Last week, the Food and Drug Administration took the highly unusual step of publicly upbraiding the company, which he has run for the past 18 months, for failing to disclose that certain data from animal testing for a gene therapy was manipulated. The drug maker apparently became aware in mid-March, but did not notify the agency until the end of June. Unaware of the problem, the FDA approved the drug in May.
Despite their anger, agency officials believe the drug would have been approved anyway. Just the same, the company may face civil and criminal penalties after an investigation plays out.
For now, though, we are left with a slew of unanswered questions reminiscent of Watergate: What did they know and when did they know it? Why is the FDA under the impression the company did not act faster to probe the manipulation once it learned of the problem? Why did Novartis not tell the FDA sooner? Was there a cynical decision to ensure the drug was approved no matter what?
Normally, such scenarios should not occur. As a former top executive with a large drug maker who asked not to be named told me: “It’s not unusual during the drug development process that you find something you suspect is not quite right and have to figure it out. It happens all the time. But if they chose to do the investigation before saying anything, not giving a heads-up to the FDA is stupidity.”
Stupidity may be the least of it. No one should rush to judgment, but if federal authorities do find there was intentional fraud, the company needs to be penalized. And big fines should not suffice. Any individuals — including executives — who were responsible should also be held accountable.
For its part, Novartis maintained it quickly probed the incident before sharing interim results with the FDA. The drug maker also stands by the safety and effectiveness of its therapy, called Zolgensma, which is used to treat children with the most severe form of the rare and fatal disorder spinal muscular atrophy.
One thing is clear: This turn of events is a setback for Narasimhan, who actually learned of the problem sometime in May.
For those unfamiliar, Narasimhan is a medical doctor who climbed the drug development ranks before being promoted to chief executive in early 2018. This was just before Novartis found itself involved in a scandal for hiring Michael Cohen, a former attorney for President Trump, to gain access to the White House. Narasimhan escaped unscathed, however, because his predecessor took the blame.
Meanwhile, he is also grappling with the aftermath of bribery allegations that have popped up in a few countries. As an example, Novartis has set aside $700 million in hopes of settling a pending case in the U.S. in which the feds accused the company of bribing doctors with expensive meals and fat speaking fees to write prescriptions.
Mindful of such misdeeds, Narasimhan has repeatedly attempted to convince anyone who would listen that he would restore a sense of trust and integrity. So far, he’s won points for being bright, direct, and earnest. This latest episode, though, makes me wonder whether such an effort is like turning the Queen Elizabeth around in a bathtub.
“We don’t know very much about exactly what happened. Maybe it comes down to one rogue person,” said Holly Fernandez Lynch, an assistant professor of medical ethics at the Perelman School of Medicine at the University of Pennsylvania. “But the bigger issue is the leadership first decided to figure out what happened before clueing in the FDA — and also waited until after the product approval.”
To be fair, the FDA has so far not found a reason to question the effectiveness or benefit of the drug. Sure, had the approval been delayed by a few months, Novartis investors might have panicked and a cloud would have hung over the company. But agency officials indicate that, for now, Zolgensma would have been approved anyway, and it’s reasonable to assume the stock price would have eventually bounced back.
Nonetheless, it’s easy to see why a handful of U.S. senators are accusing the company of greed, especially given that the therapy — a so-called once-and-done treatment — costs $2.1 million.
This is not just a perception problem for Novartis, though.
This incident is bad timing for the entire pharmaceutical industry. Already mired in controversy over pricing, drug makers in general have a credibility problem.
On one hand, they harp on what we might call the three I’s — innovation, innovation, and innovation — to justify what they charge. But moments such as this, unfortunately, have the potential to undermine any rightful claim to healing the world’s ills.
Remember, this is an industry in which numerous companies have been tagged for illegal marketing and, in some cases, failing to disclose clinical trial data. More recently, a laundry list of drug makers have reached settlements with the feds for using charities to pay kickbacks to Medicare patients.
So restoring trust isn’t so easy, for anybody. And Novartis appears to have just made it harder.
Fernandez Lynch offered this analogy: “What if I give each of my kids $20 for a field trip and one thinks he lost the money. He doesn’t need to call me immediately. He could look for it, because I don’t need to know he thought it was lost. But once he knows, then he does need to tell me.”
Maybe Narasimhan should have called his mother a little sooner about that missing money.