Saturday, May 31, 2008

Dr. Peter Rost's recent thoughts -- led me to do some re-thinking of my own. . . .

Go read Dr. Rost's post -- I'll wait. Okay. You're back now? Good. In sum, Dr. Rost posits that Schering is doing an incredible job of fleecing American doctors about Vytorin and Zetia -- pointng to the would- be, so-called 75 percent market retention rate (about which the reps are no doubt boasting), through the first four months in 2008.

Now, if the truth be told, though, I'll take almost no credit for this very-friendly rejoiner, below -- for it was articulated to me by another financier, whose abilities and instincts I deeply respect -- as we both considered short position strategies, more generally -- he had a very good observation about the "only" 22.25 percent downturn in Vytorin/Zetia scripts. Essentially, he said:

One possibility (and, coincidentally, he is a man taking a generic statin for his high-cholesterol-levels) may be that it will take 120 or more days (measuring, now, from the ACC Panel's ENHANCE discussion -- March 30, 2008), for those old Vytorin/Zetia prescriptions to be "fully flushed out". He thinks most ordinary folks buy in four- (or more) month doses, to save money (maybe even from Canada, in bulk -- despite the questions surrounding that course), driven in part by the fact that Vytorin is just so darn expensive. This theory holds that lower to middle-market Americans (boomers, mostly) aren't likely to throw out expensive medications. No, they'll wait until close to the normal time to refill (late-July, or early-August 2008), to visit their doctors -- then their doctors will write a new Lipitor or Crestor or generic Zocor script.

Or so his theory goes -- and, he has a significant short position on SGP, to back this thinking up.

He feels -- like I do -- that by late Summer '08, we will begin to see the bulk of the middle-market switching. As Sen. McCain's case (albeit unintentionally) proved, it is likely that the richest 1/10 of one percent have already tossed their Vytorin (regardless of the cost per pill), and switched -- in his case, to generic Zocor. So, if Vytorin lost about 25 percent of the market when it was only the richest .001 of the nation switching, and ignoring day-to-day running costs of the meds they take -- what will happen to those whose insurance carriers will now bring the co-pay up to 40%, or 50% (or more) of the retail price of Vytorin/Zetia?

And what of those Americans without health insurance, at all? For those 49 million or so Americans, it would seem unlikely that they'd stay on Vytorin -- if they ever were on it -- either taking nothing, or buying generic statins instead. It is just. so. darn. expensive. Did I mention that? Oh yeah -- I guess I did.


A Quick One -- Alerted to this -- by a friend of the blog. . . .

. . . .And, just now, asked a question about it, by another reader on another board, I'll offer just a touch about the Forbes piece [UPDATED --Pharmagossip's "Quote of the Week" comes from Mike Krensavage, as well]:

Question: . . . .did you read the story about Mike Krensavage, the highly rated Raymond James pharma analyst? Krensavage is going to start his own hedge fund and he says SGP is a big time buy. . .

Answer: The Raymond James guy?!

Are you serious? Wasn't he the same guy1 who said that the SGP 6% Preferred Converts due 2010 were a strong buy back when they were worth $238, in early January 2008 -- then they dipped to $160s -- now back around $194. . . and he makes SGP common a "buy" at this level?

Ahhh. Yeh. Just because Forbes writes about someone, it doesn't make them right -- not on pharma, and not at this time, particularly.

I think the Forbes headline analogy is apt. Pharma will be "pushing tin" for quite a while -- it has become a "show me" (actual results needed) sector, no longer a "tell me" (you're a believable source) sector. Quoting, now:

". . . .His trick is to value drug firms based on how much cash they generate, as with carmakers and retailers. He advises buying when pharma is trading at low multiples of earnings, sales, cash flow (in the sense of earnings before interest, depreciation, taxes and amortization but before capital spending) or all three. That way, he figures, you get the pipeline for free. . . ."

Well, by those measures, SGP should be on his "Sell" list.

Didja' check what is projected for free cash flow at SGP for all of 2008? [Maybe I'll write on it, later today. Yeh. I think I will. Stay tuned.]

With the convert interest payments piling up, and rising other debt service costs from Organon, some unspecified cash-portion of PTP charges, and a myriad of other cash-drains, as well as the 22.25% drop in Vytorin/Zetia cash-flow. . . SGP is looking just a little cash-strapped, of late.

But that's what makes a market, no?


FOOTNOTE 1: Thus far, I have been unable to find, once again, the specific article quoting the specific Raymond James analyst who recommended the SGP 6% Converts as a "buy" -- repeatedly, in January and February 2008 -- but it was a Raymond James recommendation. There were several sources with that quote.

New Jersey Firm enters Appearance in USA v. Organon, et al.

The background on this matter is available here. Schering-Plough acquired these businesses from Organon on November 16, 2007. Here is the firm's appearance:

Thursday, May 29, 2008

Will the two new ERISA class actions -- from now on, against Schering-Plough, and Merck -- be "related"?

Today, the lawyers for the new ERISA plaintiffs -- in the putative class-action against Schering (in addition to many Schering officers, and directors, personally -- see pleading at right -- click it, to enlarge), filed papers to have that case, Oettinger v. Schering-Plough, et al., deemed "related to" -- or aligned with -- the new ERISA case against Merck -- the case called Cobb v. Merck, et al. I've written a fair amount on both of these cases -- follow those case name links to see all that background.

That would be decidely-unwelcome news for the lawyers defending Schering-Plough, and its officers and directors. These are each of the cases, respectively, that advance rather novel -- but in my estimation, rather persuasive -- theories of inherent conflicts of interest, as all-new ERISA violations. And they each seek damages from the officers and directors, personally.

Should those arguments win the day, even the officers' and directors' liability insurance carried by the companies would likely be unavailable to these individual defendants, as most such policies exclude acts of "gross negligence" from coverage. These cases allege claims that radiate well beyond the standard of gross negligence -- to "wilfull blindness." Wow. These emerging-twins bear watching, regardless of whether federal District Court Judge Cavanaugh ultimately deems them "related".

I strongly suspect the two will be deemed related, though -- for what it is worth.

Dear Mr. Hassan -- "Those lights, down-tunnel from you -- are, actually. . . the headlights of an ONCOMING train."

Clearly Mr. Hassan's 50/50 partner in the Cholesterol Joint
Venture knows what "an oncoming train" looks like -- and knows
how to collaborate, to avoid being "legislated upon",
relative to payment disclosures. See below -- a very fine
letter -- and, as ever, click it to enlarge, and read. [After-
all, even Rupert Murdoch (the Fox News owner & conservative
media mega-magnate) is being quoted today -- saying Sen. Obama
will take the White House in a "land-slide" this fall.
So, "Wake up, Mr. Hassan -- it is the train that moves,
not the station -- time to change your approach, here

But where is the Schering version?

You'll need to click the link, above,or the tiny-little
one at left -- that tiny one, yeah -- to see the "kiss-
off letter
" Schering-Plough earlier chose to
send out (from a lawyer, no less), bucking
the Medtronic, Merck, Astra-Zeneca, AvaMed and the PhRMA
(a pharma industry association) trend-line, here.

Is that wise? You decide.

Smart, very smart, that one -- Clark, is.

Wednesday, May 28, 2008

Why Schering-Plough Common Stock is Fairly Valued at About $16 to $17 per Share, as of Tomorrow. . . .

[UPDATED -- 05.29.08 AM: The Insider -- across the pond -- at Pharmagossip has featured my graphic (below), and linked us, for the story, on it! Cool! Very, very!

