Warner-Lambert Shares May Fall on Report of Deaths Linked to Diabetes Pill
Bloomberg News
December 6, 1998, 4:24 p.m. ET
Warner-Lambert Stock May Fall Because of Rezulin-Linked Deaths
Morris Plains, New Jersey, Dec. 6 (Bloomberg) -- Warner-
Lambert Co.'s shares could fall after U.S. regulators confirmed
that about 33 people have died after taking the company's
diabetes pill, Rezulin, one of two key products that made Warner-
Lambert one of the world's most profitable drugmakers.
The Los Angeles Times reported today the 33 deaths have been
linked to liver injuries in Rezulin patients, up from 21 cited
earlier this year. Since Rezulin's introduction in March 1997,
its label has been strengthened three times. A black box on the
label -- considered the Food and Drug Administration's strongest
warning measure -- highlights the section on Rezulin's risks.
While the FDA confirmed the deaths, the agency believes the
drug's benefits outweigh its risks, an agency spokesman said.
''We still feel that the drug is safe and effective when
used as indicated,'' said spokesman Brad Stone. As with any drug,
the FDA will monitor reports of problems and update the drug's
label when necessary, Stone said.
The report could cause the stock to drop, analysts said. Yet
the drug's link to liver problems is well-known and even with the
so-called ''black-box'' warning, doctors are still prescribing
it, they said. Rezulin's third-quarter sales rose 32 percent to
$181 million.
''I'm not sure they can put more restrictions than what they
have,'' said Hemant Shah, an independent drug industry analyst.
''I don't think the drug will be recalled.''
Warner-Lambert, based in Morris Plains, New Jersey, rose 2
15/16 to 78 7/16 Friday. The company licenses Rezulin from
Japan's Sankyo Co.
No Deaths Since July
The FDA generally obtains information on deaths or other
health problems associated with drugs from companies.
In this case, no deaths or liver transplants have been
reported in patients who started on Rezulin after the third label
change in July, said Steve Mock, a Warner-Lambert spokesman. That
label extended the time doctors need to do monthly monitoring of
Rezulin patients for possible liver damage to eight months from
six months.
Rezulin and another drug introduced last year, cholesterol-
reducing Lipitor turned Warner-Lambert from one of the least
successful U.S. drugmakers into one seen as an industry leader.
Warner-Lambert's third-quarter profit rose 49 percent to $296
million, boosted by sales of Lipitor and Rezulin.
Rezulin could have 1998 sales of $700 million and Lipitor of
more than $2 billion, analysts have estimated.
Just a few years earlier, Warner-Lambert had to shut much of
its drug production to meet FDA mandates. Many analysts then
thought the company might sell its pharmaceutical business and
concentrate on consumer goods, such as its Listerine mouthwash
and Dentyne gum.
Other Setbacks
While Lipitor has gained market share steadily, Rezulin has
had several setbacks. Public Citizen, a watchdog group founded by
Ralph Nader, petitioned the FDA in July to ban Rezulin. The group
cited the drug as an example of the flaws in the FDA's recent
moves to speed drug approvals.
The withdrawal of American Home Products Corp.'s painkiller
Duract in June marked the sixth time in 12 months an FDA-approved
drug was pulled from the market because of safety concerns.
Only 10 drugs were withdrawn between 1980 and 1996, a time
when the FDA moved more slowly on drug approvals. Responding to
criticism from Congress and the industry, the FDA has stepped up
the pace of its reviews in recent years. Rezulin, for example,
was reviewed in six months.
The new warnings for Rezulin weren't Warner-Lambert's only
setback this year. In June, the National Institutes of Health
ended a test of Rezulin for diabetes prevention after a patient
developed liver failure and later died.
Sign of Confidence
Still, some analysts viewed an FDA decision last month on
Rezulin as a sign of the agency's confidence in the drug. Warner-
Lambert then said the FDA approved a 1,000-patient study of
Rezulin in people who don't yet have the disease. Regulators set
higher safety standards for use of drugs in people only at risk
of, and not actually suffering from, a disease.
The real concern for Warner-Lambert may be more competition
from similar drugs with fewer side effects than more regulation
from the FDA, said Jeffrey Chaffkin, an analyst with PaineWebber,
who has a ''buy'' on the stock.
Rezulin is the first of the a class known as glitazones
approved in the U.S. SmithKline Beecham Plc and Eli Lilly & Co.
could have their own versions of glitazone drugs on the U.S.
market by 2000. Like Rezulin, these drugs work to help the body
make better use of limited insulin supplies. These pills are used
to treat the more common form of diabetes, Type 2, where the body
fails to produce enough insulin to properly regulate blood sugar.
About 15 million people in the U.S. have this form of diabetes.
''There's no question that the new glitazones are cleaner
than Rezulin,'' Chaffkin said. ''Still, we haven't seen head-to-
head comparisons. Until we see that kind of data, it's hard to
judge them.''
--Kerry Dooley in Princeton and Kristin Jensen in Washington |
