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J&J Anemia Drug Linked to Inquiry

Pharmaceuticals: A U.S. probe centers on a plant where Eprex is made. The stock falls sharply.


A federal criminal investigation of record keeping at a Johnson & Johnson manufacturing facility in Puerto Rico has been indirectly linked to one of the pharmaceutical giant's most profitable but controversial anemia drugs. The drug, Eprex, has been linked to 141 foreign cases of a rare but sometimes fatal blood disorder.

The Food and Drug Administration had little to say about the case involving its Office of Criminal Investigations and the Justice Department. But Johnson & Johnson said the investigation originated with a civil lawsuit brought in 2000 by a former employee who had been fired from J&J's Ortho Biologics plant.

The former employee has alleged that he was ordered to falsify records at various times between 1996 and 1998 to hide manufacturing lapses, according to J&J.

Eprex, which accounts for $1.3 billion in annual sales, is manufactured at the J&J Puerto Rico plant and sold in Europe and Canada, where cases of the disorder, known as pure red blood cell aplasia, have surfaced. Eprex is similar to Procrit, which is sold in the U.S. under a manufacturing agreement with Thousand Oaks-based Amgen Inc.

J&J denied there was any link between the probe and suspected drug side effects.

On June 27, J&J said it was investigating possible triggers of the rare blood disorder in which bone marrow fails to produce vital red blood cells. Eprex is designed to stimulate production of those cells. J&J has said that it was not certain why some Eprex patients developed red blood cell aplasia but that a number of factors may be involved.

The investigation comes despite the fact that the FDA had performed an inspection of the plant in October 2001, which according to an FDA official included a check of the facility's record keeping. The plant "got a fairly clean bill of health" in that inspection, said the official, who asked not to be named.

In June 2002, the facility also ws inspected by the French government equivalent of the FDA. An FDA source said that inspection also failed to turn up major problems.

J&J spokesman Marc Monseau said in an interview Friday that the company stood by the integrity of Eprex. Monseau referred to the lawsuit as a case of a disgruntled former employee fired for cause who also had no connection to the manufacturing of Eprex.

News of the case rocked investors in the New Brunswick, N.J.-based drug maker. J&J shares fell $7.88, or 16%, to $41.85 on the New York Stock Exchange, hitting a 12-month low.

J&J is the latest drug company to come under the FDA's microscope for possible quality-control problems. The agency is investigating Schering-Plough Corp., Eli Lilly & Co. and Abbott Laboratories for alleged lapses related to record keeping and manufacturing. Earlier this year, Schering-Plough paid the FDA an unprecedented $500-million fine related to problems at plants in Puerto Rico and New Jersey.

"The tripwire sensibility of investors was already on alert among investors after the Enron and Global Crossing scandals and with Merck and Bristol-Myers Squibb under scrutiny and now Johnson & Johnson," said Standard & Poor's analyst Arthur Wong. "There are just so many uncertainties that, to investors, this is like the financial version of 'The Perfect Storm.' "

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