Allergan: $600 Million Poorer, but Closer to New Botox Uses

Sounds like Allergan may have been getting a little greedy and got busted....

Allergan, the maker of Botox, will pay $600 million in fines and civil settlements after pleading guilty to marketing their product for uses for which it hasn't been FDA approved.

The Justice Department accused Allergan of encouraging doctors to use the powerful neurotoxin through kickbacks and by teaching them how to forge drug reports.

"The FDA had approved therapeutic uses of Botox for only four rare conditions, yet Allergan made it a top corporate priority to maximize sales of far more lucrative off-label uses that were not approved by the FDA," U.S. Attorney Sally Yates explained.

Botox is most famous for its use by dermatologists to temporarily diminish the appearance of facial wrinkles, but the drug, which is scientifically known as Botulinum toxin and works by temporarily paralyzing nerves, has been approved for rare conditions like eye muscle spasms since 1989.  In March, the FDA approved Botox use to treat muscle spasms in elbow, wrist and finger injuries among adults.

According to the suit, Allergan paid doctors millions and taught them how to miscode the drug to avoid being caught, all so that they would use Botox for "off-label" treatments – uses for which it has never been approved, though it may be effective. Botox was promoted for migraine relief and juvenile cerebral palsy, for which observational data suggests it is effective.

When a drug has been approved for a certain medical use, it cannot be marketed to treat other uses, even if patients report those other uses as a side benefit. Still, marketing drugs for side benefits is common. In 2008, Bayer ran afoul of the FDA when it over-emphasized the acne reducing benefits of its popular birth control pill, Yaz.

Though off-label usage is legal and often beneficial for patients, it can be dangerous. In April 2009, after repeated reports of side effects among children with cerebral palsy that mimicked botulism poisoning, the FDA ordered Botox to carry "black box labeling," the strictest possible warning for a product.  Doctors reported respiratory problems, muscle weakness, loss of bladder control and double vision among their young patients, along with hospitalizations.

Currently, the FDA is reviewing Allergan's application to approve Botox for migraine headaches. The agency is not reviewing information on juvenile cerebral palsy and no known tests are in the works, though CBS is reporting that Botox is being tested in countries like India, Poland, Serbia and Turkey for a host of ailments, including Parkinson's disease, spinal cord injuries, excessive perspiration, depression and something called "curvature of the penis."

If any of these studies abroad provide conclusive data, they could potentially spur bids for approval of new uses of Botox in the United States.

Botox News: Allergans Profits Jump 36%

Botox continues to be a golden child for Allergan, but there are a number of other products that are bolstering the drug giant's sales.

Allergan, and most especially Botox, is always on my radar... Since we opened the first medical spa back in 2000, I'm sure that we've put more than one of Allergan's sales reps into a new house. (Perhaps not, I'm not really sure what Alergan's sales reps make.)

While there Medial Spa MD's physician members who are in a position to take advantage of our Select Partners have less expensive ways to get Botox than paying sales commissions, Allergan certainly still takes the lion's share of the profits from most Botox treatments that are performed. Botox has become something of a commodity, with almost every medical spa and laser clinic (and a few day spas) offering it.

For those of you who are interested in the Botox Behemeth's contnued rise, I give you the following compiled from their latest earnings report.

Allergans second-quarter earnings soared 36% with accelerating sales spurred on by their cosmetic products. There have also been recent developments that mark progress toward FDA approval to sell Botox injections to treat migraine headaches.

Allergan said the FDA has asked the company for certain material, such as a modified Botox "risk evaluation and mitigation strategy" that includes information about thepreventive treatment of migraines. Allergan has 3 months to provide the information. Allergan says it continues to expect an FDA answer this year.

Evidently wall street liked the news... especially the rising Botox sales since shares of Allergan traded up 5.4%. The company also raised its 2010 sales estimate for Botox. (Allergan posted total Botox sales of $1.31 billion last year, split evenly between cosmetic usage and various medical treatments.)

Allergan's total revenue rose 10% to $1.25 billion with double-digit gains in both its specialty pharmaceutical and medical device businesses. (Facial aesthetic products wer up 32% and skin-care products up 40%.)

Allergan's second quarter "benefited from a continued recovery in our cash-pay aesthetics business around the world," said Pyott said in a company press release.

Botox sales rose 7% in the quarter to $360.5 million. Looking ahead, Allergan said it now believes the drug will post sales of $1.36 billion to $1.39 billion this year, which compares with a forecast in February for $1.33 billion to $1.37 billion.

It dropped its forecast for the eyelash-enhancing drug Latisse, however, to a range of $90 million to $100 million, down from February's $140 million target. A big issue is that consumers have learned to stretch their supplies, which means Allergan has to figure out how to broaden the market to offset that effect.

