GSK, Hospira litigation highlights danger in contract manufacturing

Contract manufacturing can solve all kinds of problems and save all kinds of money, but if things go bad it can bring on a world of hurt. When Boehringer Ingelheim's Ben Venue plant had to close down two years ago, Johnson & Johnson ($JNJ) and the FDA jumped through a series of hoops to keep supplies of J&J's cancer drug Doxil available to doctors.

Those kinds of interruptions come with a real cost and a lawsuit filed by GlaxoSmithKline ($GSK) gives an idea of how much. In this case, the London-based company has filed suit in New York against Hospira ($HSP) saying it wants $25 million and interest because of a vaccine contract that soured because of quality problems at a Hospira plant, Bloomberg reports. The litigation comes even as Hospira today told shareholders that the FDA has cited it for more problems at its plant in Rocky Mount, NC. 

GSK and Hospira in 2010 reached a deal for the sterile injectables maker to supply GSK flu vaccine in the U.S. The contract was to run through 2015, Bloomberg reports. But GSK says Hospira ran into quality problems making the vaccine and canceled the contract in March 2012, leaving GSK to fend for itself. 

Of course turning to another company to manufacture drugs is one part of any large drugmaker's strategy. It means not having to invest in infrastructure and being able to ramp up or down as demand requires. But there can be complications. When the Ben Venue plant in Bedford, OH, closed for remediation, a host of companies were searching for alternatives. The plant made Doxil, a key cancer treatment. J&J worked to figure out an alternative, having some of the product made in one plant and finished at another. And the FDA allowed Sun Pharmaceutical Industries to import an unapproved equivalent to provide patients with an alternative to nothing at all. Its drug has since been approved by the FDA.

But because supply problems continue, the agency has been faced with allowing the Ben Venue plant to continue to manufacture about 100 drugs, even after signing a consent decree, because there just are no alternatives readily available. 

- here's the Bloomberg story

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