Earlier, we added new screen-capture graphics; additional links.]

The newest Monthly Vytorin/Zetia IMS scrips were just released (mostly sub-rosa) by Schering-Plough, on a back-water page of its website -- no front page reference, link or mention. And, still no related SEC filing yet [Form 8-K filed on 05.29.08 AM -- But still not even LINKED on the "Investor Relations" sub-page at Schering-Plough(see this morning's screen-capture, below, right!)]. Sir Ed (he, of Pharmalot) badgered 'em into disclosing it, tonight, I think -- Kudos! "Those sneaky lil' devils." Heh. Take a look (Source: IMS National Prescription Audit Plus (NPA+), as of May 14, 2008 -- (in Thousands) -- Click to enlarge):

So -- the overall Cholesterol Franchise has fallen off dramatically in April 2008 --from a January 31, 2008 scrips level of 3,205, to a April 30, 2008 level of 2,492, or a 22.25 percent decline in three months. Let us, conservatively, I think, assume that it gets no worse than this -- off about 22 percent for the full-year 2008.

Let us fairly surmise that even post-Organon, about 60 percent of all of Schering's profitability is delivered from this franchise's equity income line (note: not sales -- income, net income). That 22.25 percent decline then, becomes a 13.35 percent decline in Schering-Plough's profits, overall (or, 60 percent of 22.25 percent).

On January 31, 2008, Schering-Plough Common Stock closed at $19.46 per share. There were slight increases in IMS scrips data in March, over February, but now "the cat is fully out of the bag" -- as of April 30, 2008, we have seen one full month, post-ACC (the American College of Cardiologists' ENHANCE conference panel discussion was held on Sunday March 30, 2008).

A 13.35 percent decline from $19.46 yields. . . . Yep: $16.86 per share.

That is SGP's fair value, tonight, and pre-market-open tomorrow, if we assume the market has correctly assessed all the other business-lines of Schering-Plough. And if we assume no more materially bad Schering news, for the balance of 2008. Remember though, those other business lines are/were depending on Vytorin/Zetia cash flow to help fund growth in the other projects and initiatives. In some measure, the $1.5 billion PTP charge, over four years -- outlined in only the most vague of terms -- by Mr. Hassan, should address some (perhaps 60 percent) of this, during 2008. But that still leaves a Schering cash-flow shortfall for 2008. How big is that shortfall? No one outside of Building K-1 really knows. [And I doubt they'll tell us.]

Now, consider that tonight -- May 28, 2008 -- Schering closed at $20.09 per share -- by my lights, that is about $3.25 per share above its "fair value", tomorrow, given the above news. Schering is simply over-valued.

Thus, once all the dust settles (circa December 2008), I believe the December 2008 fair value, considering the hampered flexibility (due to decreased year-over-year cash-flow), will be closer to $16, than $17.

For my money, this stock is simply overpriced -- at anything over $17.

You read it here first.

A great clip -- from the Insider, at Pharmagossip. . . .

Insider has a very well-timed remembrance of Sidney Pollack (1934 - 2008), up on top of his, at the moment -- with it, he flatters me, entirely undeservedly -- with a link back here.

The truth be known, I much more closely resemble this one, of his, these days. Heh. Probably TMI, but thanks, just the same.

Erh. . . Cheerio[s], mate!

Tuesday, May 27, 2008

A Dialogue Driven by Sen. McCain's Rejection of Vytorin

[UPDATED -- 05.26.08 Noon: Mike Huckman, of CNBC, just linked my blog -- presumably for the goofy graphic, below, right. Very cool. Here is the actual post-page of mine, to which he linked.]

Over the long Holiday weekend, once Ed at Pharmalot noticed the above change-in-meds in a news report of the Senator's recently-released health records, we had some fun with graphics -- creating a "collectible" campaign button for the above presidential-hopeful [click small version, at right, to view full-sized image]. Then, rather unexpectedly, a more serious discussion evolved in our comment-box. We highlight it here -- and hope that it will continue.

Thanks thus go to the Anonymous Commenter, below. My thoughts are in dark-blue, the Anonymous Commenter's are in dark orange [all as in the original, save the clean-up of a few obvious typos on my part]:

Anonymous said...

Yes, humorous. What about the idea around "getting the patient to goal?" If the Senator's LDL has elevated up to 123 from the 80's, the Vytorin was working and now the Zocor can not do the job. We are without the Senator's complete medical status and cannot determine what other major risk factors might be present. (McCain's age counts as one risk factor. What is his HDL? Does he have a family Hx of heart disease?) Using the word "acceptable" is only relative; some physicians are more aggressive and some are not. Many physicians treat all their patients to an LDL goal of less than 100.

I would prefer to rely on the more than 25 years of evidence that there is a clear relationship between lower LDL and fewer cardiac events - 4S, HPS, WOSCPS, ASCAP, POSCH, etc. Until the NCEP changes elevated LDL cholesterol as the primary target of therapy, chances are better that a smaller LDL number is a better number. We are starting to see patients who insisted on being removed from Zetia who are no longer at goal. Many are rethinking that original decision because their Vytorin was working and there are no safety issues in the Enhance trial. In spite of Enhance being handled poorly, it is only a piece of the pie - a bit of information in the long continuum of understanding how a drug behaves.

The drug's usefulness and the behavior of the executives continue to diverge. The issues of behavior continue to be troublesome but the issues around Vytorin are less so.

How about this question: If lower LDL is better for sick patients, why wouldn't lower LDL be better for patients without heart disease, especially those that may be serving as president?

May 24, 2008 2:29 PM

condor said...

It is well to note that we share a sense of humor -- that ought to serve us well, in our discussions.
Now, I think the crux of our disagreement will boil down to "Why that particular goal level (LDL number)?"

I think it fair to say that for his advanced age, Senator McCain enjoys very robust cholesterol/heart health. Did you see his scores on the treadmill/stress test? Pretty impressive -- for a guy his age.

That is the (very) good news.

Now, some clean-up, here: your "25 years of evidence" do not speak at all to gut-mechanism LDL lowering (the Vytorin/Zetia method). All that data is from statins, and earlier drugs (i.e. liver mechanisms).

"Gut mechanisms" for LDL lowering may -- emphasis may -- simply change/lower the number, without any real benefit to mortality risks.

Because Sen. McCain is so relatively-healthy, this may be a smaller concern for his case, but aren't you at all concerned that using Vytorin in all cases, aggressively, may lull patients into a false sense of security i.e., "my NUMBER is way low; that's GREAT!" -- so much so, that they stop eating a healthy diet, or stop exercising, and then suffer a cardiac event?

What if it just doesn't work?

I think I would be concerned about that. What if Vytorin is like being "book smart" (a kid who tests really well on the ACT), but lacking "street-sense" -- getting rolled all the time, for lack of common sense (out well after midnight, alone, in a tough neighborhood -- one he doesn't know, at all -- in a dark alley, on foot)?

That is why we must wait until 2012, at the earliest, to know whether Vytorin is worth all the extra money, and all that (circa 2006) fanfare.

Thanks for the thoughtful, and thought-provoking, commentary.

Do stop back.

May 24, 2008 5:52 PM

Anonymous said...

Ah, yes, it certainly will. Humor me now.

LDL goals are carefully designed by a large group of experts. (Refer to the NCEP guidelines.) These goals are not advised without a great deal of evidence as well as taking risk of side effects into consideration. I am not alone in believing an "acceptable" LDL is not the best approach. I quote the press briefing for Senator McCain, "But several outside cardiologists not involved in Sen. McCain's care said cholesterol tests and blood-pressure measurements also included in the records suggest his risk of having a heart attack in the next 10 years is at least 17% -- and perhaps a little above 20% -- and they recommend more-aggressive treatment than the senator is getting."

