Is There Any Meaningful ACTH in Acthar Gel?
The accusations leveled against Questcor (Nasdaq: QCOR) by Citron Research this morning are frightening. Truly frightening. And I don’t mean for those shareholders unlucky enough to call themselves owners of this HP Acthar franchise. No, I’m talking about the kids.
Now I don’t know anymore than anyone else does about these accusations. The allegations are well-documented, and of course as I have reiterated here for many years, Citron Research has *THE* best long term track record in exposing corporate fraud and spotting unsustainable businesses amongst the public market high-flyers.
However, this time it’s different. And that’s why it’s so potentially frightening. It’s all about the kids.
Specifically the children under 2 years of age who have been taking HP Acthar for infantile spasm (“IS”). Dosing infants is a very tricky business. All labels for drugs that are expected to be given to extremely young children have very specific formulas to apply the dosage based upon the infant’s weight AND the AMOUNT OF DRUG being injected.
In the case of HP Acthar, the specific information on the label can be found here. For children under the age of 2, the recommended dosing guide is a very complex formula – see Page 2, Section 2.1
Put simply, if the amount of drug in every vial of HP ACTHAR was 90% less than the label indicated, then every single infant that was treated with Acthar never got the necessary amount of drug to treat the illness.
If that’s true, its unforgivable. If the company was aware of the defect in the amount of drug being shipped with each vial, it’s most likely criminal.
The FDA has studied HP Acthar for the use of infantile spasms, and has had a number of very public meetings about it. One presentation in particular is worth mentioning – the Peripheral and Central Nervous System Drugs Advisory Committee which convened on May 6th, 2010. You can read the 127 slide presentation from the committee here. The advisory committee spent a large amount time trying to fine tune the dosage level for various classes of patients. You don’t need to have a PhD to realize how much time, energy, thought & effort went into the FDA’s process on this issue.
If Citron Research is even half right, all that work was completely wasted on testing for and using drug that was in actuality a fraction of the indicated potency.
Of course if the lab work behind Citron’s research is shoddy, everything goes back to normal and the FDA can move on with…. eventually approving a synthetic ACTH anyways, as there are a number of companies (including Retrophin) actively pursuing this market.
The solution to this mess is for the FDA to run its’ own tests on vials of Acthar. If the results come back poorly, the FDA should immediately allow, on an ongoing, emergency basis, the importation of a synthetic repository corticotropin injection. As my family is a large shareholder in Retrophin (Nasdaq: RTRX) it would be a conflict of interest for me to get on a soap box and push this point with the FDA. But if we were all being objective about it, that’s exactly what the FDA ought to do – and quick.
In the meantime, the Justice Department ought to immediately investigate this entire mess and also get to the bottom of this. If the allegations are false that should be easy enough to confirm. But if not…well, if the drug was being adulterated, its imperative we find out who knew what and when. Remember that Questcor raised the price 5% in mid-January. The head officer who oversaw manufacturing HP Acthar for over ten years – since the product was purchased from Aventis – stepped down shortly thereafter. Coincidence? Hmm….
The real potential victims here – assuming the allegations are correct – are the countless hundreds or thousands of young children whose lives were needlessly put at risk by a corporation that allegedly put all these young lives at risk.
These are early days. Let’s see what Questcor has to say for themselves. And then let’s hope our regulators and cops on the beat do the right thing and get down to the truth of this matter.
As of the publication of this report, the author was short Questcor common stock and either he and/or affiliates are long Retrophin.