Allergans Outlook For the full year of 2010

Total product net sales between $4,620 million and $4,750 million.

Total specialty pharmaceuticals net sales between $3,835 million and $3,930 million.

Total medical devices net sales between $785 million and $820 million.

• ALPHAGAN  franchise product net sales between $370 million and $390 million.
• LUMIGAN  franchise product net sales between $490 million and $510 million.
• RESTASIS  product net sales between $580 million and $600 million.
• SANCTURA  franchise product net sales between $70 million and $80 million.
• BOTOX  product net sales between $1,360 million and $1,390 million.
• LATISSE  product net sales between $90 million and $100 million.
• Breast aesthetics product net sales between $290 million and $300 million.
• Obesity intervention product net sales between $235 million and $250 million.
• Facial aesthetics product net sales between $260 million and $270 million.
• Non-GAAP cost of sales to product net sales ratio between 15.5% and 16.0%.
• Other revenue at approximately $50 million.
• Non-GAAP selling, general and administrative expenses to product net sales ratio between 39% and 40%.
• Non-GAAP research and development expenses to product net sales ratio between 15% and 16%.
• Non-GAAP amortization of acquired intangible assets at approximately $20 million. This expectation excludes the amortization of acquired intangible assets associated with the Inamed, Cornéal, EndoArt, Esprit, Samil and Serica acquisitions and the ACZONE(R) asset purchase.
• Non-GAAP diluted earnings per share attributable to stockholders between $3.11 and $3.15.
• Diluted shares outstanding between approximately 307 million and 308 million.
• Effective tax rate on non-GAAP earnings at approximately 28%.

For the third quarter of 2010, Allergan expects:

Total product net sales between $1.13 billion and $1.18 billion.

Oklahoma Botox Case: Allergan loses $15 million judgement

Allergan lost a a$15 million dollar award to a physician who evidently had her 'friends' testify that she got botulism from Botox injections for wrinkles.

A jury Tuesday awarded $15 million to an Oklahoma City doctor who said she suffered botulism poisoning after using the popular anti-wrinkle drug Botox.

The Oklahoma County jury found 9-3 that Allergan Inc., the maker of Botox Cosmetic, was negligent. In civil cases, at least nine jurors must agree.

Jurors voted 10-2 to give Dr. Sharla Helton $15 million in actual damages. They did not award punitive damages.

"Hopefully, now people will wake up to the real dangers,” Helton, 48, said of the negligence verdict. "It’s a stepping stone for now for public awareness.”

Her attorney, Ray Chester, of Austin, Texas, said, "I think there’s a lot of people out there that have been hurt by the product and maybe now they’ll have the courage to come forward.”

Allergan that produces Botox plans to appeal.

"The negligence verdict … is inconsistent with all credible scientific and medical evidence,” said a company spokeswoman, Caroline Van Hove. "Botox does not cause botulism.”

Helton complained of severe side effects after getting injections of 50 units of Botox Cosmetic on July 14, 2006. It was her fifth treatment for wrinkles. She eventually sold her medical practice and stepped down as medical director of Lakeside Women’s Hospital in Oklahoma City because of pain and weakness.

Attorneys for Botox told jurors the drug does not cause botulism. They also told jurors the doctor never had botulism. They said the diagnosis of botulism came from her friends, who are not experts.

The trial took three weeks. Jurors were deadlocked 8-4 at one point Monday night after hours of deliberations. They deliberated about three hours more Tuesday.

The jury found Tuesday in Allergan’s favor on a second claim against it – that its product was somehow defective.

A key issue in the trial was whether Allergan gave sufficient warning in product labeling about possible problems from Botox Cosmetic use. The labeling in 2006 did not include botulism.

"All they care about is sales,” Chester told jurors in closing arguments Monday. "They were intentionally concealing this evidence.”

Allergan’s attorney, Vaughn Crawford of Arizona, argued that "every known and even remotely possible side effect was in the labeling.” He said the warning in 2006 even included the possibility of death. He said Helton still was willing to use it.

Jurors were instructed they could find negligence if they decided Allergan failed to act like "a reasonably careful pharmaceutical company would” under similar circumstances. One juror told The Oklahoman that the jury found negligence because Allergan’s 2006 product labeling did not have adequate information about side effects. The juror said the jury came to that conclusion after comparing a 2006 label with the 2009 label.

Millions have used Botox since the Food and Drug Administration first approved it in 1989. Helton said Tuesday she is still debilitated by weakness but hopes to get back to practicing medicine again in some way. story

I guess even physicians want to chase an ambulance when possible... Anyone have some thoughts?