The Middletown Press (Middletown, CT)
Alexion Pharmaceuticals turmoil could damage state, some say
NEW HAVEN >> This week has yielded a double dose of bad news for Alexion Pharmaceuticals and those who see the drugmaker as a centerpiece of the local and state economy.
New Haven-based Alexion announced Tuesday that its chief financial officer, the head of research and development, the top compliance officer and the executive in charge of human resources all will be leaving the company. That news was followed on Wednesday with the release of a Bloomberg Businessweek story that paints a very unflattering picture of the company, which makes drugs that treat rare diseases.
This week’s news, combined with the departure of Alexion’s chief executive officer in December, leave some wondering whether the company will recover. And if the company doesn’t recover, what will it mean to New Haven and the state’s economy?
David Cadden, a professor emeritus at Quinnipiac University’s School of Business, said the most recent departure of the top executives, combined with the change in chief executive officers, doesn’t bode well for the company’s survival.
“If all of these people are leaving an organization, it’s clear indication that the organization is in severe trouble,” Cadden said of Alexion. “It is a situation that has gone from bad to downright terrible.”
A statement released to the New Haven Register Wednesday by company spokeswoman Kim Diamond says this week’s news does not do irreparable damage to Alexion.
“The fundamentals of Alexion are strong,” the company’s statement says in part. “Soliris, Strensiq, and Kanuma are life-saving therapies that are in demand all over the world. We do not anticipate that this article, or the changes we are making to our business practices, will affect the need for these important therapies that transform our patients’ lives.”
The statement concludes by saying, “As Alexion continues to grow its business, we will be anchored by a culture of compliance and driven by a passion and dedication to patients.”
Soliris is used to prevent paroxysmal nocturnal hemoglobinuria, or PNH, a rare disorder in which the red blood cells come under attack. It is also used to treat a rare chronic blood disease called atypical hemolytic uremic syndrome, or aHUS.
The Businessweek story, which hits newstands Friday, elaborates on allegations of aggressive sales practices by the company as well as the cost of its star drug Soliris, which costs more than $18,000 for a single treatment. While the Businessweek story notes that the drug has saved thousands of lives, it also details some of the problems at the company, including:
• A May 8 raid of Alexion’s offices in São Paulo, Brazil, as part of an investigation into the company’s business practices there.
• Claims that the company’s sales representatives were instructed to urge doctors to send the tests they had done on patients who were thought to have rare diseases to “preferred partner” laboratories, which, unbeknown to patients and many of the doctors, had agreements with Alexion to provide the drugmaker with a copy of the test results.
• An investigation the U.S. Securities and Exchange Commission has undertaken over the past two years into grants made by Alexion in Brazil, Colombia, Japan, Russia and Turkey to rare disease patient groups, allegedly in an effort to attract new users of Soliris. Businessweek’s story says the focus of the SEC investigation has been looking for potential violations of the Foreign Corrupt Practices Act.
Businessweek interviewed 20 current and former employees and more than 2,000 pages of internal documents in preparing its report.
In a separate statement from the one provided to the New Haven Register, Alexion officials were critical of the Businessweek story.
“Businessweek does not fully and accurately reflect the important work of our global employees who are dedicated to transforming the lives of patients with devastating and rare diseases,” the statement says in part. “Alexion has a high-performing, patient-centric culture. Our focus on lifesaving therapies informs all that we do, and this will not change.”
Alexion’s statement about the Businessweek article also says “the diagnosis and decision of whether to treat a patient with Soliris is always up to the treating physician.”
Cadden said the fallout from Alexion’s series of problems not only threaten to hurt the company, but the city of New Haven and the state of Connecticut, as well.
The state has provided Alexion with incentives that lured it back to New Haven, where the company was founded in 1992. The company relocated to Cheshire in 2000, where it remained until it returned to New Haven in 2016 to become the centerpiece of the city’s Downtown Crossing economic development effort.
Alexion is part of Connecticut’s First Five economic incentive program, which includes ESPN and other highprofile companies in the state.
“New Haven is one of the few cities in the state that has shown some economic growth,” Cadden said. “If you kill a company that was supposed to accentuate the growth in New Haven, it’s really going to hurt the city.”
Matthew Nemerson, New Haven’s economic development administrator, thinks such dire predictions aren’t fair to the company and ignore realties in the business world.
“Ford Motor company fired their CEO on Monday,” Nemerson said. “I don’t think the millions of people who own Fords woke up saying, ‘What happened to my car.’”
Nemerson called Alexion “a very important scientific company” and said city officials still fully support the company.
“They are bringing worldclass science to a very small patient population and they are doing it right here in New Haven,” he said. “Clearly there are going to be some growing pains when a company doubles or triples it size. Every country in the world has a different regulatory regime and when you become a global company, there are so many different environments you have to deal with.”
The backing of Alexion by the administration of Gov. Dannel P. Malloy will have potical consequences, even if the company is ultimately able to recover, Cadden said.
“It’s really going to damage Malloy’s economic development programs,” he said. “The Republicans are going latch onto this and suck out as much political benefit as they can. I think there is a role that state government can play partnering with industry, but this gives ammunition to people who say state government has no role to play.”