In March, the FDA and the US Department of Justice seized batches of GSK's diabetes treatment Avandamet (rosiglitazone plus metformin), and its antidepressant, Paxil CR (paroxetine), saying they failed to meet quality standards. The interruption in supply has already cost GSK around €300m in lost sales.
The signing of a consent decree means that a company commits to putting problems right, but also lays it open to the risk of fines and complete closure of the offending plant if matters cannot be rectified. In May 2002, Schering-Plough agreed to pay a record $500m (€390m) fine after signing a decree to improve manufacturing standards at its facilities in Puerto Rico and New Jersey used for the production of its antihistamine Claritin (loratadine).
In this case, the liability for GSK is around $10m a year if it fails to meet the terms of the decree, but analysts said this was lower than some had expected, and crucially did not include any penalties for the perod leading up to the discovery of the problem. A number of managerial staff have been fired in the wake of the probe.
The FDA said after news of the consent decree came out that it was concerned that "GSK's violation of manufacturing standards may have resulted in the production of drug products that could potentially pose risks to consumers."
The decree also requires GSK to post a penal bond of $650m to ensure thatproduct previously withheld by the FDA is appropriately destroyed or reconditioned.
Under the terms of this decree, the company has agreed to take measures to ensure that the Cidra facility fully complies with current Good Manufacturing Practice ( cGMP) requirements and to ensure that ongoing shipments have the quality attributes they are required to possess. The decree also requires that all corrections and the firm's compliance with cGMP requirements be certified by a third-party expert.
"The consent decree shows that FDA is serious about enforcing the manufacturing standards essential for safe and effective prescription drugs," said John Taylor, FDA Associate Commissioner for Regulatory Affairs.
The FDA's last inspection of the Cidra found Paxil CR tablets, approved to treat depression and panic disorder, could split apart. This deficiency could cause patients to receive a portion of the tablets that lacks any active ingredient, or alternatively a portion that contains an active ingredient and does not have the intended controlled-release effect. Additionally, FDA found that some Avandamet tablets did not have an accurate dose of rosiglitazone.
Meanwhile, UK company SkyePharma, which supplied the drug delivery technology underlying Paxil CR, will be paid a lump sum of around $10m to compensate for the loss of royalty revenues resulting from the withdrawal of the drug.
In addition, SkyePharma will also be entitled to an increase in the royalty rate from 3 to 4 per cent on actual net sales of Paxil CR, with effect from March 4, 2005, in settlement of a dispute between the two companies.