There is substantial evidence that the more aggressive approach in lowering LDL produces a greater reduction in LDL and fewer cardiac events.

Back to basics: LDL can be lowered by a variety of strategies. The comment that "All that data is from statins, and earlier drugs." is simply not correct.

1. Diet and exercise (life style changes) are frequently recommended for patients and can lower LDL.

2. Statins, Fibrates, Bile Acid Sequestrants, Nicotinic Acid and Cholesterol Absorption Inhibiors (Zetia and the gut mechanism) ALL lower LDL.

3. Ileal bypass lowers LDL as well. The POSCH study, not a statin study at all, demonstrates this effect. See the review:

In 838 patients followed for 9.7 years, the marked lipid modification achieved by partial ileal bypass in the POSCH trial led to demonstrable increases in the disease-free intervals for overall mortality, coronary heart disease mortality, coronary heart disease mortality and confirmed nonfatal myocardial infarction, and coronary intervention procedures. For the clinician and the patient, estimation of disease-free intervals may be more relevant than assessment of differences in incidence rates and risk ratios.

The POSCH findings in women support the aggressive treatment of hyperlipidemia in the general management of atherosclerosis in women.

Effective lowering of total cholesterol and low-density lipoprotein cholesterol in a postmyocardial infarction population significantly reduces atherosclerotic coronary heart disease (ACHD) mortality, ACHD mortality combined with a new confirmed nonfatal myocardial infarction, and the number of coronary artery bypass grafting and angioplasty procedures performed.

Significant differences in morbidity and mortality were preserved over a 5-year period following the trial.

Let's return to the initial 25 years of evidence referenced, which DO speak strongly of the relationship of lower LDL (from MANY sources AND not limited to statin use only) to fewer events.

There is a Log-linear relationship between LDL-C levels and relative risk for CHD. This relationship is consistent with a large body of epidemiological data and with data available from clinical trials of LDL-lowering therapy. These data suggest that for every 30-mg/dl change in LDL-C, the relative risk for CHD is changed in proportion by about 30%. The relative risk is set at 1.0 for LDL-C =40 mg/dl.
Grundy SM, Cleeman JI, Bairey Merz CN, et al. Implications of recent clinical trials for the National Cholesterol Education Program Adult Treatment Panel III Guidelines. J Am Coll Cardiol 2004;44:720-732.

As to a false sense of security, it is commonly agreed that life style changes are easier said than done. Even if they are executed perfectly, this strategy only lowers LDL by 10-20%. Patients commonly need 40% lowering or more.

Good street sense can be demonstrated by following the mountain of evidence pointing to the importance of lower LDL. It is reasonable to conclude that any strategy that lowers LDL will most likely result in fewer events. A variety of strategies can be implemented to achieve reduction in LDL including (but not limited to) "the gut mechanism". It is simply naive to propose that Vytorin/Zetia "don't work."

Using appropriate Tx and combinations of strategies, including Vytorin and Zetia when indicated takes advantage of this evidence. Waiting until 2012 for additional confirmation will prove deleterious for some. There is enough evidence to adopt an aggressive strategy at the present. Lower LDL prolongs life, therefore I stand by the argument that Senator McCain, and you and I should not settle for an LDL above 100.

Thank you for your extensive research regarding these troubles of SP. The drugs created by scientists are not the source of SP difficulties. Instead continue to follow the money.

May 25, 2008 12:28 AM

condor said...

Thank you for this thoughtful discussion. Your points deserve a longer response -- one which I will return to offer, after the Holiday weekend, here in America (circa Tuesday). I'll likely post your very fine comments, and my responses as a new, headlined blog-post, then, okay?

For now -- let me be more precise -- as your insightful replies have revealed my muddy word-choices here.

Is there any study that shows an outcome benefit -- in any population -- for lowering LDL via a "gut mechanism"?

You and I both know the answer to that. The answer is "no".

And you are right -- I am not upset with most of the Schering scientists -- it is their keepers, in K-1, I am disappointed with.

I did, in fact, "follow the money", and I found that Vytorin costs between 3 and 10 times what generic statin-only-regimens cost.

That is plainly the fault -- the shared fault -- of Schering's executive team, and the FDA (for approving a drug that shows no incremental "outcomes" benefit).

What I don't get it how the Schering spin-meisters can convince themselves that they are serving the common good by overcharging for an in-the-best case (at present) "me, too!" product.

There is simply no evidence that the "gut mechanism" -- Vytorin/Zetia's -- works to improve actual outcomes.

Follow the money, indeed -- it leads to a marketing flim-flam.

May 25, 2008 7:54 AM

Anonymous said...

I propose the reason for your continued insistence that Vytorin/Zetia are a medical rip-off: We are offering these divergent views due to differing definitions of the word "outcomes". We are approaching the word as if it has one meaning and we each are using a meaning that is learned from our own experiences. This careless handling of the word is akin to running fast and loose without agreement on basic vocabulary and definition.

Based on that wide chasm, you believe there is a "flim-flam" and I argue that bad behavior from executives aside, there is significant evidence that using Vytorin/Zetia does have merit.

Recent developments in medical program evaluations address the two primary concerns of cost and quality of care. Political concerns about the rate of increase in cost of medical care led to an intense interest in evaluating procedure- or treatment-specific costs in order to curtail them. However, there is a great danger that uninformed attempts to cut costs may, while achieving their goals, significantly sacrifice quality of care. Thus, it is essential that quality of care ought not be relegated to second place in deference to pure cost containment issues, but rather be given at least equal status.

The theory and practice of measuring quality of care has evolved over time. The recent evaluative history of quality has centered on the assessment of patient outcomes, appealing to the last of the sequence of structure, process and outcome as originally proposed by Donabedian (1966). It has been recognized that evaluating only structure or process in health care delivery falls short of the ultimate measure of interest--patient outcomes. While structure and process are not irrelevant for evaluating health care systems and technologies, neither are they sufficient. Measuring patient outcomes is paramount.

Theoretical and conceptual research in pharmaceutical outcomes evaluation is focused on the relationships between biological parameters, clinical manifestations and health outcomes and the relevance of each of these levels of measurement for economic evaluations. Moreover, structure and dependence of each of these levels of outcomes is a fruitful area for conceptual development so you come by your bias honestly.

You might consider an in depth review of the FDA process for new drug approval, interviews with study designers or pharmacists to understand their definition of what different types of "outcomes" are possible. In this way you might narrow your complaint to a single interpretation of the word's meaning.

Traditionally, medical "outcomes" refer to mortality and morbidity. From your comments, "outcomes" might mean patient outcomes, patient cost satisfaction, short term outcomes or a variety of other interpretations.

Using your perceived definition of "outcomes", the Enhance trial had none but the Sands trial has. Neither are powered for or provide "Outcomes" in the traditional sense.

Before we can advance, you must "see" that the discussion should be narrowed by further and more specifically defining "outcomes". There is a whole field of emerging study around this topic.

The development of more precise models and more efficient methods for assigning dollar values for changes in disease status and treatment processes are also needed to establish cost profiles for various treatment protocols. This costing research requires a detailed understanding of the clinical course of the disease, methodological issues and the potential clinical manifestations of the treatment regimen.

I remain interested in your evaluation of these problems. I remain steadfast in my belief that Vytorin and Zetia are clearly NOT "me too" products and are worth a premium as well. Over time, we most likely will converge on these issues.

