Conflict of Interest in the European Medicines Agency – Part II

Posted by jim on 26/06/12

As I said in my last post, decisions of medicines regulators can affect the share price of a pharmaceutical company.

A few recent examples – all from the past week:

The shares of Shires PLC sank 10% on Monday when the FDA approved a generic version of a competing drug.

The shares of Protalix BioTherapeutics Inc. dropped by 12% when the EMA recommended against a marketing authorisation for a drug being developed in cooperation with Pfizer (Pfizer shares remained the same.)

Shares in Celgene "tumbled" nearly 12% when the company withdrew an application to the European Medicines Agency “following a slew of questions” from the agency.

Bristol-Myers shares dropped 3.7%, while Pfizer was off 1.8% when the FDA blocked an application to market a new anti-clotting drug.

Share prices can also increase with a favourable opinion from a regulator.

Apart from the direct impact of regulatory decisions, many people in a regulatory agency, including non-executive support staff, may have access to “insider” or market-sensitive information. In other words they may know in advance of a decision that is likely to affect share prices.

So, back to my earlier point – rules or not, I believe it cannot be right for medicines regulators to hold shares in a pharmaceutical company.

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