Healthy Skepticism Library item: 12716

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Publication type: news

Second Guessing Continues For Merck, Schering
CNN Money.com 2008 Feb 4
http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-22724219.htm

Full text:

Be careful what you wish for. Perhaps Merck and Schering-Plough will take that aphorism under advisement in the wake of the Vytorin controversy.

The partners in the Vytorin venture had hoped to prove they could make a better statin, one that would both lower cholesterol and clean out arterial plaque. They went to market in 2004 with a drug that combined Schering’s SGP Zetia with Zocor, a Merck MRK drug whose patent expired in 2006.

Belatedly, critics say, the companies on Jan. 14 released the results of a two-year clinical trial that had ended in 2006. The trial, called Enhance, failed to meet the companies’ own objectives.

As has been widely reported, the trial found that while Vytorin did push down cholesterol, it did so with no health benefit to patients. Worse, it created a potentially hazardous side effect. Instead of clearing plaque from artery walls, Vytorin appears to have led to, or at least allowed, a thickening of that plaque.

Shares of both big drug makers plunged on the release of the data. Schering opened at 27.73 on Jan. 14 but now trades near 19. Merck’s stock has declined more than 25%, to around 45, since the news hit.

‘High Degree Of Confusion’

Meanwhile, doctors already are cutting back on prescribing Vytorin, analyst Seamus Fernandez of Leerink Swann says.

His firm surveyed more than 100 physicians after the Vytorin news broke. Doctors traditionally have prescribed Zetia and Vytorin as first-line treatments in 29% of high-cholesterol patients. Leerink Swann found that doctors likely will switch 22% of their high-cholesterol patients from Zetia and Vytorin over the next three months.

That points to at least a 15% slump of prescriptions for Zetia and Vytorin in 2008. Generic Zocor (simvastatin), Pfizer’s PFE Lipitor and AstraZeneca’s AZN Crestor stand to benefit, Fernandez says.

Vytorin and Zetia could take a further hit if insurance companies decide to change their formularies, making them more expensive to patients.

“We were surprised by the magnitude of the doctors’ reaction,” Fernandez said. “The survey reflects a high degree of confusion among physicians.”

Schering depends on Zetia and Vytorin for $4.2 billion in annual sales. That’s a big chunk of the $14.4 billion in 2007 revenue Fernandez projects for Schering.

Merck gets about $2.6 billion of its $24 billion in annual sales from the Vytorin joint venture.

Putting On A Brave Face

The public relations consequences of the Vytorin data remain to be seen. Scientists protested the companies’ belated release of the Enhance data. The House Subcommittee on Oversight and Investigations plans an investigation. Officials in New York and Connecticut plan inquiries under state law.

Merck is not quivering in its boots, judging by the statement of Chief Executive Richard Clark during the firm’s fourth-quarter conference call on Jan. 30.

“Merck stands behind the safety and efficacy profiles of both Zetia and Vytorin,” he said.

Still, the company continues to be dogged by concerns surrounding the Vytorin franchise. Even as Merck reiterated its 2008 profit forecast of $3.28 to $3.38 a share, some analysts questioned those figures, citing potentially large drops in sales of Zetia and Vytorin.

Clark’s outward confidence might not reflect what’s happening behind closed doors, says Kenneth I. Kaitin, director of the Tufts University Center for the Study of Drug Development.

“I would be shocked if the companies are not analyzing all this information and publicity and scientific data and saying, ‘We need to rethink our strategy,’” he said.

Merck admits to one strategic move. Since the Vytorin news broke, it has sent its sales reps to see more than 90% of primary care physicians and specialists.

All of these headaches could have been avoided easily enough, analyst Les Funtleyder of Miller Tabak says.

Schering and Merck didn’t have to do the Enhance study, he says. Zetia and Vytorin already had regulatory approval, and sales have been rising in the U.S. as well as abroad.

So why do the study?

“Merck and Schering were trying to add some marketing heft, not develop a new product,” Funtleyder said. “But why mess with success? There’s no upside.”

The study was intended to build business for Vytorin by proving it was better than a single statin, Kaitin says. “The results don’t allow Merck and Schering to say it also reduces heart disease.”

The ‘V’ Effect

Whether Vytorin turns into another Vioxx is hard to determine right now. Vioxx, a pain reliever made by Merck, was pulled from the market in 2004 due to harmful side effects.

“It’s not truly a safety issue (with Vytorin),” Fernandez said. “It’s more a performance and efficacy issue.”

But it could be a safety issue for patients who believed Vytorin would reduce heart disease, Kaitin says. “That could be putting a lot of people at risk.”

The last thing Merck needs is even the hint of another Vioxx. The company took a $1.63 billion fourth-quarter loss as a charge for settlement of Vioxx lawsuits. One of its main challenges now is correcting public perceptions.

“People know the difference between Vioxx and Vytorin, but Merck and any word with ‘V’ are bad medicine,” Funtleyder said.

While the long-term consequences for Merck shares are unclear, he says he personally “wouldn’t want to own a stock with headline risk in a choppy market.”

Paradigm Shift?

The Vytorin situation leaves Schering-Plough in a worse place, Funtleyder says. Without much of a pipeline, it raises questions about the future of Schering as an independent company.

The report on Vytorin’s shortcomings comes just as scientists are questioning the value of all statins. Several studies suggest that taking statins does not result in significantly fewer deaths than not taking statins.

For 20 years, it’s been an article of medical faith that statins lower bad cholesterol and thus prevent heart disease. Statins might do that, but they might not reduce deaths.

A Canadian study found statins can save the lives of people who have had heart attacks by cutting the odds of another fatal attack. But the study found no benefit for people without heart disease.

Statin sales amount to $34 billion worldwide and $22 billion in the U.S. A dozen statins, some generic, are on the market.

“There isn’t compelling evidence that statins hurt,” Kaitin said. “Anything that can take away enthusiasm for statins is a threat to the industry.”

As for Merck and Schering: Neither is out of the woods. Three more trials are underway to measure Vytorin’s effect on heart attack and stroke.

“For now it’s a ‘worse’ case scenario, but not yet a ‘worst’ case scenario,” Fernandez said.