May 25, 2008 11:43 AM

condor said...

I think you are right. We have not yet agreed about the word "outcomes" -- in this context. Here is what I mean, when I refer to "outcomes":

Improved outcomes would mean, to my way of thinking, a reduced rate of mortality, or reduced rate of cardiac events, all as compared to a "statins-only" regimen, in similarly-situated patients.

That is what IMPROVE-IT is, ostensibly, looking at. So, I guess we wait until 2012.

As to the POSCH study -- lowered LDL via a liver mechanism [note that POSCH also relied on ". . . .an indirect cholesterol drain from increased hepatic conversion of body cholesterol stores to bile acids to replenish the depleted bile-acid reservoir. . . ." -- a liver-draning mechanism, that!], IMO, does not equal lowered LDL via a gut mechanism -- that much may safely be inferred from the ENHANCE study [non-] results. Else, why would we not have seen statistically-significant improvement in Vytorin patients, vis-a-vis statins-only patients. Remember here that -- contrary to the companies' claims -- Dr. Bots declared the data were "fine. . . . no better, and no worse. . . ." than comparable sets of data measured the same way. So it will not advance the discussion, between the two of us, to suggest that ENHANCE is simply a case of bad measurements/faulty data.

I await your relpy. Thank you for the wisdom of your commentary, here.

May 26, 2008 11:14 AM

Anonymous said...

72 comments from the WSJ blog emphasize the practice of medicine as one of both art and science. “We must carefully evaluate cardiovascular risk and follow evidence based guidelines to HELP prevent heart disease”, as Dr. Cannon suggests. The POSCH study was quoted to remind that cholesterol can be reduced by a variety of methods, even surgery. I can not see where Enhance was suggested to be "simply a case of bad measurements/faulty data." This game is one of chance. In making a move, it is useful to look at evidence and trends, individualize the approach and make a calculated decision on Tx. It is complicated and reminds us that we are doing our best without knowing all of the answers, even if one chooses to "wait" until 2012.

May 28, 2008 12:10 AM

condor said...

It could be that WSJ commenters have a little more skin in the game than some of those at the general health-care blogs, but we certainly agree as to that last sentence: ". . . .It is complicated and reminds us that we are doing our best without knowing all of the answers, even if one chooses to "wait" until 2012."

May 28, 2008 4:10 AM

Monday, May 26, 2008

Didn't Schering CEO Hassan Promise Monthly Updates on Vytorin/Zetia Scrips?

[UPDATED -- 05.28.08 PM The numbers are up -- and they are. . . UGLY. Take a look -- off 22.25 percent.

05.25.08 -- 2:00 PM: It occurs to me that Friday's nearly 2.6 percent, end-of-day drop in Schering-Plough common stock prices per share, on the NYSE may be, in part, due to some people (IMS subscribers?) having already deduced that the April monthly IMS data is rather ominous.]

Actually, he did make that promise in January 2008. On February 22, March 17, and April 21, 2008 -- he posted revised-Investor FAQs disclosures on the Schering-Plough website, and filed them with the SEC as Forms 8-K. Each of those documents contained monthly Vytorin/Zetia prescription data, from IMS.

By the time Tuesday rolls around, the May version (containing April numbers) will be about a week overdue.

This came up over on Pharmalot, in the comments, as we talked about waiting to see whether Sen. John McCain's switch to a generic version of Zocor (away from Vytorin) was emblematic of newly emerging nation-wide trends, or simply an exception to the new trends. At that moment I thought we'd need to wait for the next quarterly report from Schering and Merck. I had forgotten, for the moment, about Mr. Hassan's commitment to furnish monthly data to the investing public. But no longer.

[Note to self -- call Kennilworth for a comment, if an updated Investors' FAQ document is not posted by this coming Friday.]

Sunday, May 25, 2008

For Memorial Day 2008 -- We Wander, Off-Topic, and Off-Planet. . . .

[When we go "off-topic" for this blog -- we go way off -- ("nothing exceeds, like excess," eh?) -- off the planet, even.]

Tonight, NASA celebrated a resounding success -- around 8 p.m. EDT, the Phoenix Mars lander touched-down, softly, near the Martian Northern-polar-cap -- and radioed home -- to say it was safe, and sound. [You may access updates on the Phoenix mission's progress, via this NASA page -- the first images are already coming online, after being uploaded from. . . . the Martian Artic, tonight -- how cool is that? See one, below the video-feed.]

This flawless touch-down opens the most exciting part of a NASA mission to analyze the known deposits of water-ice there, and correlatively, engage in a preliminary search for any remaining evidence of long-lost, likely-long-gone, and long-extinct simple, primordial life -- from millions and millions of years past, on Mars. That long ago evidence -- if it ever existed, at all -- might possibly take the form of specific chemical traces -- still there, in the soil, or in the ice, all for Phoenix to sleuth out. So, I'll offer this 60 second animation celebration, edited from a much longer, more tech-laden, gadget-ey NASA file [The New York Times is running a great compendium on the mission, as well.]:

Right now, at Midnight, NASA-TV is carrying the post-touch-down Phoenix press conference -- and the most salient item, thus far -- the solar panels have deployed perfectly, to power Phoenix, and she sits on solid Martian footing, per these NASA images, tonight:

I'll not mention this again, in this space, so if it interests you -- check back from time to time at the NASA links, above. G'night, and Godspeed, Phoenix.

Friday, May 23, 2008

Probably NOT the Kind of an Endorsement We'd Really Seek/Hope for -- but John McCain Dumped HIS Vytorin(!)

[UPDATED -- 05.26.08 Noon: Mike Huckman, of CNBC, linked my blog -- presumably for the goofy graphic, at right. Very cool.

From the eagle-eyes of
Pharmalot, we note that
Senator, and presumptive Republican
Party Presidential-nominee, John McCain
(R, AZ) has switched to generic Zocor,
post-ENHANCE, from Vytorin,
according to records released
this morning. Quoth Pharmalot:

. . . .he was taken off the med
after the results of the
controversial Enhance trial
were disclosed. . . . Instead,
he was given simvastatin, or
generic Zocor, which didn’t
reduce his cholesterol by as
much but was deemed "acceptable". . . .

Perhaps his doctors saw
that Condor-WebMedica ad. Heh. G'night!

[Graphical Update -- 05.24.08 AM.]

When Cobb v. Merck, et al. was filed, I predicted. . . .

. . .that it was only a matter of time, before these newer ERISA inherent-conflict-of-interest/breach of fiduciary duties allegations would find their way into a new, or amended, ERISA putative class action complaint against Schering-Plough, and its directors and some of its officers, personally.

It looks like that happened on May 19, 2008 [but it did not appear on the electronic docket of the US District Courthouse in Newark, New Jersey, as a filed case, until last night -- because counsel filed solely in paper format on the 19th, and was duly admonished about the federal Rules on Electronic Filings on the 22nd. Heh. The original Schering ERISA case on the ENHANCE-related factual allegations, Gradone, is imaged, at right. Click it to enlarge.]

And so, as of last night, Oettinger, et al. v. Schering-Plough Corp., et al., Case No. 08-2436 (a putative Class Action Complaint, filed May 19, 2008) has fufilled that prophecy -- a case alleging those new theories (related to the inherent, unresolvable conflicts of interest endemic in situations such as those Merck, and Schering created, vis-a-vis the ERISA plans of each).

