September 5, 2000
090500 Abortion-Pill Venture Keeps To Shadows Awaiting Approval
By RACHEL ZIMMERMAN
Staff Reporter of THE WALL STREET JOURNAL NEW YORK -- Hidden away on the 13th floor of a midtown Manhattan
office building, with no sign to direct visitors to its door and an
unlisted phone number, a secretive pharmaceutical company is poised
to begin marketing what would be one of the most controversial drugs
ever to hit the U.S. market.
The drug, mifepristone, has been used for as long as a decade by
millions of women in France, Britain, Sweden, China and elsewhere to
end unwanted pregnancies early on. But it is banned in the U.S.,
where about one million women undergo surgical abortions each year.
Within the next few weeks, however, the Food and Drug Administration
is expected to decide whether to lift that ban by giving final
marketing approval to the drug, commonly known as RU-486, or to
extend once again a regulatory review that has already taken four
years.
If RU-486 gets the green light -- and approval has never seemed more
likely -- its marketer, Danco Laboratories LLC, would take its
first, tentative steps out of the shadows. And the national abortion
debate would be fundamentally altered.
Publicity-Shy
During the years it has fought to make mifepristone available in the
U.S., Danco has revealed little about its business strategies or the
people behind the company. Now, internal Danco documents reviewed by
The Wall Street Journal lay out for the first time the company's
plans for manufacturing, distributing and marketing the drug if it
wins FDA approval, as well as testing mifepristone for other
potential medical purposes.
Danco's investors and managers have deliberately, even obsessively,
avoided the spotlight as they have gone about raising money, finding
a manufacturer, seeking regulatory approval and resolving internal
conflicts. The reason for their discretion is simple and chilling:
The years since a group of pro-choice activists first got together
to figure out a way to make RU-486 available in the U.S. have been
marked by a series of violent, sometimes murderous, attacks on
physicians who perform abortions, and on the clinics where they
operate.
Thus, Danco's executives and investors have for the most part
steadfastly refused to talk to reporters. And they have demanded
that their outside supporters -- mainly abortion-rights advocates
who have been brought into the loop -- stay equally mum. Citing
security worries and trade secrets, Danco's backers have also fought
to seal court records related to several civil lawsuits the company
is involved in over contractual matters, out of concern those
records might disclose their identities or other details about the
company.
'How Can I Help You?'
It's even hard to physically locate Danco. There are no signs in its
building's lobby or hallways pointing to the suite the company
occupies. Phone Danco and the person who answers avoids mentioning
its name, instead asking, "How can I help you?" Danco's chief
executive officer, Roy Karnovsky, a former Merck & Co. marketing
executive who worked at the drug giant for 20 years, doesn't talk to
the press.
But the internal Danco documents titled "Highlights of Partnership
Meeting Held on June 15, 2000, at Danco Laboratories New York
Office," and "First Quarter 2000 Activity Highlights," dated June
27, offer a glimpse of Mr. Karnovsky's previously undisclosed
strategy for Danco. They identify some of the company's financial
backers, discuss sales projections and outline a preliminary
public-relations campaign.
Prominent Supporters
As it turns out, for-profit Danco and its nonprofit partner, the
Population Council Inc., a New York-based organization that promotes
family planning world-wide, have received grants and loans to
develop mifepristone from some prominent investors, including
foundations set up by Warren Buffett, George Soros and the late
David Packard.
The documents also provide details about Danco's manufacturing
plans, which the firm has tried to keep under wraps. They suggest,
for example, that the company has contracted with a China-based
manufacturer to produce the drug for Danco. This is a sensitive
issue: Many of Danco's political allies say they are concerned about
the company's discussing a possible business relationship with
China, because of that country's controversial family-planning
policy.
The FDA has set Sept. 30, a date that falls amid the final weeks of
the presidential-election campaign, as the deadline for its next
move on RU-486, which is meant to be used in conjunction with a
second drug that causes contractions. The agency's options include
approving mifepristone, denying approval or requesting more
information. If the agency sanctions the drug, it would essentially
be accepting the 1996 recommendation of an FDA advisory panel that
found RU-486 to be safe and effective. In the wake of that
recommendation, the FDA, which typically accepts its advisory
panels' suggestions, issued the first of two "approvable" letters to
Danco listing issues that would have to be resolved before the drug
could be marketed in this country.
