeryville biotechnology firm's three major business units. Chiron's drug development unit would be absorbed into Novartis.
(6)
Will Gov. Arnold the Hun be in a position now to exert influence among his fellow Teutons to get more ordinary flu vaccine, seeing as the avian flu pandemic that has killed 62 Asians has not yet hit our shores? Novartis has contributed $21,220 to his political career so far. (8)
Novartis aborted a 5-year "win-win, public/private partnership" with UC Berkeley during the controversy between some UC Berkeley biologists, particularly Ignacio Chapela, Novartis, other UCB biologists, and the UC administration, on how such partnerships between biotechnology corporations and California's public research university should operate. Another part of that affair was publication by Nature, a UK scientific journal, of a paper by Chapela and UCB graduate student David Quist on genetic drift from GMO corn to indigenous varieties in Oaxaca, a study backed by another by the Mexican government. When published, in 2002, the study was instantly labeled nonsense by the biotechnology industry, which, just to be on the safe side, turned the full force of its massive propaganda capacities on Nature. Nature did not exactly retract the Chapela-Quist study, but “the journal later printed an unprecedented editorial note stating that ‘the evidence available is not sufficient to justify’ the original publication and calling upon readers to judge the science for themselves.” (9) Although, in 2002, the problem of GMO contamination could still effectively be thugged around by biotech propaganda, calmer heads have prevailed since, and producers and shippers of non-GMO grains can buy insurance against detection of GMOs in their shipments at foreign ports (including our largest trading partners) that do not like GMO grains. (10) In short, Chapela and Quist were right; everybody knew it; but the funding for scientific research being what it is in universities, it was financially inconvenient to admit it. Chapela, who later came up for tenure at UC Berkeley, was passed by two faculty committees but dinged by an administration budget committee. He sued. Several weeks later a large, weeklong demonstration against biotechnology research and corporate funding took place at UC Berkeley, during which time UC granted Chapela his tenure because it was getting to be an issue of academic freedom and free speak, and UC don’t want no more of that at Berkeley, what with war and the possibility of a draft and all.
Timed to the day with the Novartis takeover of Chiron, Biotechnology Industry Organization President and CEO Jim Greenwood, issued a statement in strong support of President Bush’s national pandemic plan, particularly in the areas of “liability protections, dependable markets, transparent procurement procedures, strong research and development and procurement funding, and support for production infrastructure.” (11) This is only of interest to the ordinary consumer in light of the tremendously distorting effect BIO lobbying, propaganda, and its members’ political contributions continue to have on preventing the US government from any adequate public health and safety testing, through the FDA, on any of this industry’s products. This is an industry that has lost billions a year since its inception in the mid-1970s. (12) Its only real successes have been in its huge propaganda campaigns – which is precisely what makes it dangerous today for the ordinary senior citizen American seeking an ordinary flu shot as the flu season of 2005-2006 is upon us.
The Center for Disease Control reports that deaths among seniors, as Americans live longer, have grown steadily and are now about 36,000 a year from non-avian flus. (13) Part of the reason for the rising death rate may also be attributed to shortages of vaccine for the last three seasons. So, more than 100,000 people, over 90 percent of them elderly, have died in the last three years in the US from flu, compared with 62 people in Southeast Asia who have reportedly died of avian flu over the same period.
All things considered, if John Thurman were still among us, it would be pure joy to go down to Frank Fats in Sacramento with him some night, enjoy snacks with the cocktails and wine, sit back and listen to a man whose eloquent profanity still rings delightfully in the ears of some, old enough to stand in line for the (almost) free flu shots he worked to provide senior citizens in California. But those were the days when California government stood for something other than the last campaign contribution and the next fraud. (14)
-------------------
Flu-shot supplies lagging for U.S.
Vaccine orders unfilled as the season kicks off.
By Dorsey Griffith
Sacramento Bee – Nov. 5, 2005
Despite assurances of plentiful supplies of flu vaccine, manufacturing delays combined with high demand have left many local health care providers without the shots.
