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Fed scrutiny over Cell Therapeutics' marketing tactics

By Luke Timmerman
Seattle Times business reporter

November 20, 2004 - Cell Therapeutics said yesterday that the U.S. Attorney's office in Western Washington is asking questions about the company's tactics for promoting Trisenox, an arsenic-based drug for a rare form of leukemia.

Richard Leigh, general counsel for the Seattle biotech company, said the U.S. Attorney had a brief meeting with the company, and has requested more information. He said the company is cooperating and has not received a subpoena, or a lawsuit.

The U.S. Attorney's office had no comment.

In July, Cell Therapeutics told the Securities and Exchange Commission (SEC) that "it is likely" that it has promoted Trisenox for uses that aren't approved by the Food and Drug Administration (FDA), which is called "off-label" drug promotion.

Companies are allowed to make doctors aware of unapproved uses in which their drugs may have potential, but they aren't allowed to actively promote their drugs until the specific uses have been licensed by the FDA.

In Cell Therapeutics' case, off-label sales of Trisenox are important. The drug was approved in the United States four years ago as a treatment for a type of leukemia that affects about 400 patients. At $20,000 per patient, that means its maximum U.S. sales potential is limited to about $8 million a year.

To branch into bigger markets with thousands of patients, the company has tested Trisenox against a deadly bone-marrow cancer, multiple myeloma and a pre-leukemia syndrome called MDS. Because some doctors are prescribing Trisenox for those diseases, Cell Therapeutics has forecast it would sell up to $40 million worth of Trisenox this year.

A week ago, the company said it was falling short of those estimates, and as a result, would lose more than $150 million this year.

Cell Therapeutics has said it tries to make doctors aware of Trisenox's potential "off-label" benefits through medical-education seminars, without crossing the line into clear promotion, like placing ads in medical journals.

Throughout the pharmaceutical industry, companies often try to walk a fine line between what it calls "medical education" and promotion. For medical education, companies often issue press releases to tout new study findings that attract the attention of doctors, investors and the media. It can sponsor a patient-advocacy group, which is then free to actively encourage patients to consider trying a given drug in an unapproved use.

Some of the "off-label" promotional tactics have come under increasing scrutiny from the FDA and other federal investigators. InterMune, a Brisbane, Calif., biotech company, received a subpoena last week from the Justice Department asking for information about its promotional tactics. The company's drug, Actimune, is approved for two rare diseases, but the company has said almost all of its sales come from an unapproved use, as a treatment for idiopathic pulmonary fibrosis.

A former saleswoman at InterMune sued the company after she was fired, for what she described as her unwillingness to go along with off-label promotional practices.

Cell Therapeutics has never made money in its 13-year history, like most biotech companies, but it has been under pressure this year to make progress. It has made $15 million worth of spending cuts to keep from running too deeply in the red while it awaits test results from another cancer drug it hopes will create bigger sales, Xyotax.

Luke Timmerman: 206-515-5644

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