Even More Bad News for Abbott and Roche

Even More Bad News for Abbott and Roche

When Home Diagnostics (NASDAQ:HDIX) released their first quarter results the corresponding press release contained the following paragraph;

As outlined previously, the Company continues to be in discussions with the FDA regarding the risk of inaccurate blood glucose readings in GDH-PQQ systems for certain groups of patients who are undergoing maltose based therapies. In late March, the Company provided the FDA with a plan to further mitigate this risk with its TRUEtest strips, which utilize this enzyme. The Company has scheduled a meeting in May to discuss its plan with the FDA.

During the conference call that accompanied the earnings release Joe Capper HDI’s new President and CEO stated;

Shifting gears for a moment to our discussions with the FDA regarding the use GDH-PQQ enzyme and the manufacturing of our TRUEtest strips. These discussions that we and other leading manufactures are having with the FDA are centered around the enzymes potential effect on the accuracy of blood glucose readings in patient who received medical treatments or IV therapies that are known to contain maltose and maltose derivatives.

At the end of March, we submitted our plan to the FDA to further mitigate the risk of inaccurate readings that may arise in small groups of patients who are undergoing certain medical treatments. We have a follow-up meeting scheduled with the FDA later this month to discuss our plan.”

According to the 10-Q the company filed with the SEC:

“The Food and Drug Administration (FDA) has requested meetings with manufacturers, including the Company, of blood glucose monitoring systems to discuss the FDA’s safety concerns about the continued use of glucose monitoring systems that use the GDH-PQQ enzyme. The FDA’s concerns relate to certain patients receiving other medical treatments or IV therapies that are known to contain maltose and maltose derivatives. In the past, regulatory agencies, including the FDA, have issued cautionary statements and medical device alerts to the health care community that explained the risk of using GDH-PQQ systems with dialysis patients receiving maltose, xylose or galactose. The Company’s TRUEresult and TRUE2Go systems both use TRUEtest strips, which in turn use the GDH-PQQ enzyme. Prior to receiving 510(k) marketing clearance of these products from the FDA in August 2008, the Company modified its labeling and educational materials, in accordance with FDA recommendations, to mitigate these risks. During a meeting with the FDA in February 2009, the Company was asked to work with the FDA to develop a plan that addresses these concerns and further mitigate the risks associated with the use of these products by patients receiving other medical treatments or IV therapies that are known to contain maltose and maltose derivatives. This plan, if approved and required to be implemented by the FDA, may limit the distribution of these products and/or require additional labeling and educational materials, may require that a different type of enzyme be utilized in these products, or may require the withdrawal of these products from the market. The Company submitted a risk mitigation plan to the FDA in March 2009 and will begin reviewing its plan with the FDA in May 2009. At this time, management cannot reasonably estimate the amount of potential loss, if any, related to this matter. As more information becomes available, accruals, if any, for losses that may be considered probable and/or asset impairment charges may be necessary. An unfavorable outcome in this matter could have a material adverse effect on the Company’s financial position, liquidity and results of operations.”

Before we go any further it’s important to note that this issue s not unique to HDI as they outlined in their 10-Q, “The Food and Drug Administration (FDA) has requested meetings with manufacturers, including the Company, of blood glucose monitoring systems to discuss the FDA’s safety concerns about the continued use of glucose monitoring systems that use the GDH-PQQ enzyme.” Diabetic Investor has confirmed with officials at Abbott (NYSE:ABT) that they are also in discussions with FDA over this matter. Although Diabetic Investor has not heard back from Roche, given their monitors also use this enzyme, it’s fairly safe to assume they too are working with the FDA. It is also believed the new Accu-Check Active Nano already launched in Germany and the United Kingdom which was supposed to be launched here in the United States in the third quarter is now delayed at the FDA due to this issue. Diabetic Investor has confirmed that Roche has told distributors and retailers not to expect the Nano until late this year or early next year.