The first three weeks of November marks the peak season for flu-shot awareness, but many doctors who ordered vaccine last spring still have not received their supplies, and some larger public providers are curtailing or canceling flu shot clinics.
The problems can be traced, in large part, to Chiron Corp. of Emeryville, the company that was unable to ship about 50 million doses of flu vaccine to the U.S. market last year because of manufacturing problems at its plant in Liverpool, England.
Chiron had hoped to produce between 18 million and 26 million doses of vaccine this year, or about a quarter of the nation's supply. The company has since cut its estimated production, though it wouldn't give a specific figure. As of a week ago, the company had shipped 5 million doses.
"We are very aware that everyone has been skeptical, impatient and frustrated with us," Chiron spokeswoman Alison Marquiss said Friday. "We will continue to ship (vaccine) through November. There is definitely more to come."
Chiron's delays and reduced output this year were caused by the time-consuming process of fixing the problems that led to last year's production line crisis. That crisis halved the U.S. supply of vaccine, leading to nationwide rationing and redistribution.
"Certainly we are behind from where we would be in a normal year," Marquiss said. "The past year has been a rebuilding year for us."
Chiron's delays have left Mercy pharmacist Neal Cardosa with just 150 of the 2,000 doses he ordered for doctors throughout Sacramento.
"I get probably six calls a day from physicians' offices: 'When will you get it? Do you have it yet? Why does someone else have it and we don't?' " he said.
The situation has left many older patients, who under federal health guidelines should have already received the vaccine, have been unable to get the shot from their doctor.
"I'm 72 with diabetes, and I am one of the ones who is supposed to get it first," complained June Hansen of Carmichael.
The delays and related shortages have angered many in the medical field, including the California Medical Association, which wants an overhaul of how vaccine is distributed so physicians are not at the end of the line when problems occur.
"Something is totally wrong in the distribution system," said Dr. Jack Lewin, who heads the CMA. "It's going to drug stores and Costcos and Wal-Marts but not to the doctors who actually care for people at risk. We are going to make sure this doesn't happen again."
Dr. William Dugdale, a Sacramento general practitioner, has not received a single dose of flu vaccine this year, said his medical assistant, Mary Baumgartner.
For the past 14 years, Baumgartner has made it her mission to get every elderly patient immunized. She ordered 2,500 doses in April, then made follow-up calls at least once a month to make sure the shots were en route. This year, her daily calls have yielded nothing but assurances that she's on a waiting list.
The problem has been exacerbated by high vaccine demand. Sanofi Pasteur, which will supply the United States with 60 million doses, booked orders for its entire output in just two days.
"Demand has been extraordinary," Sanofi spokesman John Abrams said. "In a normal year, on the first day of booking, it can be as low as a few hundred to a maximum of a few thousand requests. The first day this year we had over 10,000 orders."
Abrams said Sanofi has delivered about 45 million doses of vaccine and expects to ship the rest this month.
Customers who were turned away have had to rely on manufacturers with much less output, including Chiron, GlaxoSmithKline and MedImmune, which makes an intranasal vaccine for healthy people ages 5 to 49.
Maxim Health Systems, which holds shot clinics at supermarkets, pharmacies and other retail outlets, had planned to provide between 2.2 million and 3 million doses, but after receiving 70 percent of its order - all from Sanofi - it doesn't expect to get the remaining 30 percent.
On Friday, Maxim canceled all flu shot clinics scheduled after Sunday. The Maxim clinics - held at several local Safeway, Albertsons, Costco, Priceless and Longs stores - typically run through Thanksgiving.
"We know the demand for vaccination is higher this year and currently there is simply not enough vaccine available to continue our retail programs," said Steve Wright, Maxim's national director of wellness services, in a statement. "We understand the frustration that some have experienced in trying to get vaccinated against the flu this year."