Those issues, which involve the labeling and distribution of the
drug, are close to being resolved, according to the documents and
people familiar with the negotiations. And now, Danco is crafting an
initial marketing campaign aimed at swiftly building market share
while attempting to avoid inflaming antiabortion forces.
With this in mind, Danco is proceeding cautiously. It intends to
sell the drug directly to physicians and clinics and plans to spend
at least $1.2 million to teach doctors, counselors, midlevel
clinicians and other medical personnel to administer it properly,
the documents indicate. "This is a medical process," says Danco's
spokeswoman, Heather O'Neill. "We want women's questions answered
fully by a health-care provider."
The National Abortion Federation, with funding from Danco, has
already trained about 1,200 providers, says NAF Executive Director
Vicki Saporta. And if the drug is approved, Danco and NAF plan to
distribute brochures, CD-ROMS and other types of training guides.
Also in the works is a Web site and a toll-free number for
prospective customers.
Danco's public-relations strategy is being designed, at least in
part, by the Seattle office of DDB Worldwide, which has handled a
number of campaigns on women's health issues and on behalf of such
groups as the National Abortion Rights Action League. A DDB
executive in Seattle confirmed that the agency was hired by Danco.
Danco isn't disclosing its advertising plans, but "my guess would be
that they are not going to advertise aggressively," says Carolyn
Westoff, a Columbia University obstetrician whose patients have
participated in federally approved trials of mifepristone.
Early Option
The company has tentatively picked the brand name Early Option for
the drug, based on women's responses in focus-group surveys. If
approved, Danco's preliminary estimate is that the pill would
generate about $3.7 million in sales by the end of 2000 and $34.2
million by 2004. It also predicts, according to the internal
documents, that the drug would be used for 29% of all U.S. abortions
after four years on the market. That's a sizable share, given that
many pregnancies are detected late in the first trimester, when
RU-486's effectiveness starts to wane. But as early detection
becomes more prevalent, Danco believes that after four years on the
market, the drug would account for 53% of the abortions performed
within the first eight weeks of pregnancy, the documents say.
The U.S. already has approved misoprostol, the drug meant to be used
in conjunction with mifepristone, as an ulcer treatment.
Misoprostol, whose role in the abortion process is to induce
contractions, is sold under the brand name Cytotec, and its maker,
Pharmacia Corp.'s Searle unit, has steered clear of the abortion
debate. Indeed, a label on Cytotec bottles warns pregnant women to
avoid it, and last month, Searle issued a warning to doctors about
possible severe side effects resulting from "off-label" uses of the
drug, those not specifically approved by the FDA. (Doctors can
legally prescribe for other uses a drug that the FDA approved for an
unrelated purpose.)
Abortion-rights activists suggest that Searle might be attempting to
protect itself from potential liability should the
mifepristone-misoprostol regimen be approved. But Claudia Kovitz, a
spokeswoman for Searle says the timing of the warning letter was
"purely coincidental." She says Searle and the FDA had agreed, after
discussing the matter for some time, that Cytotec's label warning
should be strengthened, and that the move had nothing to do with the
agency's pending decision on mifepristone.
A $10 Million Loan
Until now, the sources of Danco's start-up funding haven't been
identified. But according to the internal documents, its largest
infusion of cash came from the David and Lucile Packard Foundation
of Los Altos, Calif. Mr. Packard was a co-founder of Hewlett-Packard
Co.
Sarah Clark, director of the foundation's population program,
confirms that the Packard Foundation gave Danco a $10 million loan
for the project. "It's consistent with our strategy and foundation
philosophy that American women should have the full range of options
when it comes to their own reproductive health," Ms. Clark says,
adding: "We don't make loans to anything we don't believe in."
Other money for the development of mifepristone came from the
Buffett Foundation in Omaha, Neb., whose vice president is
billionaire investor Warren Buffett, a longtime supporter of
population-control causes. Allen Greenberg, the Buffett Foundation's
executive director, declined to comment.
