FDA fines Genzyme $175M for manufacturing problems

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FDA fines Genzyme $175M for manufacturing problems

Genzyme to pay $175M, agrees to FDA requirements for fixing drug manufacturing problems

Matthew Perrone, AP Business Writer, On Monday May 24, 2010, 5:19 pm EDT

WASHINGTON (AP) -- Biotech drugmaker Genzyme Corp. has agreed to pay a $175 million penalty to federal regulators in connection with long-standing manufacturing problems that have already cost the company millions.

The payment, which Genzyme disclosed last month when it reported its first-quarter performance, is the return of "unlawful profits" from the sale of products made at the plant, the Food and Drug Administration said in a statement released Monday.

The FDA also said the company signed a legal agreement to fix problems at its biotech drug plant in the Allston neighborhood of Boston.

Under terms of the consent decree, Genzyme must map out a plan for overhauling the plant and stick to a preset timetable or face additional fines.

The consent decree still must be approved by the U.S. District Court for Massachusetts, Genzyme said in a separate statement.

The decree requires Genzyme to move operations for filling drug vials to a new plant by Nov. 28 for U.S. sold products, and by Aug. 31, 2011 for those sold internationally.

If Genzyme misses these deadlines, it will have to pay 18.5 percent of revenue it received from selling products made there. Furthermore, if Genzyme fails to comply with manufacturing standards over the next few years, it will have to pay $15,000 per day until it meets federal standards.

"It is critical for the safety of the drug supply that companies comply with basic manufacturing standards," said FDA principal deputy commissioner Joshua Sharfstein. "FDA takes these obligations very seriously and expects manufacturers to do the same."

In June, the Cambridge, Mass.-based company shut down the plant for about three months to clean up viral contamination that had been slowing production of the drugs Cerezyme and Fabrazyme. The virus was not harmful to people, but the shutdown was costly. During the fourth quarter, profit plunged 73 percent to $23.2 million on lower sales.

In November, the FDA says it found tiny particles of trash in drugs made by Genzyme, including steel, rubber and fiber. The agency recommended that doctors closely inspect vials of four drugs made at the plant: Cerezyme, Fabrazyme, Myozyme and Thyrogen.

Since January, Genzyme has restructured its manufacturing operations, naming a new president of global manufacturing and corporate operations, along with a senior vice president of global product quality. It also contracted manufacturing for some of its key products to Hospira Inc.

Prior to the problems with its Allston plant Genzyme was considered one of the leading lights of the biotech industry, building a multibillion dollar business around treatments for rare diseases.

The company's best-selling drug, Cerezyme, treats Gaucher disease, an enzyme disorder that can result in liver and neurological problems. Its second-best seller, Fabrazyme, treats an inherited disorder known as Fabry disease, which is caused by the buildup of a particular type of fat in the body's cells. Myozyme treats Pompe disease, which interferes with muscle development and Thyrogen is used to diagnose thyroid cancer.

Shares of Genzyme fell 93 cents, or 1.9 percent, to close at $48.48.

AP Business Writer Tom Murphy contributed to this story from Indianapolis

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