Novartis Drug Data Allegations Revive Questions Over Ethics

Concern over Novartis AG’s corporate culture returned to the spotlight after U.S. regulators said the Swiss drugmaker delayed disclosing manipulation of animal testing data for the world’s most expensive drug.

The company became aware of a data problem on March 14 but didn’t alert the Food and Drug Administration for more than a month after the agency’s May 24 approval of the drug. The therapy, called Zolgensma, sells for $2.1 million.

The FDA’s questions are another blow to Novartis’s reputation after revelations last year that it paid $1.2 million to President Donald Trump’s former lawyer Michael Cohen and allegations it paid kickbacks to doctors. In a bid to avoid further stumbles, Chief Executive Officer Vas Narasimhan has taken steps aimed at raising standards and managing risk and named a new ethics head.

A small number of scientists at AveXis, the Novartis unit that developed Zolgensma, are leaving the company, Narasimhan said on a call with analysts. The company doesn’t believe the data inaccuracies extend beyond those individuals or affect its broader gene therapy platform, he said.

“The Zolgensma issue just shows how difficult it is to change the culture in Novartis, despite the new CEO having made this a key priority,” Stefan Schneider, an analyst at Vontobel in Switzerland, wrote in a note to clients.

The company’s actions are being assessed and could lead to civil or criminal penalties, said Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research. The data manipulation doesn’t call into question the safety or effectiveness of Zolgensma and the drug will remain on the market, according to the agency.

Novartis shares fell as much as 4% Wednesday in Zurich.

The company said it has full confidence in the medicine’s safety. The therapy is approved for the treatment of young children with spinal muscular atrophy, a rare and deadly muscle-weakening disease.

Novartis said it immediately initiated an investigation into allegations of data manipulation and shared its interim findings with regulators. The company said it doesn’t expect the issue to affect future development programs for the medication.

AveXis informed the FDA on June 28 that company personnel had manipulated data from product testing in animals.

The information was intended to allow the company and regulators to compare a version of the therapy used in the initial studies of Zolgensma with an updated version administered in later-stage studies and toxicology reports.

There is no evidence any human study results were manipulated and only a tiny portion of the earlier data was flawed, Marks said in an interview. He said the agency likely wouldn’t have approved Zolgensma when it did had it known about the issue.

While the flawed data may call into question some of the findings from the earliest human studies of Zolgensma, it should have no effect on later-stage studies that are producing evidence that the treatment can transform the lives of patients, he said.

“We don’t have any concern about the children who will go on to be treated,” he said. “We would do a greater disservice by taking it off the market at this time.”

The agency completed an inspection of the company’s data and manufacturing processes and fully discussed the details before taking action, Marks said.

For Novartis, the development is potentially significant given that the prospects for Zolgensma and the acquisition of AveXis are key parts of the investment case, according to a note from analysts at Barclays. The FDA’s comments are “relatively damning,” they wrote.

The company investigated the issue thoroughly, informed the FDA as soon as an assessment had been reached and “tried to do all of the right things,” Narasimhan said. “We understand the agency has a different perspective.”

Other gene therapy players will be watching. Zolgensma is a key test for the field as a number of the drugs move toward the market, offering the potential to fix the root cause of a disease with a single treatment. The FDA has predicted as many as 20 cell and gene therapy approvals each year by 2025.

Wilson Bryan, director of the FDA’s Office of Tissues and Advanced Therapies, passed on the admission from Novartis on July 1 and expressed concerns, according to an incident memo the agency posted Tuesday.

Bryan wrote that there is compelling evidence of Zolgensma’s effectiveness “based on the information available at this time.” A full assessment of the impact of the data manipulation “may take at least several months,” he wrote.

–With assistance from Sam Unsted.