Chiron Corp. (CHIR)

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U.S. Uncovered Problems At Chiron Plant in 2003

'Quality-Control Issues' Were Similar to Concerns That Shut Down Facility

By SARAH LUECK and PUI-WING TAM
Staff Reporters of THE WALL STREET JOURNAL
October 11, 2004; Page A3

Federal regulators said an inspection of Chiron Corp.'s flu-vaccine plant in England last year turned up manufacturing problems similar to those that led British authorities to shut down the facility last week.

U.S. Food and Drug Administration officials documented what they called "deviations" from good manufacturing standards at Chiron's Liverpool plant in June 2003. John Taylor, the FDA's associate commissioner for regulatory affairs, said "systemic quality-control issues" led inspectors to conclude that Chiron wouldn't necessarily be able to discover problems, identify the root cause and take steps to prevent similar issues from arising again.

The FDA's disclosure suggests that there were early-warning signs about the problems that later led to the Liverpool facility's shutdown and the resulting shortage of influenza vaccine in the U.S. just as flu season is set to start. No contamination was found in finished vaccine last year, however, which prompted FDA officials to begin working with the company to try to correct the problems, Mr. Taylor said.

Chiron, one of two major flu-vaccine suppliers to the U.S., announced last Tuesday that British health regulators suddenly had revoked the manufacturing license for its Liverpool plant, citing concerns over the plant's manufacturing process. The action means that 46 million to 48 million doses of the flu vaccine that the Emeryville, Calif., company expected to send to the U.S. this year won't be available, leaving France's Aventis Pasteur, a unit of Sanofi-Aventis SA, as the other principal supplier of the vaccine.

The shutdown triggered fears of how the U.S. would cope in the event of a flu pandemic this year, with health officials recommending a rationing of flu shots for the season. Chiron's stock, meanwhile, has plunged and the company drastically has reduced its earnings guidance for 2004. In Friday trading, Chiron stock slipped further to close at $35.63, down 90 cents, or 2.5%, on the Nasdaq Stock Market.

The plant closing is raising questions about the role played by U.S. regulators in overseeing the vaccine-production process. U.S. health officials have said they were surprised by the British decision to shut down the plant. Mr. Taylor and other U.S. officials aren't saying whether they agree with the United Kingdom authorities' decision to close the plant until an FDA team in Liverpool completes its work.

A Chiron spokesman declined to comment on last year's FDA inspection.

Mr. Taylor said the problems that FDA inspectors found at the Chiron plant in 2003 -- including high levels of bacteria in unfinished vaccine -- were "observations that you will often find in other vaccine and drug manufacturers." The FDA went through the same process it usually does when inspectors find such issues, he said, such as walking Chiron officials through their findings. The company responded with steps meant to correct the problems, which the FDA monitored throughout the past year, Mr. Taylor said. Bringing a vaccine plant into compliance with the FDA's manufacturing standards "takes time," he said.

Then in August of this year, Chiron reported that it found batches of vaccine contaminated with serratia, a common bacteria that, when injected, can cause bloodstream infections. The FDA asked for a complete investigation and began at least weekly conference calls with the company. Chiron reported that the contamination was limited to eight lots of flu vaccine, after tracing the contamination back to two pools of unfinished product, Mr. Taylor said. The company ultimately tested all the lots and re-tested those that didn't show contamination. Chiron "was still saying they'd be able to supply the U.S. market," Mr. Taylor said.

In a statement yesterday, the FDA said its vaccine branch never heard from Chiron that U.K. regulators were on the verge of blocking vaccine shipments. The FDA said "there had been no communication" between its vaccine regulators and their counterparts in England until after Chiron's license was suspended.

The FDA expected Chiron to submit a full report on the matter last week and then decide whether the flu vaccine could be released. But U.K. regulators suddenly announced they were revoking the company's license to make vaccine at the Liverpool plant. "Theoretically we would have looked at the report for adequacy," Mr. Taylor said. "We never got to that point."

A spokeswoman for the U.K. Department of Health said yesterday that British regulators had no comment beyond their statement last week that Chiron's vaccines' license was suspended for three months.

Chiron said Friday that it has initiated talks with U.K. health authorities that it hopes will lead to a plan to lift the manufacturing suspension from its Liverpool facility. Chief Executive Howard Pien said it is of "paramount importance" that Chiron's Liverpool plant be working again by March 2005 in order to supply flu vaccines to the U.S. for the 2005 flu season. Chiron will do "whatever it will take to have the suspension lifted in time to be in a position to supply influenza vaccine to the United States for the next season," he said, adding that the company remains committed to making flu vaccines for the U.S.

This weekend, FDA inspectors were back at the Liverpool plant to determine whether any of the Chiron vaccine can be salvaged. But U.S. officials are saying that the Chiron vaccine won't be usable this flu season. On Friday, FDA Commissioner Lester Crawford told the House Government Reform Committee that he is "pessimistic" about the possibility of salvaging any of Chiron's flu vaccines this year.

--Anna Wilde Mathews and Jeanne Whalen contributed to this article.

Write to Sarah Lueck at [e-mail] and Pui-Wing Tam at [e-mail]

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