Wednesday, September 30, 2009

So Vertex Was Able To "Pre-Sell" Telaprevir's European-Approval Milestone

First the quote, from today's press release:

. . . .Sale of rights to certain telaprevir milestone payments:

Vertex will receive approximately $35 million in cash for the sale of rights to an additional $95 million in potential future milestone payments tied only to launch of telaprevir in Europe. Vertex is not obligated to repay the approximately $35 million to the buyers if the milestone events relating to the launch of telaprevir in Europe are not achieved. . . .

Based on current projected European development and commercial timelines for telaprevir, and assuming a successful European commercial launch, Vertex expects that the milestone payments will be earned prior to April 2012. If achieved, the milestones will be paid by Janssen Pharmaceutica N.V., a Johnson & Johnson company, as part of a collaboration signed with Vertex in June 2006 for the development and commercialization of telaprevir in Europe. . . .

Now, think about, that for a minute -- some presumably very-sophisticated investors were willing to hand over $35 million today, in cash, for an event that may (or may not) occur in 2012, or later. They were willing to pay out almost 37 percent in cash, today -- or accept a little less than three-to-one odds that this horse will win, place or show -- in a European approval race.

Anyone who's been around pharma for any length of time will be able to rattle off the names of at least 20 or 30 "sure things" -- things that, unfortunately, never reached any market, of any size. So this substantial cash up-front deal is doubly-impressive. Admittedly, I had guessed at a smaller haircut, back in July, but this still is a pretty powerful -- and market-based -- vote of confidence (backgrounder, under that link), for Vertex's telaprevir.

True enough, a larger player like Schering-Plough (even if its boceprevir candidate would support such a bet) wouldn't need to offer such a casino-style structured transaction, into the capital markets (as it may mobilize cash from less costly sources than Vertex may, generally-speaking). Even so, seeing Vertex and Morgan Stanley succeed in closing this wild-deal -- had to cause a few facial twitches, this afternoon, in Kenilworth, and at least a few arched eyebrows in Whitehouse Station, tonight.

As ever, stay-tuned.

Would This Have Made A Difference, in Florida -- In 2006, '07, '08 or '09?

The below is from page 47 (full-text PDF link) of Merck's just-released Global Corporate Responsibility Report:

. . . .In 2010, Merck plans to publish on our website a list of policy positions being advocated within state legislatures in the U.S. . . .

I do wonder whether such a required "sunshine" disclosure might have been enough "antiseptic" -- to help avoid the odd and mis-shapen Florida requirement that non-US born girls and women be vaccinated with Gardasil®, or face deportation (background in that link).

Clearly the vaccine has its place -- but I do feel the overly-zealous drive to mandate it -- in the states, more than occasionally through Merck's governmental affairs offices -- has lead to some truly awful legal outcomes.

Outcomes like this one.

New Merck Report: Finally, "Time to Walk the Talk" -- at Whitehouse Station?

Merck has just released its annual global corporate responsibility report this morning, thus:

". . . .For this report, Merck devoted resources to dig deeper into which social, environmental and ethical issues were significant to the company and relevant to its stakeholders," said Elizabeth E. McGeveran, Senior Vice President, Governance & Sustainable Investment, F&C Management Ltd.

"That included sharing confidential information with stakeholders, taking time to listen to criticism and suggestions, and letting us know which issues they were ready to tackle. Merck understands that the days of 'feel good' CSR reports are over -- and that companies need to work hard to identify emerging business risks and talk about issues for which there may not be easy answers. Having been consulted on the reporting process, F&C looks forward to reviewing the final version of the newest report and seeing if Merck's emerging markets strategy or the challenges facing patents are explored effectively. . . ."

. . . .4. Conducting ourselves ethically and transparently
Δ Implemented new Guiding Principles for Ethical Business Practices with the medical and scientific community.

Δ Established comprehensive, global guidelines for escalation, investigation, remediation and recognition of non-compliance events, and implemented them across our different divisions and regions. These guidelines will help ensure the appropriate disciplinary action is taken, up to and including dismissal, when necessary. . . .

Here's to hoping -- for "hope is a good thing. . . In fact, hope may be the best of all things. . . ."

But now we'll need actions, to reaffirm the hope, Mr. Clark.

