CASPER — A lawsuit filed this month against the Food and Drug Administration in U.S. District Court alleges the owner of Cody Labs misled federal regulators when it moved production of a drug from its Cody manufacturing facility to upstate New York last year.
Competing drug company Genus Life Sciences filed the suit in the District of Maryland Southern Division seeking to overturn approval of a drug the FDA approved earlier this year. It alleges that drug company Lannett lied to federal regulators when it stated in numerous documents it would be developing and manufacturing Numbrino, a new cocaine-based anesthetic, in Cody, only to switch manufacturing to a facility in Carmel, New York, after obtaining approval from the Food and Drug Administration.
The lawsuit further alleges the FDA failed to take legally required actions to begin the process to withdraw approval for the drug after Genus brought the issue to federal regulators’ attention.
Shortly after getting approval from the FDA, Lannett shuttered the Cody facility, a sign the drug company may have used the facility to avoid having to undergo an additional year of testing at the Carmel manufactory as required under federal regulations, the lawsuit alleges.
“Months before the agency approved its application, Lannett reconfirmed to FDA that it would manufacture Numbrino exclusively in Cody and that the Cody manufacturing facilities were ‘active’ and ‘ready for inspection,’” the lawsuit claims. “Just days later, Lannett told investors that it had ‘ceased operations at the Cody plant’ and was ‘already produc(ing)’ Numbrino at a different facility in New York.”
Public documents provided to the Star-Tribune supported these assertions. While Lannett did properly file documentation needed to begin developing and testing at the Cody facility in September 2017, the company continued to list the Cody facility as the manufactory for Numbrino months after the building was closed and its equipment was liquidated.
The facility was still listed as “active” and “ready for inspection” in supporting documents used by the FDA in approving the drug in January, despite statements to shareholders announcing the planned closure of the Cody facility roughly 18 months before the FDA approved the Numbrino application; the company shuttered the facility approximately five months before FDA announced its approval.
“Lannett may have withheld the truth from FDA in order to avoid delaying FDA’s processing of Lannett’s application,” the lawsuit alleges, adding that the company would have had to submit more data to federal regulators. “Had Lannett been truthful, it would have needed to wait over a year to gather that data and then file a major amendment to its application (which would have started a new 6-month review cycle for the application), resulting in a lengthy delay (approximately 21 months) before FDA could approve the application.”
Lannett did not respond to a request for comment from the Star-Tribune.
Extensive testing at a single facility is an important requirement for federal regulators to ensure the integrity of commercial supply chains for drug manufacturers, according to a source familiar with the federal regulatory process. (The source, a former FDA official, spoke to the Star-Tribune on the condition of anonymity because of ongoing professional obligations.)
“The FDA reviews hundreds and hundreds of drug applications every year, and they don’t have the resources and manpower to go and dig into in establish the truthfulness of every single statement in an application,” the source said. “The only way the FDA can operate is on a sort of honor system that companies provide correct information to the agency so that the agency’s decisions are based on accurate information.”
Genus Life Sciences, the plaintiffs in the lawsuit, said Lannett’s allegedly false statements to the FDA could set a negative precedent for the regulator. To demonstrate that the facility can adequately manufacture the drug in question, the lawsuit states, the applicant must manufacture three batches of the drug at the facility, generating at least 12 months of data on the stability of the supply chain in order to ensure its integrity.
By granting Lannett approval for its drug after it allegedly skipped this step when it moved production to New York, the lawsuit argued, the FDA enabled the company to potentially endanger public health.
“Not only will FDA’s refusal to take the legally required action harm Genus, it also will endanger public health and safety by exposing Americans to a potentially unsafe or ineffective drug made in a facility about which Lannett provided materially false information in the CMC section of its application,” the lawsuit reads. “By doing so, Lannett deprived FDA of the opportunity to review an accurate CMC section and to decide, based on that information, whether to approve Lannett’s application and whether to inspect the facility prior to approval to ensure that it could manufacture Numbrino safely and properly.”
The origins of the lawsuit come as part of a national conversation about the manufacture of opioids and other pain medications. And while the jobs provided by Cody Labs are long gone, the lawsuit also recalls one of the state’s most highly touted economic development stories.
Founded in 2000 by former Navy SEAL Ric Asherman, the company experienced a meteoric rise early in the decade, expanding 13 times its size and tripling its staff within just three years of operations. Four years later, the company had increased to 40 employees and was used by the Federal Reserve as a case study for the type of business helping define the nation’s “new” economy.
This was the same year the company was acquired by Lannett. The next several years were marked by ruts and swells: In 2010 — the year the company was poised for its second expansion — Cody Labs was ordered by a judge to cease its manufacture of an unlawful medication, prompting threats of layoffs of 50 or more employees, the company said at the time.
However, at more than 100 employees by 2013, the company kept expanding and, despite a behind-the-scenes dispute that led to Asherman’s ouster and the threat of closure, Cody Labs announced plans to expand once more, promising up to 250 new jobs in Park County over the following decade in return for $34 million in public funding.
The local economic development arm, Forward Cody, partnered with the company to pursue a $2.53 million grant from the State Loan and Investment Board to expand the business, aiding in the construction of a $3.7 million warehouse on Road 2AB that is today occupied by rapper Kanye West’s apparel company, Yeezy.
“It’s a magnificent thing, it’s a magnificent story, because it provides (economic) diversity,” then-Gov. Matt Mead said at the 2015 ribbon cutting, according to the Powell Tribune.
Then, the bad times began.
In April 2018, the company — months after being tied up in a 45-state lawsuit over alleged price fixing — halted a $50 million expansion on the outskirts of town. Several months later, Lannett announced a restructuring plan in an effort to cut $10 million in costs, resulting in the layoff of 50 employees and eventually the sale of Cody Labs.
A little more than a year later, the company announced the business would be shut down — a burden for too long amid a national opioid epidemic that had drawn additional scrutiny.
If the allegations in the lawsuit are found to be accurate, the FDA will likely be compelled to withdraw approval for the drug, forcing Lannett to revisit the entire approval process in order to match compliance with the law.
“If an NDA contains an untrue statement about the facility where the drug will be manufactured, the applicant does not amend the NDA to correct that statement, and FDA subsequently approves the application, then FDA must withdraw the approval upon learning of the untrue statement,” the lawsuit reads.
What it won’t do is make Cody whole again.
The community Lannett left behind has since moved on after one of its largest employers pulled up stakes.
“It doesn’t look like it would affect Cody either way,” Cody Mayor Matt Hall wrote in an email. “Lannett has leased the building on 2AB and has two potential buyers of the building on Yellowstone Avenue so they won’t be able to down shift and move any operations back to Cody.”
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