Harmony Biosciences is a cesspool of a company where prior executives went to prison for unrelated scams. In fact, Martin Shkreli even once said that he got the idea for his own prescription drug scam from them. But Mr. Shkreli was mostly ripping off insurance companies, Harmony Biosciences is selling dangerous and expensive drugs to people that don’t need them.
Their scam revolves around Wakix, a drug intended to treat narcolepsy, the rare condition where people randomly fall asleep for arbitrary lengths of time. The main drug in the Wakix pill is pitolisant, a “histamine receptor antagonist.” Drugs in this category mostly don’t get along well with the heart, and have historically not been super effective. The FDA rarely approves these drugs, and many of the ones they did were later recalled.
Harmony’s drug pitolisant is no different and when it was first synthesized in France 25 years ago it failed their inventor’s own Phase 1 testing. However, the inventor was a guy named Schwartz and his ex-employees say he was a real jerk, routinely getting in screaming matches with his employees. Harmony Biosciences licensed the drug from Schwartz, then proceeded to lie to the FDA by making up a series of successful tests and failing to notify the FDA that 13 of the test patients that were taking the drug, not the placebo, had died in ways that may or may not have been connected to the drug.
Men who worked for Harmony’s sales team said they were more than a little aggressive, and they must of contacted literally every person in the US with narcolepsy. Doctors getting pitched the drug caught on that some of their sales pitch was exaggerated, because Harmony advertised that pitolisant was “not a controlled substance” and easier to proscribe. That was a moot point since doctors are licensed to prescribe controlled substances, and other drugs in Wakix’s cocktail were controlled.
What the doctors didn’t know was their promotional material lied. Harmony said Wakix “increased histamine levels in the human brain” but that point can neither be proven nor disproven and since this is medicine, that’s false advertising.
These doctors did have their patients try it, but most of them dropped the drug soon after. One doctor said he didn’t see any noticeable benefit, and another said many of his patients reported heart trouble symptoms and one was hospitalized. Scorpion Capital estimates 30-50% of patients who take Wakix are off Wakix within a year, with many doctors dropping the drug completely.
Other ex-employees from Harmony said they were pushing an off-label scheme. That is, telling doctors they can prescribe it for things the drug was not specifically authorized by the FDA to treat. That ex-employee estimated about 40% of total sales had nothing to do with narcolepsy.
Guilt in this case may be obscured by Harmony’s high turnover. Their first CEO was jailed for taking a bribe. Their second CEO started this scheme but cashed out over a year ago. Scorpion Capital asked Harmony’s CEO about his last job as CFO of Intercept which also collapsed on a toxic drug scheme. The CEO kicked them out of the building immediately. However, Scorpion Capital alleges that Harmony has been selling toxic drugs from day one, with the founder of the company admitting that his very first job out of college was selling a drug to doctors that was later recalled by the FDA due to previously unknown side effects.
Harmony has also been flagged in previous audits with no specifics given, but Scorpion Capital thinks they’ve been lying about their sales numbers to investors. Also, Harmony has no intellectual property of their own, they simply sell drugs on license, which is a house of cards even if they weren’t frauds.
Full report here: scorpionreports.s3.us-east-2.amazonaws.com/HRMY1.pdf
h/t Aryeh987