$500M Verdict Against Teva Exposes Drug Industry Secret: Dose Packaging Manipulation

Last Updated May 10, 2010 4:12 PM EDT

The $500 million verdict against Teva (TEVA) and Baxter, favoring a patient who was infected with hepatitis after vials of the anesthetic propofol were used twice, says more about the way companies sometimes manipulate drug packaging sizes than it does about jackpot juries.

The case is a warning to managers: Patients and consumers are often as interested in the packaging of a product as they are its contents. While this case is an extreme one, packaging manipulations -- from unopenable clamshells to wasteful boxes full of inserts and filler -- are among consumers' biggest gripes. In the drug business, the manipulation of packaging and dose sizes is big business, and this case suggests consumers are finally figuring that out.

In the case, Henry Chanin claims he was infected with hep C after a nurse injected him with propofol in preparation for a colonoscopy. Each propofol vial contains 50 milliliters of drug, even though a single dose is just 10 milliliters. Nurses therefore used each vial more than once, spreading infection from patient to patient. Teva is furious:

The label for its propofol product clearly states that it is for single patient use only and that aseptic procedures should be used at all times.
But if Teva's vials are for single use, why is there so much extra drug in them? Because the 50 millileter vials are cheaper to make.

The episode is reminiscent of an unproven case against Amgen (AMGN) that alleged the company overfilled vials of the anemia drug Aranesp so that doctors could save the unused drug for other patients -- thus claiming Medicaid reimbursement twice when they'd only bought one dose.

Similary, Genentech packaged its Lucentis eye drug in $2,000 dose units, even though its Avastin cancer drug -- which is basically the same substance -- sells for about $60 per dose. Genzyme (GENZ) faces a similar dilemma over its Campath blood cancer drug: If Campath proves effective against MS, the company will find that patients only need about $10,000-worth of the drug at blood cancer prices -- it could command many times that if it was sold in MS-specific doses.

Teva may have enjoyed some good publicity over the weekend with a company profile in the New York Times, but the company is running out of excuses on propofol: Teva received a warning over dirty manufacturing practices in December 2009 after the drug was recalled in July 2009. A propofol shortage followed that.

As for the hep C infections, the company continued to sell the bigger vials even though it knew the vials were being reused, generating infections:

Teva was aware of the potential danger, having logged 148 previous hepatitis C infections blamed on reuse of single-use vials of propofol, [plaintiffs attorney Robert Eglet] said. "They knew it was a problem. They knew there was multidosing with these vials."