Tuesday, September 29, 2009

Sanofi CEO: "Likely" to Acquire the Intervet Business from New Merck

The below snippet comes from a interview transcript, out of London, overnight.

Do go read it all, but I think the wrinkles, here, are going to be how much of either entity's businesses will need to be divested to clear European, and to a lesser extent, United States antitrust review -- but it sure sounds like Sanofi will exercise its call option within the alloted 100 days, post merger close:

. . . .Once Merck closes its deal with Schering, Sanofi CEO Chris Viehbacher said, "there is a likelihood" his company would move to combine with the Intervet animal health business that Schering-Plough is bringing into the new Merck.

"If there's an opportunity to do it, I think it makes sense to create a world leader in animal health," Viehbacher said in an interview, calling it an "area of sustainable growth. . . ."

"If we can in a second step merge Merial with Schering/Intervet, then you would create a business that basically covers everything," Viehbacher said.

Sanofi has 100 days after the close of the Merck/Schering-Plough merger to exercise its option, which would create an enormous player in the $19 billion global animal health market.

Viehbacher noted that Merck can decline to enter into the venture, but would have to pay Sanofi a breakup fee of $400 million. "So that might influence their decision," he said. . . .

I bet New Merck CEO Clark won't want to pay any termination fee, when he might instead "buy back into" the newly-combined Intervet/Merial businesses as a 50-50 JV partner -- owning a half-stake in what will arguably be the world's largest Animal Health businesses concern. But what do I know?

This is how a September 24, 2009 investor presentation (by Merck) laid it all out -- at Slide 11 (click to enlarge):

Question: How long (after the above) until Miles White, and Abbott, surface?

An Evolving Work-In-Progress -- Of Merck's "In-Substance" Pending-Patent Cliffs

This draft below will soon be integrated with the earlier Schering-Plough "in substance" patent cliff table -- to set forth the "New Merck" in-substance patent cliff picture -- in one plain-English, and convenient summary table. Let me know if any of you see any errors in the work thus far ("Old" Merck, only here):

Brand Name2008 SalesChemical NameClaim First Filed30 Month Expiry/
At-Risk Date
Likely Competitor
Singulair® $4.3BmontelukastFebruary 2007August 22, 2009aTeva
Primaxin® $760Mimipenem/cilastatinJanuary 2007September 1, 2009bRanbaxy Labs
Cozaar® $3.5BlosartanN/AFebruary 11, 2010cMultiple
Emend® $264MaprepitantJanuary 2009June 2011Sandoz
Nexium® $1.4BesomeprazoleOctober 2005May 27, 2014dRanbaxy
Fosamax® $1.5Balendronate.Lost exclusivity in 2008numerous
Trusopt/Cosopt® $780Mdorzolamide.Lost exclusivity in 2008numerous
Proscar®$320Mfinasteride.Lost exclusivity in 2006numerous
Zocor® $660Mstatin familyLost exclusivity in 2006numerous
TOTAL:$13.4 Billion


Note a: Trial completed February 2009; awaiting decision; no launch yet, despite window being open since August 22, 2009.

Note b: By agreement, Ranbaxy may launch September 1, 2009.

Note c: First Cozaar patents expire in February and April 2010. Many likely competitors after those dates.

Note d: Despite the in-substance launch window opening in April of 2008, Raxaby and Merck (along with partner AstraZeneca) entered a settlement agreement keeping a generic form of Nexium off the market until May of 2014. The United States Federal Trade Commission (the "FTC") is now formally investigating this settlement agreement -- looking into, among other matters, its potential for improper anticompetitive effects. In that regard, Merck and AstraZeneca each received an investigative document demand from the FTC -- in July 2008 -- regarding the settlement agreement with Ranbaxy. Merck is cooperating with the FTC in responding to the document demand.

More to come, as ever.

Monday, September 28, 2009

When We'll Know -- As To The ECC's Determination

When the far right margin of this linked document contains an "en", with a link attached to it, you'll know that the European Competition Commission has officially made a determination on the Merck/Schering-Plough reverse merger:

. . . .18 September 2009

Prior publication in Official Journal

Provisional deadline: 23 October 2009. . . .

Just. Go. Read. It.

The truth is out there -- just go find it. [Or click image, at right.]