Another backer: the Open Society Institute, New York, whose chairman
is hedge-fund investor George Soros. Ellen Chesler, a spokeswoman
for the Open Society Institute, says the nonprofit organization has
given more than $380,000 to the Population Council to help train
doctors in properly prescribing RU-486 and to underwrite expanded
clinical trials of mifepristone. The institute also funded a recent
issue of the Journal of the American Medical Women's Association
devoted entirely to medical abortion and mifepristone.
All told, Danco had raised about $34.7 million through March 2000,
according to the documents. That includes $23.4 million from its
partners, a group of abortion-rights advocates and businessmen from
around the country. Among them are a Nashville, Tenn., country-music
producer, a San Diego doctor-turned-entrepreneur and a New Jersey
businessman, none of whom responded to repeated phone calls seeking
comment. Danco hopes to raise $2 million more to operate through the
first quarter of 2001, the documents say.
Thorny Problem
One of Danco's thorniest problems has been finding a manufacturer to
make mifepristone for the U.S. market, something no established
American or European drug maker has been willing to risk, for fear
of reprisals from antiabortion forces, says the NAF's Ms. Saporta.
Since 1997, Danco has been embroiled in a lawsuit with Hungary's
Chemical Works of Gedeon Richter, a manufacturer that Danco, in
documents filed in New York state court, claims backed out of an
agreement to make RU-486 for the company.
Now, Danco has a manufacturing plant that FDA officials were
scheduled to inspect in late July, according to the internal
documents. Neither Danco nor the FDA will comment. But the documents
indicate that Danco expects to pay at least $293,363 through the end
of this year to one of several Chinese manufacturing plants that
currently produce RU-486. A second, back-up manufacturing site is in
the works, though its location couldn't be established, and the
documents say it is having production problems, including "poor
yields" and "high impurities."
Danco's supporters are skittish about any association with China,
where abortion is state-sanctioned and family-planning laws dictate
that women in urban areas can, in most cases, have only one child. A
link between RU-486 and China, they fear, could upset lawmakers wary
of the communist nation's human-rights record, providing ammunition
for abortion foes.
Close to Resolution
Just who will be allowed to prescribe the drug is still a matter of
deep concern within the abortion-rights community. Danco has been in
intense discussions with the FDA this summer to resolve "the finer
issues of labeling and distribution," says Ms. O'Neill, the
company's spokeswoman.
In June, the FDA startled Danco and its supporters by saying it
might impose a series of restrictions on providers of RU-486, a move
abortion-rights advocates say would discourage women from using the
drug as an alternative to surgical abortion. The FDA's proposals
included requiring prescribing doctors to be trained to perform
surgical abortions; have credentials to perform ultrasound tests;
and hold admitting privileges in a medical facility within one hour
of their office.
A split has emerged among abortion-rights supporters over how to
handle the FDA negotiations, with Danco and the Population Council
taking a conservative approach aimed at placating the agency and
others pushing for less government oversight of a drug they believe
is fundamentally safe, according to a person familiar with the
issue.
That disagreement was underscored in a July 18 letter to FDA
Commissioner Jane Henney from Simon Heller and Bonnie Scott Jones,
lawyers for the Center for Reproductive Law and Policy. The letter
referred to "years of anti-choice political pressures" and suggested
that Danco and the Population Council were taking a far too cautious
approach, capitulating to pressure from political conservatives.
Of course, if the FDA approves RU-486 this fall, its decision could
have a serious impact on the last leg of the presidential campaign.
Vice President Al Gore, the Democratic nominee, supports women's
access to mifepristone. Moreover, it was his boss, President
Clinton, who smoothed the way for RU-486's arrival in the U.S. In
1994, after no established drug maker proved willing to market
mifepristone here, Mr. Clinton helped persuade its original
manufacturer, the Roussel Uclaf unit of Germany's Hoechst AG, to
hand over the U.S. patent rights to the Population Council. The
Population Council, in turn, licensed the marketing, distribution
and manufacturing of the drug to start-up Danco.