It seems a little confusing as to why the FDA, who through a spokesperson confirmed they are in discussions with several manufacturers over this issue and are actively seeking a solution, has come back to this issue first identified back in 2005. According to an FDA report “Falsely Elevated Blood Glucose Readings with a Point-of-Care Meter Due to a Maltose-Containing Intravenous Immune Globulin Product” the authors concluded; “FDA encourages physicians, other health care professionals, and patients to submit adverse event reports, particularly for serious events, for any FDA-approved, -licensed, or –regulated product, including maltose-containing immune globulin and glucose meter products.”

This report outlines 7 cases where this issue occurred and includes the following statement;

“A comprehensive list of FDA-approved and U.S.-marketed GDH-PQQ blood glucose monitoring systems is not provided because any such list would be misleading. Multiple systems that are currently on the market are distributed under multiple trade and proper (generic) names. Regulations do not require manufacturers to notify FDA of the trade names under which approved systems are marketed. In addition, new systems continue to be introduced on an ongoing basis into the market, which has undergone enormous and sustained growth in recent years. Furthermore, manufacturers of GDH-PQQ systems currently on the market may subsequently change to non-GDH-PQQ systems. Even if the FDA could provide a list that were comprehensive and current at this time, the list would become increasingly out-of-date over time and, if used as a reference, would serve as a source of misinformation. Therefore, instead of relying on lists of GDH-PQQ systems, we urge healthcare providers and patients to refer to test strip professional package inserts or consult device or instrument manufacturers to confirm the glucose methodology in any system that is used for monitoring patients receiving maltose-containing immune globulin products.”

Given the ongoing discussions with several manufacturers over this issue and their public comments it appears the FDA is no longer passing the buck and dumping this problem back into the hands of physicians and patients. One reason for this change in direction could be the number of reported adverse events related to this issue. According to officials at LifeScan, a unit of Johnson and Johnson (NYSE:JNJ), who’s monitors are not affected by this issue; since 2002 there have been 76 reported adverse events related to this issue with 11 deaths and 45 cases of sever hypoglycemia. The officials went onto to note in reviewing professional literature they discovered 19 additional adverse events not reported in the FDA’s database.

It’s interesting to note that Bayer, whose Contour monitor that used GDH-PQQ enzyme, was modified last summer. According to Bayer the Contour is currently the only no-coding monitor not affected by this issue.

Diabetic Investor spoke with several experienced professionals with vast glucose monitor knowledge to gauge just how serious this issue is for manufacturers who use GGH-PQQ. These professionals indicated that switching to a different enzyme is not an easy task and would be quite costly. According to LifeScan, who monitors we should note again are not affected by this issue; “while it’s certainly feasible to change from one enzyme to another, this would not be a trivial matter.  Extensive development and equivalence testing would be required as would a regulatory submission for the strip and most likely the meter.  The process could easily take a couple of years from research initiation to product launch and the new strip/enzyme would likely not be compatible with the existing product installed base, requiring meter replacements for existing customers.”

While Diabetic Investor does not see this issues having a major impact in HDI as they just one monitor that uses this enzyme, it could become a major issue for Abbott and Roche. According to list published by Medscape® the entire line of FreeStyle monitors manufactured by Abbott uses this enzyme as well as the Accu-Chek Active, Aviva, Advantage, Complete, Inform and Voicemate systems. Should the FDA take the position that manufacturers can longer use the GDH-PQQ enzyme Abbott and Roche would basically be forced to redesign almost their entire line of monitors and test strips. Even if the FDA requires stronger label language or additional warnings this would hurt the companies as competitors who do not use this enzyme will surly use this to their advantage.

Given the current dynamics of the blood glucose monitoring market where each share point is being fought over, any advantage, no matter how narrow it may be, will be used. Seeing as Abbott and Roche are both losing share and already have a host of issues facing their struggling BGM units, this is the last thing they need. As noted earlier this issues appears to have delayed the Accu-Chek Nano, which Roche had hoped would at least stop the bleeding for their Accu-Chek line of monitors.

Diabetic Investor also sees this issue as another example of just how badly the FDA needs reform. Once again the agency was aware of potentially dangerous issue, did nothing about it and people died as a result. Needless to say this is completely unacceptable when steps can be taken, as Bayer did, to rectify the problem. When patients lives are at stake it should not matter that fixing an issue takes time and costs money. The cost of fixing this issues pales in comparison to the value of a patient’s life.