Johnson & Johnson announced last week that it would be laying off 3 to 4 percent of its global workforce in an effort to generate savings of $1.3 to $1.6 billion by 2008.

The company expects to take the biggest hit in its pharmaceutical division, which faces numerous patent expirations, including top sellers such as migraine medication Topamax and antipsychotic Risperdal. Some pharma operations will be consolidated, and finances will be pumped into late-stage drugs. The company stated that it has plans to file new drug applications for seven to 10 drugs by 2010. 

 The company will better integrate its Cordis subsidiary, which has been hit by a 41 percent drop in the sales of its Cypher drug-eluting stents. 

Attrition and job freezes will be used to curb the number of layoffs.

Enterprise-wide functions (HR, IT, and finance) will be streamlined.

"Throughout our history, we have always taken a thoughtful, disciplined approach to address the challenges we face," stated William C. Weldon, Johnson & Johnson chairman and CEO, in a release. "These actions we are taking to improve our cost structure will enable us to continue investing for future growth and profitability."

According to Les Funtleyder, healthcare strategist for Miller Tabak, these cutbacks are a sign that J&J is being proactive for the future. "Drug development is such a volatile industry," Funtleyder said. "This plan probably signals that its mid-stage pipeline is not particularly robust, so it gives you a five-year window into how J&J views its pharmaceutical division."

Johnson & Johnson is the latest pharma company to announce cutbacks in operations. Early last week, AstraZeneca and Bristol-Meyers Squibb also announced that they would be trimming back staff over the next two years.

Peter Young, president of the investment bank Young and Partners, said that these cutbacks were not unexpected, in light of last year?s sales force layoffs at Pfizer. "Pharma is looking at its portfolio and its revenue projection, and it's trying to balance between maintaining a new structure and teams for products coming out, and maintaining existing products," Young said. "A big part of this reorganization is recognition of how much pharma can support going forward. This situation is not a positive--this is what companies do when they go into defensive mode. This is definitely an industry trying to retrench."

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Company follows industry's job-slashing trend

J&J to Cut Costs and Jobs

The maraviroc saga continues as a Pfizer internal investigation last week resulted in the sacking of three managers from the company's HIV division. One rep said the division VP of sales, Mark Brown, announced in a teleconference last week that Assistant Sales Manager Kelly Fitzgerald, HIV Sales Director Art Rodriguez, and Mid-Atlantic Director Bob Mumford were "no longer with the company."

Brown did not specify whether the execs had voluntarily resigned or been handed a pink slip outright. But "I think it is very safe to say that they were terminated," said ex-Pfizer whistle-blower Peter Rost, who broke the story with the 

's Ed Silverman on their respective blogs. "Three senior execs from one division leaving at the same time voluntarily doesn't usually happen," Rost added.

All the fuss stems from a sales rep who leaked copies of some pretty damning slide presentations and e-mails to Silverman's Pharmalot and Rost this past spring. These slides and e-mails pointed to off-label promotions for ailing HIV drug Viracept and the just-approved Selzentry (maraviroc). (FDA delayed the drug's approval in June--despite an advisory board's recommendation to approve--but approved it Monday afternoon.) Selzentry hadn't been approved when these materials were given to reps, but Pfizer had implemented an expanded access program for the drug.

While a company can't use any employee, sales rep or not, to promote a drug that hasn't been approved, FDA spokeswoman Crystal Rice said in the case of expanded access programs, patients and physicians can find out about the programs through FDA and National Institutes of Health, which have a Web site dedicated to that task (www.clinicaltrials.gov). If companies do recruit physicians, their materials may be closely scrutinized by FDA "for regulatory purposes," and their communication must be "about the program and not unapproved use of the drug." What the rules don't say clearly is how companies can recruit physicians for expanded access programs without illegally promoting an unapproved drug. "It's a fine line," Rice said. "Sponsor representatives may inform people about the existence of the program but must not overstate the data or value, make false or not proven claims about the drug, etc."

The Pfizer rep said she came forward because she felt her directives were illegal; she was subsequently "freezed out" of her division. She added that the three execs' exit gave her some satisfaction, though she still wonders why the situation arose in the first place.

The incident recalls the Neurontin debacle. Pfizer acquired fellow drugmaker Warner-Lambert in 2000, only to be slammed with a false-claims suit from the Department of Justice. Sales reps from Warner-Lambert had been doing a little off-label promoting of antiepileptic Neurontin (gabapentin), saying it could be used to treat bipolar disorder and Lou Gehrig's disease, among others, though FDA hadn't approved those uses. Pfizer agreed to pay $430 million in damages and entered into a Corporate Integrity Agreement with Health and Human Services.

The Selzentry /Viracept snafu may be deemed to have broken that agreement, which could spell profit-eating fines down the line. For the time being, the investigation, conducted by firm Ropes & Gray, remains internal. Pfizer didn't return requests for comment by press time.

Pharma giant's house gets a little cleaner after whistle-blower's accusations

Pfizer Fires Three?

GlaxoSmithKline's Avandia should remain on the market--but with new warnings. That was the 21-1 vote recommendation of a joint meeting of FDA's Endocrinologic and Metabolic Drugs Advisory Committee and Drug Safety and Risk Management Advisory Committee, which met July 30 to consider the fate of the drug. Avandia (rosiglitazone) has been under fire since a study in the May 21 New England Journal of Medicine (NEJM) found that the diabetes drug--GlaxoSmithKline's second-best seller--substantially increased the rate of heart attack in patients that took it.

"The advisory committee recommended additional warnings, some suggesting a boxed warning," said Robert J. Meyer, MD, director of FDA's Office of Drug Evaluation II for the Center for Drug Evaluation and Research, in a press conference following the meeting. "Likewise, there were many who recommended limiting the use of the drug with insulin and in patients with severe heart disease, but many did not specifically cite a firm contraindication. FDA will take this advice into due consideration in reaching its internal decisions on how to best respond."

As many observers had expected, a substantial part of the presentation on the drug was devoted to critiquing the data. Questions were raised about both the meta-analysis by controversial cardiologist Steven Nissen, which formed the basis of the NEJM article, and GSK's record study, which painted the most favorable picture of rosiglitazone.

"The reason you see this repeatedly at the advisory committees is if we have a clear answer, we don't take the issue to the advisory committee," said Meyers. "Part of the problem with some of the long-term randomized control trials here is they were not specifically designed to answer this question. If we had the foresight eight years ago to have known that, in 2007, we'd be grappling with this, this would've been a different issue."

GSK spokeswoman Mary Anne Rhyne estimated that 1 million patients were currently taking Avandia. She said that she could not speculate on the future sales of Avandia following the allegations cited in the NEJM article but stated that GSK had agreed to look at the totality of the data.

"We've already studied 1.3 million patients in a clinical setting to evaluate Avandia's effectiveness, and it's clear to us that there is a need for Avandia as a treatment option," Rhyne said. "It's interesting--there were a number of patients at the hearing speaking about how difficult it is to control diabetes. One was an amputee, and one had lost his vision because of diabetes. And they were asking for the availability of options to control the effects of diabetes."

In terms of making a final decision regarding Avandia, Meyer said: "The FDA will consider the advice in an expedient manner and move forward accordingly on this important matter, but there is no set time frame."

Although FDA is not required to follow the advice of its advisory panels, historically, it has done so.

Advisory committees recommend that the popular diabetes drug remain on the market--but with new warnings

Pharmaceutical Executive-08-08-2007

J&J to Cut Costs and Jobs

Pfizer Fires Three?

Avandia Survives