Update on Vaccines Market, Wyeth's Prevnar Case

01/06/2005

A recent report issued by The Freedonia Group, a Cleveland-based market research firm, predicts that demand for vaccines in the U.S. will continue to grow at an 8.6% pace through 2008 (see table below). Within that time, the report adds, we may witness the first vaccines for AIDS, genital herpes, West Nile virus, even cancer. Cancer vaccines alone are projected to reach a demand of $6 billion in 2013, roughly 35% of the human vaccines market.

The stuff of science fiction bleeds into reality. While vaccine production is fraught with risk and will never be a slam dunk for any company, demand will fuel huge growth. Pediatric preparations, the report goes on to say, will remain top sellers, as they have been in the first half of the decade.

The case of Prevnar, Wyeth Pharmaceuticals’ inoculation against infant pneumonia and meningitis, suggests strong demand is not always a good thing. In 2004, Wyeth had difficulty meeting Prevnar obligations due to vial-filling production line problems, causing the CDC to take measures to conserve supply.

And that was just the most recent of Prevnar’s troubles, all of which have been spotlighted as a result of an ongoing whistleblower lawsuit filed by former employee Mark Livingston. (See Pharmaceutical Manufacturing, April/May 2004, p. 10).

In bringing Prevnar to market several years ago, Wyeth ran afoul of FDA cGMP regulations and suffered $30 million in fines, prodding the firm to launch several new compliance initiatives. Demand for Prevnar continued to grow, and Wyeth ramped up production. By December of 2002, the drug had generated $1.9 billion in sales. (That figure is now in the neighborhood of $3 billion.) The stage was set for what Livingston alleges was blatant neglect of GMPs and standard quality control in an effort to bring as much product as possible to market.

Hired by Wyeth as a trainer for its compliance initiatives, Livingston began to question the safety and quality of Prevnar’s production and training soon after. He claims to have reported compliance problems to the plant’s managing director, a corporate quality control auditor, and with a senior VP. He was met with hostility each time, he says. The company issued Livingston a written reprimand for what it considered “foul and abusive” language, and later that year terminated his employment following a run-in with a human resources executive at a holiday party.

Livingston claims he was let go for speaking up. Wyeth claims Livingston was rude and abusive to superiors and colleagues. Regardless, Livingston filed suit, claiming whistleblower protection under Section 806 of the Sarbanes-Oxley Act. This is the first time that “SOX,” implemented as a broad measure to combat rampant securities fraud, has been used in such a way. Livingston and his lawyers are arguing that Wyeth’s compliance issues are a direct threat to sales and profits, and thus shareholder value. Wyeth counters that there are no compliance issues to speak of, and if there were Sarbanes-Oxley gives Livingston no means to sue.

Lawyers from the Government Accountability Project (GAP) representing Livingston recently wrapped up depositions of several of Livingston’s former colleagues, setting the stage for what should be an eventful 2005. Several scenarios could unfold. First, Wyeth will likely file a motion for summary judgment to have the suit thrown out. If it is, Livingston could appeal. If not, the two parties could go to mediation to pursue an agreement. Failing that, the case would go to trial—probably late this spring or early summer, says JoAnne Royce, deputy general counsel at GAP.

Naturally, Royce feels Livingston’s claim would hold up in court. “I don’t think this is one you should take to a jury,” she says.

“I have more confidence now than I did a year ago,” says Livingston, who claims to have 15,000 pages of company emails, audit reports, FDA inspection reports and other documents to support his case. “We have the audit trail, and that should be very disconcerting to Wyeth,” he says.

“The case will be judged on its merits,” says Wyeth spokesperson Douglas Petkus, “and we believe Mr. Livingston’s claim has no merit.”