The Oettinger case also alleges personal liability violations of ERISA against CEO Fred Hassan, the entire Schering-Plough Board of Directors, and "John/Jane Does 1 through 10" -- the non-director, but Schering-employed Plan Fiduciaries, inside the company, serving in "dual roles" -- one role, for the ERISA plan(s), and the other role, for the company itself. Bob Bertolini is mentioned here.

This is how -- from a small spark, back in early March 2008 -- a bon-fire seems to begin.

We Seem to be Attracting the Oddest Assortment of Attention, Here. . . .

[UPDATED -- 05.27.08 @ 6 PM: As Ed cogently notes, Schering added some fire-power in its Investor Relations Group, today -- bringing back an alum named Janet Barth, who'll be reporting to Alex Kelly (he's apparently moving "upstairs"). I now wonder -- clearly she'd been hired by late last week, or perhpas even a little earlier -- whether the below is the first evidence, of "her new footprints" at Schering. More to come, no doubt.]

Okay, readers, some more throw-away junk, for a Friday night's entertainment value, mostly -- this one will probably take just a little explaining. Could they be visiting to prepare a case study, or could they be visiting because they've been retained? [Note that the firm does not provide client lists, or business-won stories. Ooh! -- very "hush hush, that"!]

So, several of my pages were visited repeatedly today -- and for substantial chunks of time -- by the below, via my applet. And the same visitor has been running seaches on keywords here. Hmmmmm. . . . [What a handy friend I have here in statcounter, no? Click to enlarge.]:

Now, just who are these guys? Well, here's their front page -- they are located in DC:

Fascinating, no? And, check-out that copy: "High-stakes communication consultancy. . . . Damage control. . . . Why everything you know about crisis management is wrong." Wow.

I really couldn't. make. this. stuff. up. Even if I tried.

I bet they are preparing a case study, that's what I bet. R-i-i-i-i-i-ght. Heh. [I actually do doubt Schering-Plough has hired the firm. Covington & Burling? Not likely; they'd do it "the old-fashioned way". Individual executives? Nah, too pricey. Hans Becherer? Ira T. Kay? Again, I am shrugging.]

But as I've come to learn, "the truth is usually far stranger. . . ." As ever, we shall see. G'night, one and all!

"One Major Airline Crash, Every Day, of Every Year, in America. . . ."

New 30-second-long VIDEO -- of Dennis Quaid's May 14, 2008 soundbite -- from his testimony: "100,000 people die from medical errors every year, in America. . . ."

A Very Compelling Transcript Section: Dennis Quaid -- on Preventing Medical Errors, via Bar-Coding. . . Another Good Idea

The preliminary PDF copy of the May 14, 2008 House Oversight Committee hearing, chaired by Rep. Henry Waxman (D, CA) is now available online. [We've now received the higher-res, editable, video feed, here, Rep. Waxman [and kind tech-staffers! THANK-YOU EVER SO MUCH!!!]. Hint. Hint. A low-res, dodgy-connection realmedia feed in a new window from has been available for a while now.] I found Mr. Quaid's analogy, here, offered a common-sense framework for assessing the issue [emphasis supplied]:


[Preliminary Transcript]

Wednesday, May 14, 2008,

House of Representatives,
Committee on Oversight and
Government Reform

Washington, D.C.

. . . .Mr. QUAID. Yes, sir. Also, to answer Mr. Souder as far as the makeup of the panel, I, myself, have considered myself to be a Republican most of my life, but I am on the other side of this issue.

Mr. TIERNEY. That may not be conservative enough for Mr. Souder. You may want to talk about that. . . [Loud laughter.]

. . . .Mr. MCHENRY. Because I think beyond this issue I think medical errors and making sure hospitals and the medical industry updates in terms of technology, I think a lot of us can work together.

Mr. QUAID. This is doable.


Mr. QUAID. This is something that would actually wind up saving the American public money. This is something that eventually I think the insurance companies, themselves, would welcome because it would lower their liability, because fewer mistakes would be made.

I relate it to the airline industry, one of our safest [industries]. Why is it so safe? It is because every time there is a crash the NTSB goes out and they find out the exact cause of that crash, and usually always whether it is design, or pilot [error] or whether -- it comes down to human error somewhere along the way, and they minimize the impact of human error in aviation, to where it is the safest form of travel, today.

But if you relate it to what is going on with how many patients die needlessly every year because of medical mistakes, it is 100,000 patients. That is the equivalent of one major airline crash A DAY, every single day of EVERY YEAR, in America alone. But because it happens over such a broad, disconnected area, the public isn't really aware of it, but it is something that if people were realIy aware of, we would not tolerate.

Mr. MCHENRY. Thank you, sir.

Mr. QUAID. Thank you. . .

I'll have much more, from this hearing transcript shortly -- but I wanted to rush this bit right out.

UPDATED: Low-res -- but Dennis Quaid's 30 second video clip:

And -- Speaking of "Long Times" -- Improve-It 2012

I forgot to note that overnight, the outcomes study on Vytorin crossed another major milestone -- IMPROVE-It is now less-than 1,500 days away from completion.

Well, that ought to ease investors' minds, eh?

Yep -- take a look at the count-down clock in the lower-left margin -- 1,499 days, and counting. . . . counting. . . .

Then we'll know whether Vytorin improves outcomes. It will have been on the market for about eight ten years (measuring from Zetia's original US FDA approval date -- kudos, Commenter No. 1!) by the time we know whether it really works -- works to improve patients' odds of avoiding heart-attacks.

Thursday, May 22, 2008

Gee -- 11 Hours and 57 Minutes is Kinda' a Long Time -- On One Site -- no?

Or, belay that: 11 Hours and 57 Minutes 24 hours and 12 minutes is Kinda' a Long Time. . .

I gather the lawyers at Covington & Burling had a lot to look at, though, when they stopped by my little shack (once again!), around 8:30 a.m. EDT, this morning. . . . but they didn't leave until about 8:30 p.m., EDT [it looks like they ordered out for pizza, too! j/k] -- that's a pretty full day, no? Fascinating1. As ever, click to enlarge:

Also, as ever. . . more, almost certainly is to come, here. G'night, one and all.

FOOTNOTE 1.: This morning, the 23rd, the firm is back, this time conducting various word and phrase searches -- now pushing through 24 hours of total-connected-time.

Wednesday, May 21, 2008

It Could be a Very Long Summer for Schering-Plough's Securities Lawyers. . .

. . .As they wait to read, right here, and elsewhere on the web, how independent, unaffiliated experts view their advice -- before, and during this ENHANCE study results fiasco. Perhaps even more pointedly, previously, many may wonder exactly what happened during the 2007 public offering, and firmly-underwritten sale (then-priced at $27.50 per share!), of about $3.8 billion of registered equity securities (more, if one totes up the euro, and US, debt offerings during that time-frame) in August, and September of 2007 -- all while Dr, Kastelein was trying (in vain) to schedule meetings to move forward on finalization, and publication of those long-overdue ENHANCE results. "What really happened, on all of those (eight, or more) due-diligence calls?" We'll have to wait to find out.

Tonight, the plaintiffs' lawyers, as well as the lawyers for the defendants [thanks to a friend of the blog for the clarifying edit, here!], in the putative securities fraud class action lead case, In re Schering Plough Corporation/ENHANCE Litigation, Case No. 08-397, (DMC), have agreed to extend the deadline for the plaintiffs' steering committee of lawyers to file an amended, and consolidated, securities law class action complaint -- to September 15 August 1, 2008.

