Washington Editor

WASHINGTON - The ripple effect of Sam Waksal's deeds is evident today not only in a New York courtroom, but also in Washington at the offices of the FDA and the SEC.

While decorating expert Martha Stewart, a friend of former ImClone Systems Inc. CEO Waksal, is answering to charges stemming from her sale of ImClone stock prior to public release of poor news about the cancer drug Erbitux, the FDA is implementing a new procedure for handling public companies caught lying about their drugs. (See BioWorld Today, Jan. 3, 2002.)

Under the new procedure, FDA employees have a process for providing the SEC with information about any publicly held, FDA-regulated firm that has made false or misleading public statements concerning a matter within the FDA's authority. That includes sharing of nonpublic information about a company or product.

Mark McClellan, FDA commissioner, said agency employees will not be expected to routinely police statements made by companies, but, he said many staffers are in a position to identify statements that might be of interest to the SEC.

Indeed, two years ago when the House Energy and Commerce Committee investigated ImClone, eventually leading to a seven-year prison term for Waksal, members were astonished to learn that the FDA doesn't have authority to take action against company officials who lie about or exaggerate issues, such as the progress of the FDA's pre-market review. The new procedure doesn't give the FDA any legal authority; rather it simply sets up a centralized system for communicating. (See BioWorld Today, June 18, 2002.)

In the case of ImClone, House committee members were upset about a Business Week article and a "60 Minutes" segment that touted Erbitux as something of a miracle drug well in advance of the company completing its rolling biologics license application. Lawmakers maintained that Waksal and his brother, Harlan, also a former ImClone executive, were profiting because of the hype, while FDA reviewers were quietly finding problems with the Erbitux BLA.

Not addressing the ImClone scandal specifically, Stephen Cutler, director of the SEC's division of enforcement, commented on the enhanced inter-agency cooperation.

"When companies misrepresent the status of the FDA's review of their products, investors can be harmed," he said. "We are eager to continue working with the FDA to aggressively address such situations and to enhance our already-productive relationship."

Among the initiatives outlined in the attempt to better communicate, the FDA has given certain employees authorization to share nonpublic information with the SEC or its staff, rather than executing such authorizations on a case-by-case basis.

As for Erbitux, the colorectal cancer drug has been approved in Switzerland, where it will be commercialized by Merck KgaA, of Darmstadt, Germany. In the U.S., the drug is on file with the FDA and the Prescription Drug User Fee Act action date is Friday.

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