J&J’s ‘Texas two-step’ talc bank­rupt­cy case heads back to ap­peals court

In late Feb­ru­ary, John­son & John­son won a con­tro­ver­sial case sur­round­ing its bank­rupt­cy fil­ing de­signed to set­tle 38,000 law­suits ac­cus­ing its talc-based prod­ucts of caus­ing can­cer. How­ev­er, it ap­pears that bank­rupt­cy case is far from over as the US ap­peals court has now agreed to re­vis­it that rul­ing.

The dis­pute stems from J&J’s use of a “Texas Two-step”: ap­ply­ing a law that en­abled it to spin out its li­a­bil­i­ties re­lat­ed to the on­go­ing talc law­suits in­to a sep­a­rate com­pa­ny. That com­pa­ny, known as LTL Man­age­ment, then filed for bank­rupt­cy — a move that shield­ed LTL (and there­fore J&J) from fur­ther ju­di­cial ac­tion in the talc law­suits.

The claimants in the case said that J&J’s moves are a mis­use of the US bank­rupt­cy code, though J&J main­tained that pre­vi­ous com­pa­nies have done the same.

The law­suits al­lege that J&J’s wide­ly-used ba­by pow­der and oth­er talc-based prod­ucts were con­t­a­m­i­nat­ed with as­bestos and caused mesothe­lioma and ovar­i­an can­cer.

Judge Michael Ka­plan of New Jer­sey, where J&J is head­quar­tered, sided with J&J in the bank­rupt­cy case, who said at the time J&J’s fil­ing “with the ex­pressed aim of ad­dress­ing the present and fu­ture li­a­bil­i­ties as­so­ci­at­ed with on­go­ing glob­al per­son­al in­jury claims to pre­serve cor­po­rate val­ue is un­ques­tion­ably a prop­er pur­pose un­der the Bank­rupt­cy Code.”

How­ev­er, Ka­plan lat­er grant­ed ex­pe­dit­ed ap­peal to the case, al­low­ing it to skip dis­trict courts and head di­rect­ly to the 3rd US Cir­cuit Court of Ap­peals, which has now agreed to re­view the case.

J&J stopped sell­ing its ba­by pow­der in 2020, though the megaphar­ma said it was due to de­clin­ing sales. The com­pa­ny has main­tained that its icon­ic talc prod­ucts do not con­tain as­bestos.

The phar­ma is al­so fac­ing a sep­a­rate law­suit in New Jer­sey from the fam­i­ly of a for­mer work­er that al­leges the com­pa­ny hid ev­i­dence of the pres­ence of as­bestos at a for­mer J&J sub­sidiary. In that case, Ka­plan ruled that J&J’s bank­rupt­cy fil­ing did not ap­ply.

The mesothe­lioma claimants com­mit­tee de­clined to com­ment on the ap­peals up­date. John­son & John­son did not re­spond to a re­quest for com­ment be­fore pub­li­ca­tion.

Has the mo­ment fi­nal­ly ar­rived for val­ue-based health­care?

RBC Capital Markets’ Healthcare Technology Analyst, Sean Dodge, spotlights a new breed of tech-enabled providers who are rapidly transforming the way clinicians deliver healthcare, and explores the key question: can this accelerating revolution overturn the US healthcare system?

Key points

Tech-enabled healthcare providers are poised to help the US transition to value, not volume, as the basis for reward.
The move to value-based care has policy momentum, but is risky and complex for clinicians.
Outsourced tech specialists are emerging to provide the required expertise, while healthcare and tech are also converging through M&A.
Value-based care remains in its early stages, but the transition is accelerating and represents a huge addressable market.

Lat­est on ul­tra-rare dis­ease ap­proval; Pos­i­tive, if mixed, signs for Bio­gen's ALS drug; Clay Sie­gall finds a new job; and more

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FDA spells out how can­cer drug de­vel­op­ers can use one tri­al for both ac­cel­er­at­ed and full ap­provals

The FDA’s Oncology Center of Excellence has been a bright spot within the agency in terms of speeding new treatments to patients. That flexibility was on full display this morning as FDA released new draft guidance spelling out exactly how oncology drug developers can fulfill both the accelerated and full approval’s requirements with just a single randomized controlled trial.