. . . .As the passing of health insurance reform draws near, the defenders of the status quo in Washington are growing fierce in their opposition and using misleading information to defeat the chance of real reform. Health insurance reform will protect people against unfair insurance practices; provide quality, affordable insurance to every American; and bring down rising costs for families and businesses — this shouldn’t be about Washington politics. It’s about American lives, businesses and our future.

It’s never been more important to dispel these outlandish rumors and myths. Learn the facts and share them with your friends, family and neighbors. . . .

Indeed. Do go read it -- it is but a single page long.

Abbott's Deal for Solvay: A [Partial] Vytorin® Reverb?

Matt Herper, at Forbes has a very well-thought-out story this morning (do go read it all, here), on the similarities he now sees between some parts of Abbott's $6.6 billion deal for Solvay, and the problems besetting various cardiac medicines -- especially those without verified clinical outcomes benefits -- like Vytorin®, thus:

. . . .Catherine Arnold, the pharmaceuticals analyst at Credit Suisse, says it is more about financial engineering, using cheap cash to buy out a firm Abbott now pays royalties to for a lucrative heart franchise. That will boost earnings per share by 10 cents, or 3%, in 2010 and eventually by as much as 9%, or 30 cents per share.

But the increased bet on the franchise of heart drugs is risky. Generic versions of the $1.3 billion drug TriCor are expected as soon as next year. A newer drug, TriLipix, isn't expected to make up for the loss. And some doctors are starting to have doubts about the usefulness of some drugs, which have failed to prove their benefits in large clinical trials. . . .

The worry is that sales could drop even faster, just as sales of Merck and Schering-Plough's Vytorin have dropped after a few studies led doctors to realize the paucity of evidence for that drug.

[Still, it's] hard to criticize Abbott's decision to purchase the Solvay drug unit. The deal will add to earnings almost instantly, and the price was actually cheap. . . .

Also, on Merck/Abbott interfaces and connections, see my story of yesterday -- indicating it was a near-winner for the Merial assets earlier this summer -- and suggesting it might surface, once again with even more cash in hand, to bid on various parts of Intervet, after the bust-up/reverse merger is closed. Also this morning, Merck annouced it would distribute CSL's regular seasonal vaccine lines in the US for the next six years, at least -- so far, this doesn't include commercial scale batches of H1N1 vaccine. The two already had a deal along these lines -- they've simply extended the would-be termination date.

Finally, last week the ECC had indicated that the earliest possible clearance date for the Merck-Schering deal would be October 23, 2009 (but most papers are only now reporting it). However, the clearly more-important US FTC/DoJ antitrust division hasn't made any such forward looking announcement, on the deal's prospects. Nor will it.

Sunday, September 27, 2009

So Abbott Nearly Got the Old Merck/Merial Animal Health Assets? Wild.

Jeanne Whalen, over at The Wall Street Journal is reporting this Sunday morning that Abbott was deep in the running, to acquire Animal Health businesses from Merck, thus:

. . . .Abbott of late has been in a more acquisitive mode, making a strong run this summer at purchasing a veterinary medicine business from Merck & Co. French drug maker Sanofi-Aventis SA eventually bought the asset for $4 billion. . . .

I'd look for Abbott to resurface, then, when the Intervet assets (at least those that would pose a competitive overlap problem for New Merck, vis-a-vis the Sanofi-Aventis "New" Merial businesses) are toted up for sale. That will have to happen pretty quickly, once the reverse merger closes, as Sanofi/Merial will likely exercise its call option to acquire all of Intervet away from "New" Merck -- then divest one or more of the competing lines, either from Merial, or from Intervet.

Keep an eye on that Miles White. He's crafty.

Merck's Fosamax® -- New Femur Fracture/Osetonecrosis Focus?

