Pharma News: Bristol-Myers, Sanofi Gain Temporary Halt to Generic Plavix; FDA Negotiating Funding with Industry

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Sanofi, Bristol Win Ruling on Plavix and Drug Firms Use Financial Clout To Push Industry Agenda at FDA

• Summary: Avoiding a worst-case scenario, a federal judge granted a request by Bristol-Myers Squibb Co. (BMY) and its French counterpart Sanofi-Aventis SA (SNY) for a temporary injunction halting sales of a generic version of their best-selling drug, Plavix. The drug sold $3.8 billion in the U.S. alone last year; however, since the generic market opened up, Bristol-Myers and Sanofi have lost nearly 75% of their market share. The ruling was far short of a complete victory as it allows pharmacies to continue to sell the generic supplies already on their shelves - estimated to be enough for several months' distribution. In addition, Bristol-Myers and Sanofi were required to post a large bond. U.S. sales of branded Plavix plunged 77% to $14.4 million for the week ended Aug. 25 from $62.7 million for the week ended Aug. 4, according to market-research firm Verispan. Shares of Bristol-Myers have dropped 20% in value since a possible deal with Apotex, the Canadian company responsible for knocking branded Plavix off of shelves, which would have preserved some of Bristol-Myers market share fell through in July. In after-market trading, Bristol-Myers' shares rose $1.97 following news of the ruling. In other Pharma news, The FDA is bargaining with the pharmaceutical industry for an increase in fees, giving the industry an even greater role in shaping the way FDA regulates them. Such negotiations between the industry and the FDA date to the introduction of "user fees" in the early 1990s. But steadily rising payments by drug makers -- $232 million in fiscal 2004 -- now fund more than half the agency's critical drug-review process. It is considered highly irregular for a regulatory agency to be required to negotiate their budget with the industry they oversee. Other agencies such as the FCC and the SEC rely on user fees for at least some funding, but don't generally haggle over the fees. Instead, they typically impose changes through formal rule-making or by implementing formulas set by Congress. Until 1990, the FDA was entirely funded by Congress and any deal struck between them and the drug manufacturers will be subject to Congressional approval before it can be implemented.
• Comment on related stocks/ETFs: For background on Bristol-Myers Squibb's and Sanofi-Aventis' recent problems with generic Plavix and the legal problems that have ensued, including an ongoing federal anti-trust investigation, see George Gutowski's Bristol-Myers Squibb the Subject of a Criminal Antitrust Probe. Then, for in-depth analysis, read David Phillips' excellent Bristol-Myers Squibb: Excedrin Headache No. 99.