Drug Makers’ Stocks Fall on News of FDA Investigations

The Food and Drug Administration delivered major blows to two health-care companies Wednesday, sending the shares of Schering-Plough Corp. and Abbott Laboratories Inc. sharply lower.

New Jersey-based drug maker Schering-Plough said it was informed that the U.S. government has launched a criminal probe of one or more of the firm’s products.

Separately, suburban Chicago-based Abbott Labs said the FDA found one of Abbott’s plants failed to comply with quality standards.

Schering-Plough, whose plant problems in Puerto Rico and New Jersey have weighed heavily on its revenue and earnings, said in a regulatory filing that the FDA’s office of criminal investigation in Puerto Rico was leading the probe.

“This investigation is at a very preliminary stage, and that is all we can say at this point,” said spokesman William O’Donnell.

Schering-Plough makes products including allergy medicine Clarinex and hepatitis C treatment ribavirin at plants in Puerto Rico.

The FDA regularly oversees drug firms’ testing, labeling and manufacturing efforts and works with them to fix deficiencies. Analysts said the criminal nature of the probe indicates that the FDA suspects Schering-Plough deliberately strayed from FDA policy.

Schering-Plough’s shares fell 12.3%, or $3.49, to $25, the biggest percentage loser on the New York Stock Exchange.

FDA spokesman Brad Stone, when asked about the Schering-Plough investigation, said it is not the agency’s policy to comment on such matters. Schering-Plough disclosed in February 2001 that the FDA had pinpointed quality control problems at its plants in Puerto Rico and New Jersey.

For Abbott, which makes prostate treatment Flomax, HIV and AIDS drugs Kaletra and Norvir, and various diagnostic tests and nutritional products, the FDA decision is the latest setback for the company in a nearly decade-long dispute with the government over quality standards.

The plant in question is Abbott’s Lake County, Ill., diagnostic manufacturing operations, where the company makes blood tests used by laboratories and hospitals.

Shares of Abbott dropped $4.84, or 9.4%, to $46.90 on the NYSE.