While Congress recently passed legislation that will allow FDA to require confirmatory trials to be recruiting and ongoing prior to granting an accelerated approval, the agency is now making clear that the initial trial used to win the AA, if designed appropriately, can also serve as the trial for converting the accelerated approval into a full approval.

FDA ad­vi­sors unan­i­mous­ly rec­om­mend ac­cel­er­at­ed ap­proval for Bio­gen's ALS drug

A panel of outside advisors to the FDA unanimously recommended that the agency grant accelerated approval to Biogen’s ALS drug tofersen despite the drug failing the primary goal of its Phase III study, an endorsement that could pave a path forward for the treatment.

By a 9-0 vote, members of the Peripheral and Central Nervous System Drugs Advisory Committee said there was sufficient evidence that tofersen’s effect on a certain protein associated with ALS is reasonably likely to predict a benefit for patients. But panelists stopped short of advocating for a full approval, voting 3-5 against (with one abstention) and largely citing the failed pivotal study.

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No­vo Nordisk oral semaglu­tide tri­al shows re­duc­tion in blood sug­ar, plus weight loss

Novo Nordisk is testing higher levels of its oral version of its GLP-1, semaglutide, and its type 2 diabetes trial results released today show reductions in blood sugar as well as weight loss.

In the Phase IIIb trial, Novo compared its oral semaglutide in 25 mg and 50 mg doses with the 14 mg version that’s currently the maximum approved dose. The trial looked at how the doses compared when added to a stable dose of one to three oral antidiabetic medicines in people with type 2 diabetes who were in need of an intensified treatment.

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Ly­me vac­cine test com­ple­tion is pushed back by a year as Pfiz­er, Val­ne­va say they'll ad­just tri­al

Valneva and Pfizer have adjusted the end date for the Phase III study of their investigational Lyme disease vaccine, pushing it back by a year after issues at a contract researcher led to thousands of US patients being dropped from the test.

In a March 20 update to clinicaltrials.gov, Valneva and Pfizer moved the primary completion date on the trial, called VALOR, from the end of 2024 to the end of 2025.

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Judge al­lows ex­pert tes­ti­mo­ny in GSK tri­al al­leg­ing Zan­tac link to can­cer

A California judge will allow a plaintiff in a state court case to introduce expert testimony connecting a potential carcinogen in former blockbuster medicine Zantac to cancer.

The order was handed down on Thursday from state judge Evelio Grillo, who is now allowing both parties to introduce expert testimony in an upcoming trial after what’s known as a Sargon hearing, where a judge determines the admissibility of expert witnesses and expert opinions.

Sen. Maria Cantwell (D-WA) (Drew Angerer/Pool via AP)

Sen­ate com­mit­tee ad­vances PBM bill as bi­par­ti­san re­forms gain trac­tion

Pharmacy benefit managers are beginning to see enemies on both sides of the aisle: On Wednesday, a US Senate committee advanced to the full chamber a bill to increase PBM transparency and crack down on what lawmakers and critics say are deceptive practices.

The Senate Committee on Commerce, Science and Transportation advanced the bill by a bipartisan 18-9 vote, after hearing testimony last February documenting how PBMs control several key areas of the drug distribution and payment system. The Pharmacy Benefit Manager Transparency Act, introduced by committee chair Maria Cantwell (D-WA) and Budget Committee ranking member Chuck Grassley (R-IA), would make it unlawful for PBMs to engage in:

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Clay Siegall, Morphimmune CEO

Up­dat­ed: Ex-Seagen chief Clay Sie­gall emerges as CEO of pri­vate biotech

Clay Siegall will be back in the CEO seat, taking the helm of a private startup working on targeted cancer therapies.

It’s been almost a year since Siegall resigned from Seagen, the biotech he co-founded and led for more than 20 years, in the wake of domestic violence allegations by his then-wife. His eventual successor, David Epstein, sold the company to Pfizer in a $43 billion deal unveiled last week.

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