Regulators seen failing to cooperate

More than a year after drug and securities regulators pledged to work more closely to review company disclosures, little seems to have happened.

Regulators will say little about their efforts to cooperate. But even the trade group representing large drug makers, the Pharmaceutical Research and Manufacturers of America, says its members haven't mentioned any changes since the Food and Drug Administration and the Securities and Exchange Commission described how they planned to work together in February 2004. ''Nobody's raised this issue to us," said Alan Goldhammer, the group's vice president for regulatory affairs.

That's a pity, say some industry specialists like Alastair J.J. Wood, a Vanderbilt University professor and a member of the New England Journal of Medicine's editorial board. Companies could use more guidance on questions like when their communications with the FDA amount to a ''material" disclosure that SEC rules oblige them to pass along to investors, Wood said.

The current situation is unfair to small biotechnology companies with fewer products, he added, because under current rules they are more likely to have to disclose problems with their drugs. Larger drug makers, meanwhile, can usually argue that the fate of one drug won't affect the company's prospects overall, and therefore they don't have to disclose them.

Another problem, said Linda Bentley, a Mintz, Levin attorney, is that FDA rules also leave wiggle room in some cases on just when medical-devices companies need to disclose product recalls beyond just to doctors.

''There's a disconnect between that and whether or not you should go a step further and inform your shareholders," Bentley said.

The subject of FDA communications with life-sciences companies is a touchy one, since these stocks can react dramatically to any news about their dealings with the FDA. For instance, on Thursday the shares of Cambridge drug-developer Biogen Idec Inc. fell 4 percent after The Boston Globe reported a possible fourth illness related to the company's multiple sclerosis drug Tysabri, based on documents obtained from the FDA under the Freedom of Information Act.

A Biogen Idec spokesman said the company provided ''all the pertinent facts" publicly. An FDA spokeswoman said the company ''complied with our agreements regarding the reporting of adverse events to the agency."

In another case, shares in Natick medical-device maker Boston Scientific Corp. fell 3 percent on Tuesday after the FDA released a warning letter it sent the company on May 18 faulting its control of the quality of implanted drug-injection devices it makes. Analysts cited other possible factors for the decline as well.

Politicians began to notice the volatility of drug stocks after disclosure problems at New York cancer-drug maker ImClone Systems Inc. that eventually sent publishing executive and ImClone shareholder Martha Stewart to prison. During and after hearings in 2002, lawmakers pressured the FDA to work with securities regulators during the drug-approval process.

In turn the agencies in February of last year said they would work together. Specifically, they described steps to make it easier for FDA employees to bring to the attention of securities officials any false or misleading statements from public companies, even if the information was considered non-public. The guidelines didn't require major changes in company reporting, however. For instance, the agencies didn't require companies to make public all negative news they get from the FDA, such as the type of letter that led to the collapse of ImClone's shares.

Since then the issue has gotten little public attention, and a chief critic of both agencies in the past, Louisiana Republican Billy Tauzin, has left Congress to become head of the drug makers' trade group.

James R. Ferguson, partner at Mayer, Brown, Rowe & Maw LLP in Chicago, said one reason little came of the agencies' initiatives is that the FDA has less enthusiasm for policing company statements than the SEC.

''This doesn't fall within the heart of the FDA's mission, so it may not have the same priority that it has for the SEC," Ferguson said. ''Unless they make the decision to aggressively share information with the SEC, nothing will happen."

Spokespeople at both the SEC and the FDA declined to make officials involved in the cooperation effort available for interviews despite numerous requests. Spokespeople also wouldn't elaborate on statements made in March by the head of the SEC's Boston office, who said the FDA had referred additional cases for review.

''Mostly this is forging relationships so each agency knows the appropriate person at the other," said John Nester, an SEC spokesman. ''It's not like there's a team of SEC people sitting over there or vice-versa," he said. On Thursday President Bush nominated a California congressman, Christopher Cox, to head the agency.

US Representative Edward Markey, Democrat of Malden, who sits on an FDA oversight committee, said company statements about post-marketing studies also deserve more scrutiny.

''It is disconcerting to me that the SEC . . . reported to me that only 1 of the 3 public companies that have received warning and untitled letters from the FDA concerning false and misleading promotion of accelerated approval products actually disclosed that fact to their investors," Markey said in a statement.

In a March 21 letter to Markey, Alan Beller, director of the SEC's division of corporate finance, wrote that in November and December the two agencies' staffs met and discussed, among other things, how the SEC could use the FDA's website.

Beller also wrote that the SEC has brought enforcement actions against seven companies for making false claims of FDA approval for their products in the past five years. Of those seven, just one case was filed since the agreement was struck with the FDA, Markey says the SEC told him.

Ross Kerber can be reached at kerber@globe.com.