GSK sues Hospira over vaccine deal gone bad

Hospira CEO F. Michael Ball

Hospira's manufacturing problems have led to supply interruptions and drug shortages, sometimes leaving customers to scramble for alternatives. Now one of those customers wants to be reimbursed for its trouble.

GlaxoSmithKline ($GSK) says in litigation filed in New York that it struck a deal with Hospira ($HSP) in 2010 for the sterile injectables maker to supply its flu vaccine in the U.S. through 2015, Bloomberg reports. But GSK, no stranger to manufacturing problems itself, says Hospira ran into quality problems making the vaccine and canceled the contract in March 2012, leaving GSK to fend for itself. That would have been about the time Hospira started work on plants after the FDA cited them for quality issues. The London-based Glaxo said the deal cost it dearly and it wants Hospira to cough up $25 million and interest.

Hospira has been wrestling with quality problems for several years and today said that the FDA has issued yet another list of concerns at its plant in Rocky Mount, NC. The company launched into a major overhaul of its U.S. manufacturing network after the FDA in 2011 found a long list of problems at plants in Rocky Mount and Clayton, NC; Austin, TX; and Boulder, CO. The company has been working closely with the FDA  and has been reporting progress. CEO F. Michael Ball in an earnings call last month said the FDA had returned to its largest plant, Rocky Mount, for what the company hoped would be the definitive inspection of its plant upgrades. But even as that was under way, the company last week issued three recalls of 5 products, some because of particles found in retained samples.

Glaxo, of course, understands what plant problems can lead to. In 2010, it agreed to pay the U.S. $750 million to settle civil and criminal charges that it sold to federal programs adulterated drugs. The drugs had been produced at a plant in Puerto Rico. It closed the facility in 2009. Problems at that plant, which came to light as part of a whistleblower lawsuit, included using tainted water in processes. As part of its settlement, GSK signed a Corporate Integrity Agreement that includes stringent oversight and reporting responsibilities at the manufacturing plants covered by the arrangement.

- read the Bloomberg story

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