Genzyme is to give the US government $175 million from the sale of products that were made at its troubled manufacturing facility in Boston.

The payment, which is known as a disgorgement whereby a company must give up profits “obtained by improper or illegal acts”, is part of a consent decree agreed with the US Food and Drug Administration. The settlement also means that Genzyme has agreed to adhere to “a strict timetable” to bring the plant at Allston Landing in line with the regulatory requirements of the agency.

The facility was temporarily shut down after a bioreactor was contaminated with a virus, particularly affecting production of Cerezyme (imiglucerase) for Gaucher disease, Fabrazyme (agalsidase beta) for Fabry disease. Then, in November, the FDA warned of the potential for foreign particle contamination in all lots of the two aforementioned therapies plus Myozyme (alglucosidase alpha) for Pompe disease, Aldurazyme (laronidase) for mucopolysaccharidosis type I and Thyrogen (thyrotropin alpha) for thyroid cancer.

FDA principal deputy commissioner Joshua Sharfstein said “it is critical for the safety of the drug supply that companies comply with basic manufacturing standards. [The] FDA takes these obligations very seriously and expects manufacturers to do the same.”

The decree requires Genzyme to move fill/finish operations out of the plant for Cerezyme, Fabrazyme and Thyrogen, sold within the USA by November 28 this year and the deadline is August 31, 2011 for products sold abroad. Allston Landing is up and running again but Genzyme is still only able to meet 50% of demand for Cerezyme, and 30% for Fabrazyme.

Should Genzyme not be able to meet these deadlines, the FDA can require the company to disgorge 18.5% of revenue for these products. The firm added that it expects the “remediation plan” to take two to three years to complete and if they are not achieved by a set time, the FDA can force a payment of $15,000 per day, per affected drug, “until these compliance goals are met”. Once the plan is complete, the agency will require five years of oversight and annual reports submitted by the Quantic Group, a consultant hired by Genzyme to oversee its compliance programme.

Chief executive Henri Termeer said “we appreciate the guidance the FDA provided over the past year as we work to restore the agency’s confidence in our ability to operate the Allston plant at the highest standards, and return to reliable product supply for patients”. Genzyme concluded by saying it is “assessing the impact of several factors” before giving full financial guidance for 2010, including the company’s decision to pursue strategic alternatives for three of its businesses, cost-cutting, a $2 billion share buyback, the impact of foreign exchange rates and the supply of Cerezyme and Fabrazyme.

Analysts remain concerned and Geoffrey Meacham at JP Morgan issued a research note, saying the November 28 limit “could prove difficult given the company's poor track record of meeting manufacturing timelines”. He added that “we suspect the FDA will be even more vigilant than normal before approving other facilities, and these timelines leave little room for error”.