Four 'Dos and Don'ts' for Handling Warning Signs about an Approved Drug by Brian S. Inamine and Michael F. Ruggio Attorneys and Shareholders, LeClairRyan

Faced with bad news about an approved drug (e.g. anything from a rise in reports of adverse reactions among patients to FDA notification that a warning letter is in the mail) pharmaceutical companies naturally tend to focus on the crisis at hand: Can this lucrative product stay on the market, or is a recall inevitable? And if the drug can be saved, what can companies do now to help keep it on the market? Such questions must be asked and answered because according to the trade publication, Gold Sheet, an analysis of FDA data shows that a major recall is more likely than ever. For example, the number of drug recalls rose from 426 in 2008 to 1,742 in 2009. From a strategic standpoint, however, pharmaceutical companies sometimes fail to appreciate just how much their early responses to bad news about a product can shape both regulatory intervention and whether or not a company is or is not metaphorically pilloried in the press and slammed in court.

When faced with the prospect of the FDA issuing a warning letter about an approved drug, pharmaceutical executives can indeed take steps to minimize penalties and mitigate bad PR. The key is to think carefully about the implications of every action taken in response to the warning signs and to avoid common mistakes. Likewise, if a drug recall does become necessary, the response to these early warnings can make or break the litigation that follows.

Below are four "dos and don'ts" for dealing with FDA warning letters and the legal aftermath of drug recalls.

In today's regulatory environment, few, if any, pharmaceutical companies would be foolish enough to flagrantly ignore or refuse to cooperate with the FDA once bad news began rolling in about an approved drug. But suppose a company has started to hear reports of patients suffering, for example, serious neurological symptoms after taking a promising, newly approved drug. Assume, too, that independent research has linked our hypothetical drug, which promises to bring in sales of $1 billion a year, with such terrible complications. Given the importance of this product to the bottom line, even executives who would never flatly ignore the FDA might nonetheless be tempted to rationalize or downplay the bad news. "People are not taking the doses correctly," they might argue, "and doctors are misinterpreting what they are seeing—the relationship is one of correlation, not causation." In the face of convincing evidence to the contrary, however, such stalling tactics tend to do more harm than good. While keeping the drug on the market for a few more months will bring in extra revenue, the PR, regulatory and legal costs of avoiding the truth could hurt the company far more in the long run.

Read more