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Supervision of 7-8 years ordered for Genzyme

Quality-control problems prompt accord with FDA

By Robert Weisman
Globe Staff / May 25, 2010

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Genzyme Corp. will remain under federal oversight for the next seven to eight years as it works to fix quality-control problems that have bedeviled its Allston Landing plant for 15 months.

The timetable was spelled out in a consent decree struck between Genzyme and the Food and Drug Administration.

Under its terms, Genzyme will pay a previously disclosed $175 million federal fine, the first in its 29-year history. The agreement, filed with the US District Court in Boston yesterday, is subject to court approval.

Yesterday’s consent decree comes as the Cambridge biotechnology company struggles to revamp its production operations, regain the confidence of patients and investors, and fend off a bid by activist investor Carl C. Icahn to get himself and three allies elected to the board. Icahn, who owned 4.9 percent of Genzyme’s stock last month, said in a recent regulatory filing that its manufacturing system is “broken.’’

Genzyme’s plant in Allston produces drugs to treat rare genetic disorders such as Gaucher, Fabry, and Pompe diseases. The treatments can cost as much as $300,000 a year per patient.

Last summer, the company had to suspend drug production after a virus was found at the plant, overlooking the Charles River. The temporary shutdown delayed shipments of enzyme replacement therapies Cerezyme for Gaucher disease and Fabrazyme for Fabry disease, frustrating patients and depressing sales.

Although the company said last month that it expected to pay the $175 million fine, other terms of the consent decree were not known until yesterday. Among them, Genzyme agreed to move fill-finishing work for its domestic drug shipments out of the Allston site by November. The transfer of fill-finishing for overseas shipments will take place by Aug. 31, 2011.

Fill finishing is the process of pouring drugs into vials for shipments to hospitals and clinics, where they are administered to patients.

Late last year, inspectors found bits of steel, rubber, and fiber in some drugs during the fill-finishing process in Allston. The work will be moved to a Genzyme operation in Waterford, Ireland, and to subcontractors such as Hospira Inc., subject to approval by federal regulators.

The firm faces additional fines if it fails to meet FDA deadlines.

Genzyme shares retreated 93 cents to $48.48 in trading on the Nasdaq stock exchange yesterday, a decline of 1.8 percent.

In all, the Cambridge biotechnology giant will spend two to three years in remediation under the consent decree, and another five years under oversight by a third-party contractor, the Quantic Group, a Livingston, N.J., consulting firm focused on boosting manufacturing quality and safety.

Quantic will craft a remediation plan with Genzyme, and the company could be fined $15,000 a day for missing milestones.

“This is in line with our expectations,’’ Genzyme spokeswoman Lori Gorski said of the consent decree. “We’re focused on restoring the confidence of the FDA. And we now have a framework to achieve our goal of returning to the highest manufacturing standards and restoring a reliable product supply for our patients.’’

A statement issued by the FDA yesterday termed the fine levied on Genzyme a “disgorgement,’’ in which a firm must relinquish profits because it violated FDA regulations.

“It is critical for the safety of the drug supply that companies comply with basic manufacturing standards,’’ said Joshua Sharfstein, FDA principal deputy commissioner. “FDA takes these obligations very seriously and expects manufacturers to do the same.’’

Robert Weisman can be reached at weisman@globe.com.