Call it the NAFTA shuffle.
Apotex Corp. is the U.S. incorporated company that sells drugs made by Apotex Inc., a Canadian generics manufacturer, which is controlled by a Canadian holding company. Apotex claims in a filing that the Food and Drug Administration (FDA) "decimated" its business by issuing an import ban against drugs made at two of its Canadian facilities.
In the process, it says the U.S. violated the North American Free Trade Agreement (NAFTA) by treating Apotex less fairly than other companies, like Teva Pharmaceutical ($TEVA), which is an Israeli company with a U.S. sales operation and lots of U.S. investors. Got that.
The claims are made in a filing in the International Centre For Settlement of Investment Disputes, where Apotex hopes to get the U.S. to arbitrate, reports InPharma Technologist. Apotex says FDA actions cost it more than $520 million in lost sales of existing drugs and the opportunity to launch other generics. The FDA told Pharmalot that it does not comment on pending litigation.
The long chain of events that Apotex relates will be somewhat familiar to any company that has received a warning letter from the FDA. After years of inspections with no substantial concerns from the FDA, inspectors wrote up a list of violations after an inspection at the Etobicoke, Ontario-based plant in late 2008. Apotex responded and made investments and enhancements to address concerns. It didn't hear anything back until it received a warning letter in June.
Then, in July, a team of FDA inspectors converged on its Signet plant in Toronto. That led to a conference call and the company's agreement to recall 675 batches of drugs. But the FDA issued an import ban on all drugs made at the two plants and prevented the company from seeking new marketing authorizations in the U.S.
The Apotex filing does not get specific about the alleged violations, but the warning letters for the two plants discuss contaminated drug ingredients, the return of defective material to inventory and the re-release of failed material prior to sufficient reprocessing and testing. It also says repeat violations "raise serious questions regarding your corporation's quality and production systems."
Apotex, however, says inspections followed by other regulators, like Health Canada and EMA, which thought some improvements were in order, but that the plants were compliant. Its drugs were banned only in the U.S.
The back and forth between the company and the FDA went on for another year, and then, in the fall of 2010, after more improvements, Apotex says the FDA agreed to re-inspect the plants. But it says there were cancelations and delays of the inspections and, after the plants were cleared, more delays before the ban was lifted. The gist of the claim is that Apotex lost a bunch of money as a result.
It then claims that the Israeli generics manufacturer Teva had similar plant issues at about the same time, but that the U.S. never issued an import ban against Teva and resolved issues with the company quickly.
Apotex does not suggest why the U.S. would treat Teva more favorably than itself. And there have been times when Apotex has itself been accused of playing loose with the rules. In February, Apotex handed over $444 million to Sanofi ($SNY) and Bristol-Myers Squibb ($BMY) as repayment for its premature launch of generic Plavix, the big-deal blood thinner, back in 2006.