Puerto Rican PHARMACEUTICAL bites the dust...

[El_Jibaro]

[i]SCHERING-PLOUGH TO PAY GOV'T $500M FOR 'QUALITY CONTROL' ISSUES

AP
Friday, May 17, 2002[b]

Schering-Plough Corp. (SGP), the maker of allergy blockbuster Claritin, agreed to pay the government $500 million to resolve quality control issues at facilities in New Jersey and Puerto Rico. The company also cut its 2002 earnings estimates.


Under the agreement, Schering Plough will pay the U.S. government two equal installments of $250 million in the second quarter of 2002 and the second quarter of 2003.

The company will retain outside experts in determining manufacturing methods that comply with the FDA's Good Manufacturing Practices standard.

Schering-Plough also said it was recalling and discontinuing production of two older asthma drugs, theophylline and Proventil Repetabs, which it stopped marketing last year. The company temporarily suspended production of animal health products Banamine, Nuflor and Optimmune in Puerto Rico.

The FDA agreement is subject to approval by the U.S. District Court for the District of New Jersey, the company said.

Schering-Plough shares have fallen to 1997 levels since the criminal investigation became known.

WALL STREET SPOOKED BY CRIMINAL PROBE

A slew of problems have plagued Shering-Plough's two facilities in Puerto Rico, where analysts say the company manufactures the allergy drug Clarinex and the Hepatitis drug Rebetol.

Last year, Schering-Plough set aside $500 million to resolve issues over its manufacturing practices at facilities in New Jersey and Puerto Rico. Those issues caused the FDA to delay the approval of Clarinex, Schering-Plough's successor to Claritin.

The nature of Schering Plough's problems has never been fully disclosed.

Like other drug companies, Schering-Plough is the subject of numerous lawsuits and investigations over issues such as pricing by entities ranging from state attorneys general to consumer groups to the Justice Department.

But the criminal nature of the investigation spooked Wall Street. "The criminal nature of this is very unusual," said Tim Anderson, a pharmaceutical analyst at Prudential Securities. "I really don't know what that could mean."

The FDA regularly oversees companies' testing, labeling and manufacturing efforts and works with them to fix deficiencies. Industry experts said the criminal nature of the investigation indicates that the FDA suspects Schering-Plough deliberately strayed from FDA policy.

Activities that would constitute criminal behavior include falsifying expiration dates on labels or intentionally ignoring good manufacturing practices.

Last year, The Washington D.C.-based consumer group Public Citizen called for a criminal investigation of Schering-Plough, charging the company knowingly distributed albuterol asthma inhalers even though the units didn't contain the active ingredient. Public Citizen based its claim on a confidential audit it says it obtained.

Schering-Plough did recall inhalers in 1999 and 2000 but denied that anyone died because of an inhaler lacking active ingredients.

Sid Wolfe, director of Public Citizen's Health Research Group, said he was contacted by the U.S. Attorney's office about his request for an investigation. However, the inhalers were manufactured in a plant in Kenilworth, N.J. Schering-Plough's home base.

EXPECTATIONS LOWERED

For 2002, Schering-Plough now expects a mid-single-digit percentage increase in earnings per share rather than the low-double-digit forecast that it had previously made.

The new forecast includes the previously reported anticipated elimination of Claritin inventories, which will lower pre-tax profits for the remainder of 2002 by $250 million.

Second-quarter earnings per share are expected to be flat to up slightly from last year's second quarter, when it reported operating earnings of 43 cents per share.

Before Friday's announcement, Wall Street analysts expected Schering-Plough to report earnings per share of 46 cents for the second quarter, according to Thomson Financial/First Call.

[Nacionalista]

Is unfortunate that the federal government is penalizing someone for breaking the laws, but does not do anything about the federal laws broken in Vieques.

OTOH, there is money involved in this case and the feds are the beneficiaries.