Brass Particles – Another Hospira Manufacturing Mess?

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Brass Particles – Another Hospira Manufacturing Mess?

April 1st, 2013 // 4:05 pm @

Like The Gang That Couldn’t Shoot Straight, Hospira is encountering yet another manufacturing woe. Late last week, the drugmaker recalled a lot of sodium injectables after a customer identified several small grey-brown particles in a primary container. Although Hospira has not received any reports of adverse events or quality issues with samples associated with this lot, the move comes after the generic drugmaker has been repeatedly cited by the FDA for a host of manufacturing problems at several facilities.

Related – Is GSK Pressure on FDA Influencing Hospira 483 Problems?

The quality control lapses – which have appeared at Austin, Texas; Rocky Mount, North Carolina; Lake Forest, Illinois over the past two years – have increased speculation that Hospira may be forced to enter into a consent decree with the FDA. The possibility was underscored recently when the agency issued yet another 483 inspection report detailing manufacturing violations at the North Carolina facility (here is the list of 483 reports) and after the FDA expanded an import ban to include three more infusion pumps made at a Costa Rica facility (this warning letter was issued last year).

“I am pretty convinced its coming,” RBC Capital Markets analyst Shibani Malhotra told us after the 483 report was disclosed last month. “The Rocky Mount inspection makes it more likely. The FDA was possibly waiting to see how that went before they acted. I was always told it would take a while, because Hospira is complicated and functions across different FDA divisions. And so, everyone at the agency needs to be aligned for a consent decree. With the import ban from Costa Rice, the Austin 483, the Lake Forest 483 and now the Rocky Mount one,  I can’t see how the agency won’t act.”

Although the latest recall is just one lot, the discovery of brass particles is a potentially serious matter. As the drugmaker notes in a statementposted on the FDA web site: “if the particulate is undetected, there is a potential for delay in therapy, or if administered, solution containing brass particulate may result in occlusion of small blood vessels. In a worst-case scenario, copper toxicity may potentially result in hemolysis and liver toxicity, including hepatic necrosis which may be fatal.” The product should be quarantined immediately. We asked Hospira which facility made this lot and will update you with any response.

The development only underscores the difficulties that Hospira (HSP) is having restoring customer and investor confidence. One Wall Street theory is that, as the drugmaker works its way through a $300 million remediation effort, its manufacturing capacity should, of course, rebound and margins will be revived, especially as shortages across the industry allow for select price hikes.

However, as Sanford Bernstein analyst Ronny Gal pointed out in a recent research note, this scenario may not add up because Hospira business is weighted much more heavily toward commodity injectables than its competitors and, therefore, does not agree with some bullish investors who believe Hospira will become an acquisition target. He also pointed out that hospital group purchasers are pressuring prices and some rivals are starting to return, limiting the opportunity for Hospira to improve its margins.

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