Tuesday, November 18, 2008

Fitch Drops Outlook on Merck's Debt -- Points to Legal Risks, With Schering. . . .

Fitch Ratings Service has put Merck's credit-worthiness on its "Outloook Negative" list -- often a precursor to a credit ratings downgrade. In doing so, it pointed to the Cholesterol Franchise Joint Venture with Schering-Plough, as one major reason for the change. Let's read along, and listen in, from the overnight AP story:

. . . .Merck will have to continue getting good results from its joint ventures and its cost cuts in order to maintain a solid credit profile.

Its most significant joint venture -- a cholesterol drug partnership with Schering-Plough Corp. -- is experiencing weaker sales because test results showed the drug Vytorin was not more effective at reducing cholesterol the buildup of fatty plaque in the arteries than generic Zocor alone.

[Editor's Note: AP made the above-corrected copy for this story available today, November 19, 2008 at about 4:42 PM EST.]

Merck is facing legal risks because of the way it marketed the cholesterol drugs, Fitch said. Those risks include allegations it kept the trial data secret to boost sales. . . .

I think this is the first rating agency to actually single-out the specific legal risks posed by the [alleged] delay in disclosing the full ENHANCE results as a solid-reason for negative ratings action, at either Merck or Schering. I think Fitch finally read Senator Grassley's February 2008 letters. Wow.

So -- when will Fitch next review Schering-Plough's various credit-market exposures?

UPDATED @ NOON: I think these are the most-recent (09.30.08) Schering-endorsed disclosures of the various rating agency views, by agency (short-term debt rating/long-term debt rating -- outlook):

Moody’s Investors Service: Baa1/P-2 -- Negative Outlook

Standard and Poor’s: A1/A-2 -- Stable

Fitch Ratings: BBB+/F-2 -- Stable

In each case, these remain (albeit low-end) investment grade ratings -- though in this financial market, that may mean very little -- as borrowing (at decent spreads) is going to be tough, no matter what. During the third quarter of 2008, Fitch took Schering off of "Negative Outlook" -- moving it to "Stable". Well, we'll see about that.


Anonymous said...

you're an idiot

Condor said...

Fair enough, anonymous -- but how so? What is it about what I've written, that renders me an "idiot" -- in your view?

Do tell.


Condor said...

And be sure to use shortish-sentences, and small words, when you do. . . .

It will help me understand you.


Anonymous said...

Published on www.brainblogger.com:

A Failed Attempt to Improve Misperceived Greatness: The ENHANCE Trial

While it seems that pharmaceutical company sponsors of clinical trials usually end up with results that clearly favor their meds studied in their trial, there are rare exceptions, and Merck and Schering proved that with their disappointing ENHANCE Trial, which many have heard about through the media not long ago. The drugs studied were Vytorin, which was compared with Zocor.

Vytorin is a combination med for high cholesterol and contains Merck’s Zocor, which is now generic, and Schering’s Zetia, which works differently than Zocor, which is one of many statin drugs. Both Vytorin and Zetia are co-promoted by Merck and Schering. So, several years ago, an outcomes study was initiated to prove superiority of Vytorin over Zocor. The trial was named the ENHANCE trial, and possibly this trial was initiated because Zocor is generic now, and not a priority from a profit paradigm of its creator.

After several years passed, a disappointment arrived for the sponsors of this trial, which was first brought to the attention of Schering in March of 2007, yet the results existed since the spring of 2006, others have stated.

The disappointment is that Vytorin lacked anticipated benefit or superiority over Zocor. Since about 1 million scripts were written for both Vytorin and Zetia every week in 2007, combined with what I believe was about 5 billion in revenue for these two drugs that year, this was a problem for the drug makers, meaning a fear of shareholder reaction. Perhaps for Schering in particular, it was more of a calamity, since over half of their profits and earnings were from these two drugs with Schering, it has been reported.

Being the responsible corporations both companies are, of course, alterations occurred after such events were discovered that fractured numerous rules and regulations with clinical trials, possibly in illegal and unethical tactics.