But Texas Gov. George W. Bush, the Republican presidential nominee,
opposes approval of mifepristone. And opposition to RU-486 is
intense in some corners of Congress. Rep. Tom Coburn, an Oklahoma
Republican who is a family physician and obstetrician, has
repeatedly tried to block federal approval of mifepristone in recent
years. His proposal has passed the House twice, though it failed
this year.
Pledge of Resistance
"The best strategy is to elect a president and a Congress that
believes the mission of the FDA is to preserve health, not
facilitate death, and will act to rescind or block approval of
RU-486," Rep. Coburn says, noting that Gov. Bush's father banned
importation of RU-486 in the late 1980s. If mifepristone is
approved, however, "we will fight any efforts by the abortion lobby
to water down the common-sense and medically sound restrictions the
FDA may impose on RU-486. Administering RU-486 improperly could kill
two persons instead of one," he says.
Doctors generally consider mifepristone, followed two days later by
misoprostol, to be potentially less risky than surgical abortion.
The drugs, which typically result in an embryo's expulsion within
four to 24 hours, require no anesthesia, and possible side effects
appear to be relatively minor ones, such as bleeding, nausea,
cramping, vomiting and diarrhea. In some cases, bleeding can be
quite heavy, however. In the clinical trials conducted by the
Population Council, 2.6% of women experienced excessive bleeding
that required surgical intervention. The two-drug treatment is
effective about 95% of the time early in pregnancy. When it fails,
patients generally undergo surgery to terminate pregnancy, according
to the Population Council.
But many physicians liken its effects to a natural miscarriage, and
many general and family practitioners, as well as gynecologists,
have expressed interest in the two-drug combination, which is
approved for use in 14 countries.
Black Market
"Obviously, it is the intention of the abortion lobby to make this
drug as available and invisible as possible," says Michael Schwartz,
Rep. Coburn's administrative director. He says this would, among
other things, give rise to a black market for the drug among "scared
teenage girls who won't know what to do with it," particularly if
the drug combination failed.
RU-486's approval for use as many as 49 days after a pregnant
woman's last menstrual period -- at a time when the embryo inside
the amniotic sac is the about the size of a grain of rice -- would
be a landmark in the abortion controversy, if only because it would
create a less invasive, more private way for women to terminate
pregnancies. And they could do so as soon as pregnancy was
confirmed. By contrast, surgical abortions typically are performed
later, after the seventh week of pregnancy.
The French experience is telling: Fully one-third of all abortions
in France involve the use of mifepristone, according to 1998 data,
the most recent available. Since RU-486 was approved there in 1989,
the overall number of abortions has remained constant while the
proportion of drug-induced abortions has steadily risen.
If mifepristone were to become similarly popular in the U.S.,
abortion clinics, the main targets for antiabortion protests and
violent attacks, might start to shut down as women obtained RU-486
directly from their doctors.
But the strong passions abortion inspires aren't likely to be
extinguished anytime soon. That's why Danco and its backers remain
acutely concerned about security. "The potential for violence is
still there," says Peg Yorkin, a Danco investor and chairwoman of
the board of the Feminist Majority Foundation, an abortion-rights
advocacy group.
One of the final issues to be resolved is whether the FDA will
stipulate where women should take the second part of the two-pill
combination. Women in the U.S clinical trials currently under way in
15 U.S. cities can take mifepristone in a doctor's office and
misoprostol in their homes.
People close to Danco say the company is pushing for home use of
misoprostol, but the FDA may insist that women remain in doctor's
offices for hours to make sure the eventual miscarriages are
monitored. Abortion-rights advocates and many doctors think this is
an unnecessary precaution, pointing out that natural miscarriages
are quite common and occur in all sorts of settings.
Should Danco prevail, antiabortion forces could find it even more
difficult to track where abortions are taking place. One 23-year-old
Brooklyn, N.Y., woman who took the drug as part of the clinical
trials says she was relieved that she was allowed to have her
abortion at home, with her boyfriend by her side.
"At home it was just a private, personal thing," the young woman
says, "much better than waiting around in some doctor's office."
Write to Rachel Zimmerman at rachel.zimmerman@wsj.com
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