FDA tags Mylan West Virginia plant with warning letter

The other shoe has finally dropped on Mylan’s troubled manufacturing plant in West Virginia. The drugmaker acknowledged Tuesday that the FDA this month issued a warning letter for the problems at the massive site.

The acknowledgement came after FDA Commissioner Scott Gottlieb publicized the warning letter in a Tweet. The agency posted the letter Wednesday. 

Mylan in a statement said the Nov. 9 warning letter was tied to the problems the FDA had already laid out in a 32-page Form 483 in April. It pointed out that it is in the midst of dealing with those issues with a "comprehensive restructuring and remediation plan" at the Morgantown facility."

"These activities are already reflected in our 2018 outlook, and the issues raised in the Warning Letter are being addressed within the context of this plan," the statement said. "We have been in regular communication with FDA and will continue to work to ensure that the Agency is satisfied with the steps we have taken to resolve all the points raised in the Warning Letter."

RBC Capital Markets analyst Randall Stanicky agreed that the additional FDA action should not make much difference to Mylan's investors since the problems have already been baked into investors' expectations. The stock didn't move much when the market opened Wednesday. 

The warning letter generally follows the agency's 13-observation Form 483 which chastised senior management for poor oversight by the plant’s quality control department, major lapses in equipment cleaning, ineffective laboratory controls, problems with sampling and more.

But it goes further by pointing out that many of the issues are repeats of problems mentioned in a 2015 warning letter for three other plants. "These repeated failures at multiple sites demonstrate that Mylan’s management oversight and control over the manufacture of drugs is inadequate."

The company in the second quarter began a remediation effort that included simplifying the plant by eliminating production of some low-margin drugs, moving production of other drugs to alternate facilities and laying off 500 workers. The fixes, which Mylan has acknowledge will stretch at least into next year, have not come cheap. Through September, Mylan had spent $184.2 million on the fix-up and restructuring charges, with nearly $100 million of that coming in the third quarter.

Mylan President Rajiv Malik in the third-quarter analyst call indicated the remediation and downsizing will not be too hard on the company’s sales going forward. He pointed out that only one of Mylan’s top 10 drugs and only eight of its top 50 gross margin-generating products for North America are manufactured in Morgantown.

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