Since both sides (plaintiffs, and corporate defendants) have agreed to this new, extended time-line, it is highly likely that either the magistrate for Judge Dennis M. Cavanaugh*, or Judge Cavanaugh himself, will sign the related agreed order -- and Schering will then wait, through the end most of the Summer of 2008 to see how many of the theories advanced on this blog, and throughout the wider web-universe, surface in that newly consolidated legal filing -- even now, it promises to be prodigious. Massive, in fact.


* Last night (and perhaps once or twice, earlier) I think I offered an incorrect first name for this able jurist -- I have corrected that mistake eveywhere -- now that I've seen it. If anyone out there sees his name as "Kevin T.", rather than "Dennis M." on our site, please alert me. I'll change it over. My very sincere apologies.

Well -- Mr. Kingham Doesn't Really Answer Question 11, at all, Does he?

[UPDATED -- 05.21.08 8:53 PM EDT: once again, Ed, that gentleman scholar at Pharmalot, has linked us, on this. Cool!]

One more snippet from Covington & Burling's April 25, 2008 Vytorin ENHANCE study timeline letter of response [See my earlier posts, parts one, and two, below] on behalf of Schering-Plough (among other clients) -- now, in what way, exactly, is this responsive to the Chairmen of two Congressional Committees, men backed with the inherent authority to issue subpoenas, or proceed toward contempt of Congress, for non-responsive/evasive/non-compliant written answers to investigations?

Take a look at the answer given -- does it answer the question asked, at all? The question was "Who decided [authorized]. . .?" not "Was it routine. . .?" [Click to enlarge:]

Yep -- I think Dr. Peter Rost (via redacted) has it just about right, here:

WHY wasn't the November 2007 ENHANCE panel shown Dr. Bots' January 2007 Report?

This is from the middle of Covington & Burling's April 25, 2008 response to Congress, on behalf of Schering-Plough, among others. [The opening, and back-end, of that seven pager appears here, tinted in green. I posted it last night. This later snippet is the one you need to see, though -- I posted it after this one, on the 21st.]

First, note how generally non-responsive these "responses" are. Now, note particularly that there is no explanation as to why, in answer to Question Number 7, Dr. Bots' January 2007 report -- a report that concluded the "data were fine" -- was not shared with the newly "ENHANCED", November 2007 "independent expert" panel. And, note especially, here -- that was a conclusion reached, almost a full year earlier -- than when the November 2007 "new" panel finally was convened.

This is going to turn out to be significant in the now ongoing litigation, in my opinion. This "selective sharing of information" is troubling -- note also (in Response Number 8) the admission that Schering-Plough people prepared all the slide decks (do go look at those slides [at about the middle of that 70-page PDF]). That admission, in Response Number 8, may easily, and fairly, I think, be read as an attempt to predispose the November 2007 expert panel to ignore, or at least, discount, Dr. Bots' views. To "shade" what was already known, to be another, greener, hue (thus my tinting of these letter pages). As ever, click to enlarge:

As is often true when lawyers write letters on behalf of clients, what is not said -- what is left unwritten -- is far more important than what is said. The object-goal of the Congressional Committees' Question Number 7 is, in my opinion, to determine what information was, and was not, shared with the Novemebr 2007 panel -- it was already known by the Committees that Dr. Bots' report was not provided. And, perhaps surprisingly, Covington & Burling stepped right into it, here.

What Covington & Burling, and its client, Schering-Plough, did not do, was explain why such an important "piece of the ENHANCE puzzle" was not shared with the panel. To then immediately (and gratuitously) suggest that the panel "had the full benefit" of Dr. Bots' views -- simply because he attended the Novemebr 2007 panel session, is to answer a question not asked -- to answer far more than the firm, probably, ought to have answered.

It suggests, to my eye, a sense of defensiveness. It suggests, at a minimum, that there was very careful advance planning surrounding how much -- and how little -- to share with the November 2007 panel. And, given what we now know about the "ex post facto minutes" -- it suggests an agenda, going in, to move toward a change of end-points (and thus, additional delay) -- all in my opinion, of course.

And honestly, that smells, smells like a wharf-house -- at low tide -- and that is not just my opinion. That is a fact.

Tuesday, May 20, 2008

Did the Covington and Burling response (for Schering) -- in part -- precipitate the Joint House Committee Chairmens' letters, tonight?

[UPDATED -- May 23, 2008 2 PM: The Pfizer-version of the Congressmens' (below white paper) letter is now in easy-view jpg format, over at Pharma Law's blog. Nice touch, Dr. Rost!]

Take a look, and decide -- click each to enlarge below -- did these largely evasive seven pages [and I'll have much more, tomorrow, on that April 25, 2008 seven-pager on non-answer-answers!], at least in part, lead the House Committee, and Sub-Committee Chairs to fire off these DTC letters, tonight?

Significantly, this may mean that the only Vytorin Ad on TV, in the US, in the very-near future, will be mine -- the ""Truth-i-ness"-Enhanced" DTC TV Ad!? If so, way. . . WAY Cool!

Did the below. . . lead to the above? I dunno. More to come, tomorrow, on the below. There are a few important things I must have missed in the below letter, the first time I saw it. Those items merit a separate post -- for the moment, I am displaying the Schering position (such as it is) on whether the joint venture will resume the Vytorin DTC "Food and Family" TV advertising campaigns. This non-answer, coupled with Mr. Deepak Khanna's non-answers, likely led, in part, to the above letters -- one went to each Pharma CEO, tonight.

Note also that it requires an "immediate. . . written response" from Mr. Hassan, personally -- to decide what role (Dudley DooRight, or Snidely Whiplash!) he'll be cast in -- at the second round of House DTC Hearings. Wow.

Now, if you really-miss seeing Vytorin on TV, feel free to partake of this (or, just click this same icon, in the left margin):

Cobb, et al. v. Merck, et al. ERISA case reassigned to Judge Cavanaugh

Just a quick follow-up note, here -- last night, Judge Garrett E. Brown, in Trenton, New Jersey, signed an order that reassigned to Judge Dennis M. Cavanaugh, the ERISA case captioned Cobb, et al. v. Merck & Co., Inc. et al., Case No. 3:08-cv-01974 (US Dist Ct NJ, Complaint filed April 21, 2008) -- a putative class action advancing new theories of recovery, on behalf of the plaintiffs.

Judge Cavanaugh, of course, is the very-able federal district court judge, in Newark, New Jersey, who is handling almost all of the 125 plus would-be class action cases now pending against Schering-Plough, the joint venture, and Merck & Co., Inc., related to all the topics I cover on this blog. Merck made special mention of this case in its most recent SEC Form 10-Q (at the bottom of page 43). An interesting discussion of the legal principles involved appears in the comments to this post.

Covington and Burling's DC Office is watching this one quite-closely.

That is all. Carry-on.

Curiouser. . . . and Curiouser.

[UPDATED -- 05.20.08 @ 8:50 AM EDT: Perhaps Ms. Wolf's remarks may be read to mean that since the time Mr. Hassan joined Schering-Plough, the stockholders have never approved a plan that allowed pay on "Market Capitalization" increases. And perhaps, we are then left to our own devices, by Ms. Wolf to infer, all by our lonesome-selves, that the 2006 proxy disclosed payments made under the 2002 Schering stock-based compensation plan, not the 2005 version. And while that 2002 plan did, in fact, allow "Market Cap" as a metric, it is -- to my eye -- the height of unbecoming sophistry, to write what she wrote -- on the clearly-loaded topic of executive compensation in what has now become a "turbulent" period in Schering's history.

