Congress: Merck, Schering-Plough, delayed releasing bad results

March 31, 2008 7:35:34 PM PDT
A congressional committee, investigating whether the makers of cholesterol drug Vytorin withheld data that would hurt sales, released new evidence supporting such suspicions Monday. The Senate Finance Committee said even the researcher who led a crucial study of the drug accused Vytorin makers Merck & Co. and partner Schering-Plough Corp. of withholding negative results to boost sales.

A letter from the committee's ranking Republican, Sen. Chuck Grassley of Iowa, states that delaying the results affected medical decisions and put financial burdens on patients and the federal government, which has paid hundreds of millions of dollars for Vytorin since the study ended nearly 2 years ago.

Spokespeople for both drug makers said the letter is just one in a series from Grassley's committee and that their companies are cooperating fully.

The letter comes as shares of Merck and Schering-Plough tanked after top cardiologists urged doctors to go back to older, well-proven treatments for high cholesterol. The doctors spoke at a major heart specialists' conference after hearing full results Sunday of the Vytorin study, called ENHANCE, that showed it worked no better than an inexpensive generic.

"This is the last thing that Schering and Merck need, especially in a political year," said analyst Steve Brozak of WBB Securities Ltd. "This can become brutal."

For months, the Senate Finance Committee and the House Energy and Commerce Committee have been investigating how Merck and Schering-Plough handled data from a study comparing Vytorin with Merck's older cholesterol drug, Zocor. Vytorin, which costs $100 a month or more, combines Zocor - available as a generic for about one-third as much - and Schering-Plough's cholesterol drug Zetia.

Between the two committees, congressional staffers have been probing everything from who knew what when to whether executives of Merck and Schering-Plough sold large amounts of stock based on insider knowledge.

The two New Jersey companies released partial results of the study on Jan. 14 - under pressure from the congressional investigators.

On Sunday, the full results showed Vytorin was no better than Zocor alone at limiting plaque buildup in arteries, even though it sharply lowered bad cholesterol and blood fats called triglycerides.

"I am troubled to learn that after careful analysis of the ENHANCE results, medical experts are now calling Vytorin the cholesterol fighter of last resort," Grassley wrote Monday in a letter to the chief executives of Merck and Schering-Plough.

The letter cites testy e-mails to Schering-Plough executives from ENHANCE's lead researcher, Dr. John Kastelein. In one last July, he states that if it is true the study results wouldn't be presented at an upcoming medical conference, "our collaboration is over... this starts smelling like extending the publication for no other (than) political reasons."

The next day, Grassley stated, Kastelein wrote, "you will be seen as a company that tries to hide something and I will be perceived as being in bed with you!"

Merck spokeswoman Mary Elizabeth Blake said those excerpts "do not reflect the legitimate scientific discussion that was going on between Dr. Kastelein and the company."

She said the companies' executives did not know the ENHANCE study results until the beginning of this year, shortly before they released the partial results in a press release, and that difficulties in interpreting the complex data caused the delay.

Schering-Plough spokeswoman Rosemarie Yancosek said her company did not deliberately delay the results to boost sales.

The House committee has cited evidence from an Internet site where pharmaceutical sales reps posted comments in March 2007 indicating they knew "the study is a bust."

The two drug makers once heavily advertised Vytorin and Zetia, which brought their joint venture $5.1 billion in 2007 sales. Since then, their stocks have dipped to 12-year lows, and they've been hit with numerous lawsuits.

Grassley wrote that the companies budgeted at least $3.5 million to entertain doctors to persuade them to prescribe Vytorin. He demanded more information about how much they spent marketing Vytorin after the study ended.

Grassley also wrote Monday to the head of the American College of Cardiology, stating he is concerned about "the appearance of influence" because Merck has funded the group's conference booths, expo fees and other items totaling more than $568,000 already this year. After the partial results were released Jan. 14, the specialists' group said patients should not panic and should not stop taking Vytorin based just on that study.

Analyst Brozak said normally the companies would be looking like takeover candidates, but "I do not know what company, at what price, would want to acquire these companies, given how little they have in their pipelines ... and given how much scrutiny they will receive."

On Monday, Merck's shares fell $6.56, or 14.7 percent, to $37.95 and Schering-Plough's dropped $5.06, or 26 percent, to $14.41. Standard & Poor's Ratings Services put long-term ratings for Schering-Plough on credit watch, with negative implications, but left Merck's ratings unchanged because it has a more diverse line of medicines.

Some analysts downgraded their ratings for Schering-Plough. However, Natixis Bleichroeder Inc.'s Jon LeCroy wrote: "we think investors are overreacting and note that Schering-Plough still offers tremendous value."

Merck, based in Whitehouse Station, N.J., is the world's No. 8 drug maker; much-smaller Schering-Plough is based in Kenilworth, N.J.

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