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The class action settlement illustrates a trend toward increased transparency, lawyers say. But issues about timing clinical trial disclosures are still unresolved.
Bristol-Myers Squibb set aside $185 million on Jan. 23 to fund the settlement of a class-action lawsuit brought by shareholders who claim the company misled them about Vanlev (omapatrilat), a cardiovascular drug. The lead plaintiff, the LongView Collective Investment Fund of Amalgamated Bank, charges that the company’s public statements hyped Vanlev’s blockbuster potential, driving up BMS stock, even thought the drug was having problems in clinical trials. The drug was never marketed to the public.
The current settlement offer would require BMS to post clinical trial results online for every drug it plans to market anywhere in the world. According to the plaintiffs, this requirement is a significant step towards the reforms spelled out in the Fair Access to Clinical Trials Act of 2005.
“The drug discovery protocol negotiated with Bristol-Myers Squibb as part of the settlement of this class action goes further than what Attorney General Spitzer obtained for the Glaxo settlement,” said Thomas Dubbs, partner at Labaton Sucharow LLP and lead counsel for the Amalgamated Bank.
But Joseph Leghorn, a partner at Nixon Peabody LLP, sees no major breakthrough. The settlement is not a great leap beyond the reforms New York Attorney General Eliot Spitzer obtained from GlaxoSmithKline in connection with Paxil disclosures, Leghorn said. He believes this new degree of transparency is part of a continuing trend.
“I don’t think this is much different than what has been going on in the industry anyway,” he said.
In general, the pharmaceutical industry is making clinical trial results more transparent. The main issue is not whether to disclose data from trials, but when, said Thomas Hartman, a partner at Foley and Lardner LLP.
Because it can take weeks or months for a company to fully understand trial data, it is difficult to say when they should make this information available, Hartman indicated.
This is especially true in the earlier stages, when the company is using results to refine a potential drug’s target population, according to Leghorn.
Elizabeth Nowicki, a law professor at University of Richmond, believes it is better to say too much too soon than too little too late, although she acknowledged that early disclosures “can hit the bottom line hard,”
Deciding when to release trial data is complicated, she said. It is important to balance the level of uncertainty in the results against the seriousness of any potential negative side effects.
Hartman added that releasing trial information too frequently could confuse investors, because the interpretation of results can change as the company further analyzes the data.
One possible solution, Nowicki said, would be to summarize clinical trial results in plain language, so that investors can understand the scientific process of drug discovery.
Hartman added that if a company releases positive trial information about a drug candidate, it is crucial that the company also makes negative results public quickly. If a company has remained fairly quiet about the upside of a pipeline drug, then it will probably draw less scrutiny for being slow to release negative results.
Companies should also be very judicious about what executives say publicly regarding drugs in the pipeline, Leghorn added.
Dubbs hopes the settlement will “jumpstart” the Fair Access to Clinical Trials Act. This could resolve many of the uncertainties surrounding transparency.
But Leghorn was skeptical.
“I don’t think that you’re going to see much more legislation,” he said. “But there might be some rulemaking.”