Washington Editor

WASHINGTON - Perhaps it was the hangover from Thursday's "2:45 p.m. Wall Street crash," in which the Dow Jones Industrial Average spiraled nearly 1,000 points before minutes later somewhat bouncing back, that had Questcor Pharmaceuticals Inc.'s investors jittery Friday, despite an FDA panel's support for approval of the company's Acthar Gel (repository corticotrophin injection) as a therapy for infantile spasms.

The Union City, Calif.-based firm's shares (NASDAQ:QCOR), whose trading had been halted Thursday pending the vote from the FDA's Peripheral and Central Nervous System Drugs Advisory Committee, had sunk as low as 10.6 percent, before closing Friday at $8.60, a loss of 57 cents, or 6.2 percent.

Acthar, which is approved as a therapy to treat patients with multiple sclerosis and nephrotic syndrome, has been used off-label in the U.S. for more than 50 years to treat infantile spasms, a specific type of seizure seen in infants and children with a certain type epilepsy, known as West syndrome.

This is the second go-around by Questcor to gain the FDA's OK for the drug in infantile spasms.

Acthar has been owned by several drugmakers since it first gained FDA approval in 1952. Questcor, which acquired the rights to the drug in 2001 from Paris-based Sanofi-Aventis Group SA, submitted a supplemental new drug application to the FDA in 2006, but received a complete response letter in May 2007. Regulators, however, encouraged Questcor to try again by submitting published source data.

The FDA last week said that while Questcor had shown due diligence in obtaining the most complete data available by submitting three studies in support of Acthar's efficacy and four evaluating its safety, regulators said those data needed to be weighed carefully.

Nonetheless, the FDA's advisers Thursday voted 22 to 1 that Questcor had provided substantial evidence of Acthar's effectiveness in treating infantile spasms. The committee also voted 16 to 7 that the company has submitted evidence to support the firm's view that a two-week course of treatment with Acthar followed by a two-week tapering regimen provided sustained effectiveness.

In a 20-to-1 vote, with two abstentions, the panel also said Questcor had submitted sufficient evidence of the safety of Acthar at an effective dosing regimen.

The committee, however, was split about Acthar's adverse effects, voting 12 to 10, with one abstention, that Questcor has not yet provided evidence that the drug's side effects of infection, convulsions and hypertension are manageable and reversible.

Questcor is holding a conference call Monday with investors and analysts to discuss Acthar and the outcome of Thursday's meeting.

The FDA, which often, but not always, follows the advice of its outside experts, is expected to make a decision by June 11, the Prescription Drug User Fee Act action date.

Novartis to Pay $72.5M to Settle Off-Label Suit

The Justice Department last week said Swiss drug and vaccine maker Novartis AG has agreed to pay $72.5 million to settle civil False Claims Act allegations that the company had been promoting its cystic fibrosis drug TOBI off label.

The firm and Chiron Corp., which was acquired by Basel, Switzerland-based Novartis in 2006, were accused of causing false claims to be submitted to federal health care programs for certain off-label uses, such as diseases other than cystic fibrosis and for patients who did not meet the parameters of the FDA-approved cystic fibrosis indication.

Under the settlement, Novartis will pay the federal government $43.5 million, plus $29 million to various states to settle their respective claims.

The initial lawsuit was brought by former Chiron employees Robert Lalley, Courtney Davis and William Manos under the qui tam provisions of the False Claims Act, which permits whistleblowers to bring a lawsuit on behalf of the U.S. and share in any funds recovered.

The whistleblowers in the TOBI suit are sharing more than $7.8 million, according to the Justice Department, which noted that the case specifically involved fraud against military health programs.

Lawmakers Probing J&J Drug Recall

The House Oversight and Government Reform Committee last week opened an investigation into what led to an FDA recall of more than 40 Johnson & Johnson over-the-counter pediatric medications, including Tylenol, Motrin, Zyrtec and Benadryl products. The massive recall was due to bacterial contamination in the drugs, which came to light after the FDA raised concerns about manufacturing deficiencies at J&J's Fort Washington, Pa. plant.

Reps. Edolphus Towns (D-N.Y.), chairman of the House committee, and Darrell Issa (R-Calif.), the ranking member, noted that the latest recall was the third such one in the last eight months related to the quality of drugs sold by J&J's McNeil Consumer Healthcare division.

Given McNeil's "questionable track record and consecutive recalls," the lawmakers said they are seeking to understand what prior actions the FDA took to address the drugmaker's quality control problems and what events led to the FDA's inspection of the Pennsylvania manufacturing facility.

Genentech, Shire, Novartis Warned

The FDA last week said it has warned Genentech Inc., Shire plc and Novartis AG about misleading promotional materials involving the drugmakers' products.

In a letter posted last week on the agency's website, regulators told South San Francisco-based Genentech, now part of Roche AG, that its so-called professional table-top display panels for Rituxan (rituximab) were false and misleading because they made unsubstantiated efficacy claims about the drug and omitted and minimized important risk information.

Specifically, the claims overstated Rituxan's efficacy in improving progression-free survival and providing benefits in patients with follicular non-Hodgkin's lymphoma, regulators said.

In separate letters, the FDA said certain promotional materials for Basingstoke, UK-based Shire's ulcerative colitis drugs Lialda (mesalamine) delayed-release tablets and Pentasa (mesalamine) controlled-release capsules also were misleading and made false claims.

Basel, Switzerland-based Novartis also was scolded about information on two websites about Gleevec (imatinib mesylate), which regulators said promoted unapproved uses of the drug and failed to disclose the medicine's risks.