Risk & Compliance

Flu-Shot Maker Faces Federal Probes

Flu-shot vaccine maker Chiron is being investigated by the SEC, the DOJ, and the FDA after having its manufacturing license suspended by regulators...
Stephen TaubOctober 15, 2004

Chiron Corp., which recently suspended production of its Fluvirin flu vaccine, is being investigated by at least three federal agencies.

Officials at the Emeryville, Calif.-based company said in a regulatory filing that the Securities and Exchange Commission has launched an informal inquiry to determine whether certain provisions of the federal securities laws have been violated by Chiron.

The SEC has requested that Chiron voluntarily turn over documents related to Fluvirin, as well as files associated with the suspension of Chiron’s license to manufacture the vaccine. The suspension was issued by the U.K.’s Medicines and Healthcare Products Regulatory Agency.

Chiron executives said the company intends to fully cooperate with the SEC but did not offer any details as to the nature of the SEC inquiry.

But company spokesman John Gallagher did tell the Associated Press that the SEC is examining the company’s actions relative to the U.K. regulator’s decision. One possibility is that the SEC is trying to determine when top management learned of the British agency’s concerns and when management relayed those concerns to investors. As is its policy, the SEC did not comment to any media outlets.

Chiron’s British manufacturing plant was shut down on Oct. 5, after the company had detected bacterial contamination in a small number of vaccine lots, according to The New York Times.

In speeches to investors, as well as in testimony to a Senate committee on Sept. 28, Chiron CEO Howard Pien said that the company discovered its problem in August, but had resolved the situation and was on track to begin shipping 46 million to 48 million doses earlier this month, the paper noted.

However, on Oct. 5, the company issued a press release announcing that the U.K. regulatory body temporarily suspended the company’s license to manufacture Fluvirin in its Liverpool facility, preventing the company from releasing any of the product during the 2004-2005 influenza season.

”How could you testify in front of Congress one week that the problem was solved and the next that it wasn’t,” asked Thomas Shrader, an analyst at Harris Nesbitt, in an interview with the Times. But, Shrader did add that it was “entirely plausible” that the British regulators identified new problems that resulted in the factory shutdown.

Earlier this week, Chiron announced it had received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents and materials relating to Fluvirin and the U.K. suspension. Chiron said it intends to fully cooperate with the U.S. Attorney’s investigation.

Meanwhile, the U.S. Food and Drug Administration, as well as Congress, is also probing the company.

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