Sutter VNA & Hospice Association, which conducts more than 1,200 flu clinics in 12 Northern California counties, will have to curtail clinics the next several weeks because its early shipments are being depleted and it has still not received a large shipment from Chiron, said Gerri Ginsberg, program spokeswoman.
"We are on a waiting list for over 10,000 doses, which would carry us through and help us fulfill our existing commitments," Ginsberg said. "But now, we're in the process of limiting and postponing and canceling clinics."
While acknowledging that many people haven't been able to get vaccinated by their own doctor, federal and state health officials said everyone who wants to be immunized should be able to get a shot before the end of the year.
"I hope they will persevere over the next weeks and keep checking in with their physicians because there will be more vaccine," said Dr. Robert Schechter, a medical officer with the state Department of Health Services.
The state agency, which ordered 650,000 doses to distribute to county health departments, is still waiting for more than 200,000 doses from Chiron.
CDC spokesman Curtis Allen said, however, that the agency has not ruled out redistributing available doses.
--------
Notes:
(1) Novartis picks chief to head Chiron unit
If deal is OKd, he'd run blood tests, vaccines
Bernadette Tansey, Chronicle Staff Writer
Friday, November 4, 2005
(2) http://www.isa.org/InTechTemplate.cfm: 13 October 2004
UK vaccine plant strayed from good manufacturing
A criminal investigation of Chiron Corp.'s British flu vaccine plant by U.S. authorities appears to be under way.
(3) Securities and Exchange Commission Form 10-Q for CHIRON CORP 6-May-2005 Quarterly Report
http://biz.yahoo.com/e/050506/chir10-q.html
(4) http://www.consumeraffairs.com/news04/2005/bird_flu_chiron.html
(5) Novartis Agrees to Buy Rest of Chiron for Vaccines (Update4) Oct. 31 (Bloomberg)
http://www.bloomberg.com/apps/news?pid=10000085&sid=adPJTU3oyjIM&refer=Europe
(6) Novartis picks chief to head Chiron unit
If deal is OKd, he'd run blood tests, vaccines
Bernadette Tansey, San Francisco Chronicle Staff Writer, Nov. 4, 2005
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/11/04/BUGDCFIU821.DTL&type=business
(7) http://www.cchealth.org/topics/flu/flu_vaccine_shortage_report_2004_10.php
(8) Big A Catching up to Dubya in drug money; no other pol raising as much as Arnold, Sept. 30, 2005, http://www.arnoldwatch.org/press_releases/press_releases_000478.php3
(9) Ignacio Chapela/ Novartis: Gone But Not Forgotten, by Russell Schoch, California Monthly, Feb. 1, 2004, www.mindfully.org/GE/2004/ Ignacio-Chapela-Novartis1feb04.htm
(10) Insuring the future: biotech soybean exports can now be protected with shipment insurance, by Colleen Scherer, Managing Editor, Dealer and Applicator, http://www.dealerandapplicator.com/home/issues/main.asp?id=01-01-15-61976&issue=31_01
(11) BIO Supports Administration’s Effort to Devise Pandemic Influenza Plan Printer Friendly, press release Nov. 1, 2005 http://www.bio.org/news/newsitem.asp?id=2005_1101_01
(12) Biotechnology Loses Billions A Year
The biotechnology industry lost a combined $6.4 billion last year, according to a new report from Ernst & Young. The industry's total accrued loss since its birth in Silicon Valley in the mid-1970s is more than $45 billion.
By PAUL ELIAS, The Associated Press, May 31 2005
http://slogefree.org/newsletters/news_item.2005-06-10.2477483281
(13) http://www.cdc.gov/flu/professionals/diagnosis/#hospital
(14) http://www.latimes.com/news/local/la-me-lopez6nov06,0,7766735,full.column?coll=la-home-headlines: Arnold's 'Very Special' Election, by Steve Lopez, Points West – Nov. 6, 2005