What she wrote, when viewed from that entirely-stilted perspective, is accurate, insofar as it goes. But, in the land of good practice under the securities laws (making complete and accurate disclosures to the investing or voting public), the vast fields her comments of yesterday omitted -- rendered the small bit she wrote -- rather materially-misleading, for the lack of complete information, and context. Now, I am a student of these matters -- if it was opaque to me, how was an ordinary investor, or proxy-holder, to parse her game of hide-and-seek?

That is, a reader of Ms. Wolf's comments might fairly (but wrongly) infer that Mr. Hassan, and his executive officers at Schering, had never been paid for increases in "Market Capitalization". In fact, they were so paid, during the year 2006.

And so, Ms. Wolf's goofy "talking points" rather deftly, but deceptively, side-step the real issue -- by obscuring it -- the issue of whether Mr. Hassan, and Mr. Becherer, and Mr. Kay should have chosen against paying on "market cap" increases, at all (even if some prior, presumably tainted, plan allowed it) -- if they were, in fact, attempting to "clean up" disclosure practices, and compensation policies, at the then-"new" Schering Plough.

So, the above sort of mendacious-sophistry is very unbecoming -- and leaves me wondering: "In exactly what way, Ms. Wolf, does such parsing about CEO compensation help "earn trust, every day"?

Again, I am shrugging, here.

We are talking about a man who received $30.2 million in compensation last year (and $29.6 million in 2006), to preside over a full-on-fiasco of a study -- on a product generating at least 60 percent of all of Schering-Plough's 2007 profits.

And to deflect attention from these facts, his lawyers are sent-out to go dance about, like angels on the heads of pins, here? Deeply-disappointing, that.


Earlier, the "Sir Lancelot" of that "kingdom far, far away" called has hat-tipped this piece! Cool!]

It seems that Schering's "designated" Compensation Consultant, Ira Kay (pictured below, left), of Watson, Wyatt, on behalf of his patron, Hans Becherer, the Chairman of the Compensation Committee of Schering-Plough's Board of Directors (pictured, at right), has recently decided to entirely remove "Growth in Market Capitalization" as one of the general metrics upon which Executive Compensation levels were judged, in 2007.

Why would he do that?

Back on April 25, 2008, that question set me to thinking through a few structural puzzles about the way Schering -- as opposed to many other companies its size -- discloses pay, and actually pays, its executives. And then I blogged on them -- kinda' too-wonkishly, in fact. Looking back, I buried the headline, back then. Until today.

Yesterday's surreal (and apparently inaccurate) denials from a high-ranking lawyer at Schering-Plough about the use (and/or non-use) of "Market Capitalization" as a metric for measuring performance has made me abidingly curious -- curious enough to re-write, and update that April 25, 2008 post -- so I'll not link to it here. This one supercedes that one.

Why would a lawyer -- a high-ranking corporate lawyer, one who signs one of the Schering cover-letters to each year's proxy statement (including the one filed with the SEC for the year ended December 31, 2006) -- so vehemently (and, it would plainly seem, erroneously) attempt to deny the existence, and use, of the very first compensation metric listed at the top of page 25 of that very same filing? Why?

Well -- I strongly suspect that I do know why. But let us first consider the continuing chain of unusual events, here. And to be clear, Ms. Wolf would be merely a foot-soldier in this particular campaign of curiosities. No, the really tough questions -- questions for which I cannot see many pleasant, or reasonable, answers -- are going to fall directly at the feet of the Chairman of Schering's Compensation Committee, and the consultant upon whom he relies for advice about setting compensation metrics, and levels. An example? I submit for your consideration:

Note that the 2005 Schering proxy, at page 42 -- omits mentioning "Market Capitalization" as one of the allowed metrics for measuring performance (and thus determining the levels of executive compensation). Take a look:

. . .the Compensation Committee may select under the Plan to include one or more of the following (in absolute values or relative to the performance of one or more comparable companies or an index of comparable companies):
• Net operating profit after taxes;
• Operating profit before taxes;
• Return on equity;
• Return on assets or net assets;
• Total shareholder return;
• Relative total shareholder return;
• Earnings before income taxes;
• Earnings per Share;
• Net income;
• Free cash flow;
• Free cash flow per Share;
• Revenue (or any component thereof);
• Revenue growth;
• Share performance;
• Relative Share performance;
• Economic value added; and/or
• Return on capital. . . .

So, in the 2005 proxy, the shareholders approved a stock-based compensation plan (as required by SEC rules, and NYSE listing standards applicable to Schering-Plough). That plan -- drafted by Schering's management, and put before the shareholders for approval -- does not, by its terms, allow the use of the performance metric called increase in "Market Capitalization".

And yet, we see that for the year ended December 31, 2006, according to the early 2007 proxy (see image, below, and page 25 of this SEC filing), executive compensation was considered, and paid, at least in part, on a measurement of the rate of increase in "Market Capitalization" -- from 2004 to 2006.

An image of that actual page-filing [click to enlarge!]:

That, my friends, is rather astonishing. I have to say that I have never seen that occur -- not in over 20 years of public company practice, inside of, or outside of the reputed-to-be wild and wooly pharma sector -- I've just. never. seen. it.

And, as I wrote on April 25, 2008, I still think it is difficult to overstate the ramifications, here: Should all that compensation from 2006, and 2007, and now part of 2008, be re-assessed, and re-calculated, to exclude any amounts awarded in reliance on the impermissible (or double-weighted), factors? Is this why Matt Herper's Forbes headline of yesterday asked about the "return" of Hassan's 2006 compensation?

I don't know -- but all those plaintiffs' lawyers will definitely have a view on this.

To round out this particular series of very odd events, I must also remark on the silence of the current Schering proxy statement -- the proxy employed to solicit votes for the just completed Annual Shareholders' Meeting, in Memphis.

It utters not one peep about "Market Capitalization." And it utters no peep about where it went -- why it went -- or why it was never listed as one of the factors for awarding executive compensation, as presented to, and approved by the shareholders -- at management's direction. Similarly, and puzzlingly, the proxy simply makes no mention of whether the 2006 compensation was paid, in part, in error.

What has transpired since that time (the ENHANCE fiasco, and the steep decline in stock prices, and the granting of even-cheaper stock options to high-management than were apparently granted to middle management, in early January 2008), simply must be considered "material information related to a voting decision". So, how can it be that the mistaken-payment of compensation on a factor not approved by shareholders, for at least the year 2006, escapes all mention?

How can that be, Mr. Becherer? Mr. Kay? Mr. Colligan? Mr. Hassan? Mr. Sabatino?

What if Those Vytorin Ads were more like the "" Anti-Cigarette Ads?

That is the rather-impertinent question I set out to answer, this evening -- Heh! By taking the video (and audio) bits from that consumers'-rights-champion Rep. Bart Stupak (D-MI), and the DTC Advertising US House Sub-Committee Hearing held on May 8, 2008 -- I came up with some ""-style guerilla advertising -- it appears immediately below.

If you cannot view the feed-inline (some Mac users for whom flash runs a little dodgily), click here. All others, just press the little triangle below to play the video -- it is only one minute, and 26 seconds long:

[Ed. Note: Of course, when Rep. Stupak speaks of now knowing (from ENHANCE) that "Vytorin has no effect on cholesterol", he speaks in a sort of short-hand -- he means, I think, that Vytorin has no additional salutory effect on the build-up of arterial plaque, compared to a solely-statins-regimen. . . . Just to keep it fair, here.]

Enjoy! -- and be very careful out there. . . something bigger, in the morning, is a-comin'! -- NOW, IT IS HERE.

