Novartis suffers set back in Japan

The New Year has brought major problems for pharmaceutical giant Novartis AG in Japan. The company is facing claims that its employees intentionally violated the strict protocols for clinical trials for Tasigna, a cancer drug it manufactures. At the same time, the company is dealing with troubling allegations that it may have violated Japanese laws promoting its blood pressure drug Diovan.

The company has admitted that employees in Japan inappropriately transferred clinical test results for Tesigna in a breach of the strict protocols for the study.

 The problems occurred when employees transferred results from research institutes to the University of Tokyo Hospital where results were being analyzed. The protocols required the transfer to take place without any involvement by Novartis.

The hospital had originally asked medical institutions involved in the clinical studies to fax results directly to the hospital. However, of 255 test surveys the hospital received, 133 had been sent by other methods and Novartis employees could have handled 125 of these.

The hospital says it has rechecked almost all of the tests that could have been handled by Novartis employees and all of the results matched the original data. No evidence that Novartis employees had manipulated any of the data was found.

The problematic data transfer marks the second setback for Novartis in Japan this year. Japan’s Health Ministry has already called for a criminal investigation of Novartis, alleging the company had misled consumers in Japan by using altered research in advertisements for Diovan, its best-selling blood pressure medicine.

Novartis’s Diovan problem emerged when some Japanese universities found that research conducted by the universities had been falsified. The universities also found that a Novartis employee had participated in all of those studies but had not acknowledged his affiliation in published papers.

Novartis executives have denied all charges but have acknowledged that involvement of a Novartis employee was a conflict of interest.

The bad news has already brought consequences including falling sales as some hospitals and physicians have stopped prescribing the drug. Japan is a big market for Novartis. With an ageing population, it accounts for a quarter of Diovan’s global sales and represented 9% of the company’s sales in 2012. If promotional material is inaccurate, products tend to be seen as flawed in Japan. Coming on top of each other, the two problems pose a serious reputational risk that could affect the company’s longer-term prospects in Japan.