The trial sponsors delayed the release of the trial results for secrecy reasons, it has been speculated. Results from the trial existed, yet were not disclosed at the time of their discovery. After several months of possessing these trial results that were only known to the manufacturers, they created or implemented some atrocious tactics to improve the trial’s unimpressive results following the original results of this ENHANCE study. At the end of 2007, the companies changed the primary endpoint of the trial, which is what the results were measured upon during the entire course of the trial. Sort of like sorting cards to make a good hand not dealt to you. Anyway, since their deliberate concealment of these trial results was clearly wrong, to respond to those who asked where the results were actually as they had been anticipated for quite some time, and while such trial manipulation was occurring and results were being kept secret, Schering stated that continued data analysis from the trial results was the etiology for the delay.

With clinical trials,it is undersood that case report forms are used to record data from the trials, and are created in a manner where further analysis is not normally necessary, as such forms are quite clear and often not subject to interpretation as implied by the trial sponsors, one could conclude. So at the end of 2007, both Merck and Schering got the attention of relevant government officials who contacted both companies regarding this ENHANCE trial due to such suspicions on the facts known and presented, and an investigation began into the activities of both companies regarding this trial at that point.

This became a catalyst for the ENHANCE trial results to be finally released at the beginning of 2008, which caught the attention of major media organizations, as expected. In the spring of 2008, a very large cardiology meeting was held, where the audience was told, I understand, to stick with statins due to this trial’s lack of outcomes for Vytorin, when the ENHANCE trial was discussed at this meeting. Furthermore, it has been said that a cardiologist at this meeting also suggested that a moratorium should occur with the utilization of Vytorin by prescribers, since statins are much less expensive, and are highly regarded, as they have been available for a couple of decades, starting with Mevacor in the 1980s. Of course and as expected, Merck and Schering were not pleased, nor were they surprised at the review of Vytorin at this particular meeting. The following month after this cardiology meeting, Schering’s earnings dropped by 48 percent, as I recall. Also during much of this year, Schering in particular blamed the media for amplifying the situation regarding the ENHANCE trial.

Now, these cholesterol drugs promoted by Merck and Schering, Zetia and Vytorin, were aggressively marketed in a number of ways, including investing I believe about 200million dollars in 2007 for DTC ads for these products. To add to this, and soon after both meds were launched, reps from both companies made inferences to doctors about outcomes regarding plaque accumulation and how Vytorin was superior in that area, which, of course, this ENHANCE trial proved it is in fact not the case whatsoever. It did not matter, apparently, to both Merck and Schering that such claims were is entirely void of proof, which is not unique to any pharma rep, in my opinion. No remorse or regret from the makers of these drug makers, either, which did not shock many. Yet what is known now is that these companies, as stated by other researchers, performed junk science with their deliberate manipulation of this ENHANCE trial using such tactics. Also, last year, Zetia and Vytorin had about 20 percent of the cholesterol lowering market. It does not seem that there will be an increase of this percentage because of this scandal. Possibly if they presented the truth, the future of these meds might be better than what is anticipated presently.

Worst of all regarding this ENHANCE trial scandal is the harm caused to both doctors and patients. The ENHANCE trial concerned and confused both of these participants in the health care system. Furthermore, it’s likely they were devastated by being so clearly misled by the marketing of both Merck and Schering regarding the false benefits of Vytorin they were led to believe by the companies that promoted them- the health care providers in particular.

This whole situation is another example of the progressively frequent discovery of corruption of the scientific method by placing profits over the well-being of patients, which harms the well being of patients. In addition, most were shocked by Merck behaving in such a way in particular because of what use to be their excellent reputation as an ethical pharmaceutical company. And this alone shows the progression and infiltration of such damaging ethical atrophy that desperately needs to be stopped and corrected for the sake of others- for everyone.

Don’t just say something. Have something to say- to the right people, with conviction and with others who share your views.

“Try not to become a man of success, but rather try to become a man of value.” --- Albert Einstein

Dan Abshear

Author’s note: What you have read is based upon information and belief. Thank you