Monday, May 19, 2008

Either Susan Ellen Wolf is "Mistaken" or. . . (Wait! -- she SIGNED that proxy!) she is. . . "shading" the truth, here.

[UPDATED -- 05.20.08 8 AM EDT: This post has caused me to set out a broader inquiry into the way Schering discloses pay -- and actually pays -- its executives. Take a look.]

Ms. Wolf, the Corporate Secretary, Vice President - Governance and Associate General Counsel of Schering-Plough (her letter, covering the 2007 proxy, is above), just wrote a comment over at, in response to the Forbes story, mentioned earlier today on this blog -- which contained the following assertion (see last sentence of the tenth paragraph, in her comments -- also posted at

. . . .Market capitalization, which the writers focus upon, was not a performance metric for any incentive plan since Fred joined Schering-Plough. . . . [Emphasis supplied.]

Mr. Hassan worked at Schering-Plough during 2006, right? Right. Trust me, he did.

Let us then take a look at the text of page 25 of the proxy describing compensation policy, for that year (the proxy to which Ms. Wolf's letter, imaged above, was attached):
. . . .General Performance Metrics Used
by the Compensation Committee in
considering total compensation levels

Three-Year Growth in Market Cap.
Increased by $9.7 billion or 38%.

January 1, 2004 — $25.5 billion

December 31, 2006 — $35.2 billion. . . .

[Emphasis supplied.]

Ahem. It is actually the first metric listed for that year, Ms. Wolf. [More on why that is entirely-inappropriate, appears here.]

An image of that actual page-filing [click to enlarge!]:

It would seem, Ms. Wolf -- that even though you very-likely prepared, filed and signed-off on this proxy statement -- Messrs. Becherer and Hassan (to say nothing of Mr. Thomas J. Colligan, then the Chairman of the Board's Audit Committee) -- might beg to differ with yours, to (and to

My comment box is open, here. So, Please feel free to correct me if I am mistaken, Ms. Wolf.

"Yeah -- What HE [Matt Herper, at Forbes] Said!" -- of CEO Hassan's 2007 pay, and May 2008 options. . . .

UPDATED -- 05.19.08 @ 11:20 AM EDT: Susan Ellen Wolf, Corporate Secretary of Schering Plough (quoted in the Forbes story below, as well), has commented on Pharmalot, about this story. Now, come to think of it, I'll likely write an entirely-new post, here -- replying to her defenses, and suggestions of inaccuriacies -- IT IS NOW UP later today. I'll be updating that response (and this one) with some graphics -- so do check back.

[Sending another "shout-out" to -- IP Address -- South Ozone Park, NYC -- Forbes Inc.! Good to see ya' (again!), here! -- Keep on keepin' on!]


Forbes is all over one of my continuing-theme stories on Schering, this morning! Very cool.

. . . .But Hassan's new stock options, granted on May 1, at $18.86 a share, are already in the money. Schering's board has claimed that the stock price is artificially low. Says the Corporate Library's [Senior Research Associate Paul] Hodgson: "If they really believe that's artificially low, they should have awarded premium price options."

[Schering Corporate Secretary Susan E.] Wolf concedes that the rules only say that the strike has to be at least the market price but that, "You can take any one component and make it harder to get, but the overall goal is to compensate people fairly so they can attract and maintain a top team," she says. . . .

. . . ."It would seem to me that given Hassan's reputation for open-mindedness in terms of compensation, that if there were some doubts about whether he should receive a bonus, he would be more likely than others to voluntarily forfeit it," says Hodgson. "There are not many CEOs I'd say that about, but he would be one of them. . . ."

[Emphasis supplied; full Forbes article here. Do go read it all.]

This is truly gratifying. I first wrote about this narrow topic (premium-priced option grants) some 13 days ago -- the morning after the "at-market" grant was disclosed in an SEC filing -- after that, I amplified my thoughts, twice, the next day, 12 days ago. Then, Ed Silverman, over at the Star-Ledger's blog, wrote far more cogently about this same topic, after our several phone conversations -- from which, I believe, we both benefitted immensely -- I know I did.

Now Matt Herper -- in Forbes, no less. Are you listening, Messrs. Hassan and Becherer?

[As to the more general topic of "giving back" his bonus -- I would not hold my breath, here, folks -- CEO Hassan is unlikely to hand it back willingly -- and Schering-Plough Board Compensation Committee Chairman Becherer is highly-unlikely to be so "impolite" [Heh!] as to ask for it back.

I've been on that bonus topic for months. And months. And months.]

Sunday, May 18, 2008

Archived Video-Stream of US House Committee's May 8, 2008 "DTC Advertising Hearing" Now Available

The House Committee on Oversight and Government Reform ARCHIVED hearing titled, “Direct-to-Consumer Advertising: Marketing, Education, or Deception?” -- web-cast of Wednesday, May 8, 2008, 10:00 a.m. EDT, in 2123 Rayburn House Office Building, is below.

[We should have the Dennis Quaid May 14, 2008 House Committee-Hearing-stream archived, and available, in fairly short order.]

This is the May 8, 2008 Hearing at which Schering's Vytorin ads appeared, and SVP & GM Deepak Khanna, on behalf of the Cholesterol Joint Venture, testified (I have also placed a link to this one, on the original Hearings post-page):

NOTE: Drag the Slider-bar, below to speed-past the "Eagle"/test pattern -- in first minute or so -- as well as through the recesses. Click the "dual vertical white lines" button, below, to pause; or the "white square" button, to stop the video-stream. [You'll need Windows Media Player installed to view it. Sorry. But there is a Mac OS X version of Windows Media Player available for download, and unstuffing, here; and Stuffit Expander for Mac OS X (at Allume) is here.]

<br /> <span style="font-family:Verdana;font-size:78%;color:#000000;">You need to have Windows Media Player in order to view this performance. Download it from <a href="" target="_blank"></a></span><br />

[Mac users -- if you've installed the
above-mentioned software
, click here
to watch the hearing in a new window.]

And, a BONUS(!) of "Multi-Media"-ey Goodness (all in Mpeg format):

Download Merck/Schering-Plough's VYTORIN (MPG file) advertisement -- this version was produced in November 2007, prior to the FDA's required January 23, 2008 changes -- see letter. Note that this version claims Vytorin works "better" than Lipitor alone -- and the Enhance study results would suggest that claim is now "misleading".

Download Pfizer, Inc.'s Lipitor (MPG file) advertisement, referenced above.

Download Ortho Biotech, Inc.'s (OBI) Procrit (MPG file) advertisement.

Witness Statements are up now, too:

Panel I
▲ Ruth S. Day, Ph.D. -- Statement (PDF File)
Director, Medical Cognition Laboratory
Duke University

Panel II
▲ Mollyann Brodie, Ph.D. -- Statement (PDF File)
Vice President
Director Public Opinion and Media Research
Kaiser Family Foundation

▲ Marcia G. Crosse, Ph.D. -- Statement (PDF File)
Director Health Care
US Government Accountability Office

▲ Nacy H. Nielsen, M.D., Ph.D. -- Statement (PDF File)
American Medical Association

Panel III
▲ Mr. Deepak Khanna -- Statement (PDF File)
Senior Vice President and General Manager,
Merck/Schering-Plough Pharmaceuticals

▲ Mr. James Sage -- Statement (PDF File)
Senior Director/Team Leader, Lipitor
Pfizer, Inc.

▲ Ms. Kim Taylor -- Statement (PDF File)
Ortho Biotech, Inc.,
(A Wholly-owned Subsidiary of)
Johnson & Johnson

By Order of the Chairman: