Rep. Fortney "Pete" Stark, D-Calif., formally apologized onFriday to Genzyme Corp. for overstating its current profits fromCeredase.
Stark, chairman of the House Ways and Means HealthSubcommittee, introduced a bill on Thursday to impose awindfall profits tax on earnings from the sale of orphan drugs.
Genzyme has been under attack by members of Congress atleast since 1991 for allegedly abusing its orphan drugprivileges for Ceredase, the company's treatment for Gaucher'sdisease. Under the Orphan Drug Act, FDA grants companiesseven-year exclusive rights to market drugs developed to treatrare diseases.
On Friday, Stark said that the statement he made on Thursday,did not distinguishing between Genzyme's projected profits andits current profits on the drug.
"This is an important distinction and I apologize for themistake," Stark said. Nonetheless, he held on to the $214million "windfall" estimate, calling it a conservative projectionof profits. Stark's prepared statement charges that Genzymecould realize a profit of $214 million in one year "on an initialinvestment a fraction of this amount."
"It is a projected windfall profit on a disease that wasdiscovered by government-sponsored research and whoseharvesting procedure was devised and revised by government-sponsored research," he said.
Genzyme (NASDAQ:GENZ) of Cambridge, Mass., immediatelyrefuted the comments Stark made on Thursday, stating that thefinancial information he released "is factually incorrect andgrossly misleading."
David McLachlan, the company's senior vice president offinance, said that for Stark "to state that Genzyme reported$214 million in profits on Ceredase sales, which is in excess oftwo times the publicly reported sales of Ceredase is patentlyincorrect."
According to Genzyme's Form 10-K filing, worldwide sales ofCeredase in 1992 were $95 million. For 1992, Genzymereported total revenues of $219 million and a loss of $30million, or $1.41 a share.
Genzyme has stated that it is currently providing Ceredasetreatment for 800 patients worldwide at an average annualizedcost per patient of $140,000. The company has estimated thatGaucher's affects 2,000 to 3,000 people in the U.S.
Genzyme said in January that it expects a 50 percent reductionin the cost of Ceredase "during the following 12 months. Thisreduction should reduce costs to below $60,000 per year."
Genzyme's McLachlan told BioWorld that Stark's apology, whichhe feels is "very appropriate," is "an opportunity for us to meetwith him and his staff to discuss the numbers. It's importantthat they understand the costs and the facts."
-- Jennifer Van Brunt Senior Editor
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