The peer-reviewed Journal of Bone and Mineral Research ($$; Subs. Req.) is carrying a new clinical vignette in this month's edition -- just out. Apparently, this is the second such peer-reviewed data point (the earlier appearing in the Journal of Orthopedic Trauma, in the Summer of 2008) associating elevated femur fracture risks, with patients taking the active ingredient in Fosamax® (as irony would have it, for osteoporosis prevention). From the current free JBMR abstract, then:

. . . .Unusual fractures of the femur diaphysis have been reported in patients treated with alendronate and, although no causal relationship has been established, excessive suppression of bone turnover and length of treatment with alendronate have been implicated in their pathogenesis. We report here clinical, biochemical, and radiological findings of a patient with rheumatoid arthritis and multiple risk factors for fractures who was treated with alendronate for eight years, and developed spontaneous bilateral subtrochanteric diaphyseal fractures. Bone biopsies obtained form the iliac crest and the femur showed decreased bone formation with histomorphometric evidence of markedly increased bone resorption at the femur. These results show for the first time that an imbalance between bone resorption and bone formation at the affected bone is associated with the occurrence of these atypical femur fractures. The cause of this imbalance is currently unknown, and further studies of the epidemiology and pathogenesis of diaphyseal femur fractures are warranted. . . .


Saturday, September 26, 2009

Schering-Plough Employees Garner New Rights Under Merck Agreement With DoJ, Through At Least 2013. . . .

Last night, I uploaded the currently-operative Merck federal "plea agreement" (though, to be fair, Merck and the DoJ styled it as a more palatable "corporate integrity agreement", when each signed it in February 2008). I did so, not really to make public the need for the current US Attorney General to let the working US Attorneys (on the relevant files) handle the "judgment calls", for I have complete confidence in the current Attorney General to ensure just that happens.

No, I uploaded it primarily to be able to show -- in one convenient place -- all current Schering-Plough employees how this Merck plea agreement creates additional rights for each of you -- especially those of you in finance, government relations, government pricing, or government contracting -- at Schering-Plough, or New or Old Merck.

You see, once the reverse merger occurs, each of you who are "Covered Persons" will be governed by, and possess rights under the provisions of the Merck CIA agreement. Quoting from pages 16 and 17 of the agreement, then:

. . . .E. Disclosure Program.

Prior to the Effective Date, Merck established a multi-faceted Disclosure Program that enables individuals to raise concerns related to any potential unethical or illegal behavior associated with Federal health care programs or Merck's policies, procedures, or practices confidentially to the Office of Ethics. The Disclosure Program includes Merck's AdviceLine and Ombudsman Program, mechanisms that individuals can access and for which appropriate confidentiality is maintained.

Merck's AdviceLine is a tollfree telephone line staffed by a third-party that is available 24 hours a day, seven days a week. Merck's Ombudsman Program is staffed by individuals in the Office of Ethics.

Merck shall continue this Disclosure Program during the term of this CIA [until at least February of 2013]. Merck publicizes, and shall continue to publicize, the existence of the Disclosure Program in the Code of Conduct, the Ethical Operating Standards, through training sessions, and by posting information in prominent common areas of Merck's headquarter facilities, on Merck's intranet sites, and on Merck's external website.

The Disclosure Program emphasizes confidentiality and a nonretribution, nonretaliation policy. Merck makes and shall continue to make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that it obtains all necessary information to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Merck conducts and shall continue to conduct an internal review of the allegations set forth in the disclosure. Merck shall ensure that proper follow-up is conducted. Disclosures made through the AdviceLine and the Ombudsman Program are investigated, as appropriate, by a designee from the Office of Ethics, who then determines the appropriate resolution in coordination with the appropriate parties, including the Compliance Officer or designee.

Merck maintains, and shall continue to maintain, a disclosure log, which includes a record and summary of each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews. This disclosure log shall be made available to OIG [the federal government Office of Inspector General] upon request. . . .

[And, from agreement pages 2 and 3:]

"Covered Persons" includes:

. . . .f. employees of [Schering-Plough's or] Merck's Corporate Finance Organization who are engaged in, or have responsibilities that directly support, the Covered Functions as defined below in Section II.C.5;

g. all employees of U.S. Pharmaceuticals (U.S. Pharma);

h. U.S.-based personnel who are assigned to MVID, Global Pharmaceuticals, GMFBS, or any other [Schering-Plough or] Merck divisions and who are engaged in, or have responsibilities that directly support, the Covered Functions as defined below in Section II.C.5; and

l. all contractors, subcontractors, agents, and other persons who perform Governent Pricing and Contracting Functions (as defined below in Section II.C.3) or who perform Promotional and Product Services Related Functions (as derined below in Section II.C.5) on behalf of [Schering-Plough or] Merck. . . .

"Relevant Covered Persons" includes those Covered Persons whose job responsibilities relate to Governent Pricing and Contracting Functions (as defined below in Section II.C.3) or to Promotional and Product Services Related Functions (as defined below in Section II.C.5). . . .

Be careful out there -- be very careful. . . .

[Some other time, I'll explain how much more could have been done, to add more "teeth" to this Merck version CIA agreement. Even so, suffice it to say that the Merck agreement is much tougher, by far, than the currently-operative Schering-Plough federally-mandated corporate integrity agreement. Thus, the above Merck agreement will control the conduct of the merged entity, under well-settled principals of applicable law.]

Friday, September 25, 2009

Back When The Current US Attorney General, Eric Holder, Was Merck's Lawyer. . . .

I have been meaning to upload the full-text PDF file (all 65 pages, and 3.8 Mb, of it) of Merck's Feruary 2008 Corporate Integrity Agreement -- an agreement that contains compliance obligations for Merck (and "New Merck") through February of 2013. [I should also mention, in passing, that Mr. Holder was a partner at Covington & Burling, at the time he represented Merck -- and that's the same Schering-Plough law firm that offered less than entirely responsive replies to a formal Congressional letter of inquiry, about ENHANCE study results disclosure delays -- in April of 2008 -- click image, at right, to enlarge.]

The Merck settlement agreement may be extended, should evidence of additional corporate wrongdoing occur (or it may be revoked altogether, and a proceeding instituted by the DoJ's Health-Care Fraud unit, reinstated). In passing, I noticed that Eric Holder (yes, the current Attorney General) signed this agreement, back in 2008, as one of Merck's retained lawyers against the DoJ.

And so, he will obviously have to be "Chinese Walled-off" from any substantive decisions related to Merck's compliance with this corporate integrity agreement, under the applicable conflict of interest rules. That's a good thing -- as even though I have the utmost confidence in his personal integrity, it will assure -- with certainty -- that only the hard-working, very able career US Attorneys (and likely the ones who handled the original Merck matter) will make these "balls and strikes" calls, from now until Feberuary 2013. Here is what caused the agreement to spring into existence; and here is the full 65-page document (3.8 Mb PDF file):

. . . .The Medicaid Rebate Statute requires that drug manufacturers report their “best prices” and other cost information to the government in order to ensure that Medicaid obtains the benefit of the same discounts and price concessions that other purchasers enjoy. An exception to this rule allows manufacturers to exclude from the prices they report any discounted prices that are “nominal” in amount. Merck improperly termed as “nominal” the prices it offered to hospitals to boost their sales and excluded those discounts from the prices it reported to the government.

Steinke’s suit further alleged that from 1997-2001, Merck had approximately fifteen different programs used by its sales representatives to induce physicians to use its many products. These programs primarily consisted of excess payments to physicians that were disguised as fees paid to them for “training,” “consultation” or “market research.” In fact, the government alleged that these fees were illegal kickbacks intended to induce the purchase of Merck products. Merck agreed [on February 7, 2008] to pay $399 million plus interest to settle the Medicaid Rebate as well as the kickback allegations.

In a separate suit filed by physician William St. John LaCorte in New Orleans, it’s alleged that Merck had established a marketing scheme in which it provided substantially reduced prices for its Pepcid products once the hospitals agreed to primarily use the drug instead of a competitor’s. (Pepcid is used to reduce stomach acid and to treat heartburn and acid reflux.) Merck allegedly offered these incentives to hospitals in order to obtain the benefit of spillover business when a patient would continue to purchase Pepcid once he or she was discharged. Merck improperly termed as “nominal” the prices it offered to hospitals to boost the sales of Pepcid, excluded those discounts from the prices it reported to the government, and thus effectively denied the government the benefit of these lower prices. Merck agreed. . . to pay $250 million plus interest to settle these allegations.

Under the two settlement agreements, the federal government will receive more than $360 million, and forty-nine states and the District of Columbia over $290 million. In addition, Mr. Steinke will receive $44,690,000 from the federal share of the settlement amount and an additional $23.5 million from the states. Similarly, Dr. LaCorte will receive a share of the proceeds from the federal and state settlement amounts under their respective qui tam statutes. . . .

I'll keep an eye on this one, and update, as any developments warrant. Those Covington & Burling lawyers sure do get around, though, don't they?

Huzzah! -- Just As Salmon Has Been Writing -- Right Here, For Months!

Tonight, The New York Times weighs in on the improper influence Dr. von Eschenbach more than occasionally (allegedly) exerted on what should have been solely independent agency science decisions (this time, as to a medical device, but as Salmon has shown, this pattern occasionally also carried over to drug candidates, at FDA, during the Bush years):

. . . .The agency’s scientific reviewers repeatedly and unanimously over many years decided that the device, known as Menaflex and manufactured by ReGen Biologics Inc., was unsafe because the device often failed, forcing patients to get another operation. . . .

"The message here is that there were problems with the integrity of F.D.A.’s decision-making process that have solutions," Dr. Joshua Sharfstein, the agency’s principal deputy commissioner, said in a conference call with reporters. . . .

The report, written by top agency officials, said that Dr. von Eschenbach, who resigned as F.D.A. commissioner in January, became as a result of political pressure "personally engaged in the details of a process usually coordinated" by scientific staff. One agency manager concluded that Dr. von Eschenbach "was demanding not only an expedited process but also an outcome in favor of ReGen," the report stated. . . .

Dr. David R. Schmidt, the knee surgeon for the San Antonio Spurs, said he was involved in the original clinical trial of ReGen’s Menaflex device and concluded that patients did not benefit. He said he was surprised that the F.D.A. approved it. . . .

Click the following links, to read of prior reports of the same sort of conduct, alleged by Salmon, most recently here (as to some device approvals), and here (as to Schering-Plough's drug Saphris), also here, here, here (more generally, on the FDA's recently-amended drug approval process), as well as here (cancer drugs), and here (as to Merck's Vioxx).

Salmon only "scooped The Gray Lady" by about eleven months, right here, on this blog -- overall. . . .

FDA Warns Of Elevated Pancreatitis Risk -- With Januvia®/Janumet® Use

Per the Wall Street Journal Health Blog's Jacob Goldstein:

. . . .The FDA said today it had received 88 reports of pancreatitis in patients taking Januvia® and Janumet®, a related drug that combines Januiva® with the diabetes medicine metformin. The agency didn’t report any deaths in cases of pancreatitis in patients taking the drugs, but 66% of the cases did require hospitalization. In 21% of cases, pancreatitis occurred within 30 days of starting Januvia or Janumet; 53% of the cases resolved once after the drug was discontinued. . . .

Merck’s sales of Januvia® (sitagliptin) and Janumet® totaled more than $1 billion in the first six months of this year. . . .

Stay-tuned. . . . but, for its part, Merck says that pancreatitis risk is an inherent condition in many, many Type II diabetic-patients, and thus the reported pacreatitis cases may simply be a by-product of the disease, not the drug used to treat it.

It is interesting that, in more than half of the reported cases, the pancreatitis subsided after the patient stopped taking Januvia or Janumet, though.

UPDATED "In-Substance" Patent Cliffs Facing Schering-Plough

In one now UPDATED and handy table, as I'd earlier detailed, below are some of the larger Schering-Plough franchises with looming near-term "in substance" patent cliffs:

Branded NameSales ($M/Yr)Compound NameFirst Suit Filed30 Month Expiry/
"At Risk" Date
Likely Competitor
Zetia®$900 MillionEzetimibeMarch 2007October 2009*Glenmark Pharma
Temodar®$950 MillionTemozolomideJuly 2007January 2010Barr Labs (Teva Pharma)
Integrilin®$300 MillionEptifibatideFebruary 2009November 2011Teva Pharma
Levitra®$430 MillionVardenafil HClJuly 2009April 2012Teva Pharma
Clarinex®$800 MillionDescloratadineSeptember 2006July 2012**Orchid Pharma
Total:$3.38 Billion........


* Trial could begin by year end 2009; though admittedly unlikely, an "at risk" launch (by Glenmark, most likely) "window" will be open -- and could occur at any time -- beginning in October 2009.

** All potential generic descloratadine manufacturers have agreed to a launch suspension until at least January 2012 (Orchid -- the one most likely to launch -- will wait, per agreement, until July 2012), though the permissive "at-risk" launch window first-opened in July of 2009.


Zetia® Patent Challenge -- Final Pretrial Arguments On November 24, 2009

This patent infringement case involves Glenmark Pharmaceuticals' efforts to bring a generic version of Zetia® to market in the United States. It seeks to do so by avoiding, or invalidating altogether, Schering-Plough's so-called ‘721 patent, a patent for the hydroxylsubstituted azetidinones compound ezetimibe, marketed and sold commercially as the cholesterol-management drug Zetia®.

I have previsouly set up the background on this case, and some of the other in-substance patent cliffs faced by Schering-Plough, here.

It now looks likely that this trial could begin, even before year-end:

. . . .Oral argument on the parties’ informal submissions regarding the Final Pretrial Order shall be heard on November 24, 2009 at 2:00 P.M. before the undersigned in Courtroom 2D of the Martin Luther King, Jr. Courthouse.


/s/ Esther Salas

Esther Salas, U.S.M.J. . . .

Stay-tuned, as Zetia made close to a billion in sales revenue last year, all by itself, for Schering-Plough.

I'm A Little Skeptical About All of This. . . But Here It is

The local-pharmacy plaintiffs challenging the Pfizer-Wyeth merger in Northern California's federal district courts -- largely on antitrust grounds -- have answered the motion to dismiss of Pfizer and Wyeth, thus:

. . . .Plaintiffs further allege that competition between defendants will be eliminated upon merger, not only for drugs currently available in the marketplace, but also for drugs that will be available after FDA approval. Likewise, the merger will eliminate competition between the defendants to develop new drug therapies.

Moreover, the merger is likely to lead to additional mergers and further concentrate an already concentrated market, as shown, for example, by Merck's intent to acquire Schering-Plough. If the merger is completed, plaintiffs are threatened with higher drug prices, diminished choice of drugs, and lower quality of drugs. . . .

As I'd written about 20 days ago, I think the plaintiffs have only a small chance of surviving the motion to dismiss, here. Originally, I covered this because it purported to establish novel grounds for challenging mergers -- the use of TARP funds, allegedly to indirectly eliminate (pharmaceutical company workers') jobs. That claim has given way to a more traditional antitrust claim. So -- there you have it; I'll bring you up to date, when/if the dismissal order is entered.

Thursday, September 24, 2009

While "Skeptical" That Cap Is Needed -- CEO Clark To Disclose Merck Doc Payments. . . .

Andrew Jack, in London, for the Financial Times reports overnight, thus (do go read it all):

. . . .Merck is set to become the largest drugs company to start publishing details of its payments to doctors in the latest response to growing criticism of excessive industry influence over drug prescribing.

Richard Clark, chairman and chief executive of the second-largest US drugs group by sales, told the Financial Times that “the system needs to be totally transparent.” He also questioned whether there was a need for an annual ceiling on payments. . . .

He may question it, but Congress may end up legislating it -- if industry doesn't self-regulate, through a PhRMA guideline cap. Are you listening, Billy Tauzin (pictured, at right)?

A Renewed Ray of Hope -- For An HIV Vaccine -- "Some Day"

I think Scott Hensley, for NPR's Health Blog, has it just about right, here -- this is simply an encouraging first step -- not much more, given the discouraging brick wall Merck (and many others before it) recently struck, on the path of AIDS-vaccine research. Do go read all of the NPR piece, but here is a snippet:

. . . .While encouraging, the modest positive results raise questions, too. The vaccine regimen tested, designated RV144, was actually two vaccines -- one to prime the immune system to attack HIV and the other to boost the response. Volunteers in the study got multiple shots of vaccine or placebo over several months. Previous tests of the vaccines given alone failed. . . .

One reason for vaccine skepticism was the finding two years ago that a Merck vaccine raised the risk of HIV infection rather than lowered it. The project was canceled and vaccine researchers fell into a funk. . . .

Keep your fingers crossed that this leads to more encouraging results.

However, one disappointing result from the current Thai combo study was that of those who were treated with study meds, yet did still contract an active form of the HIV virus, after vaccination -- the treated population's viral loads were no lower than the placebo population's. That is a particularly confounding development. Still, let us keep a positive thought, for creative developments, based upon learnings from the Thai combo study. This is about as complicated a task as biological science can offer.

Wednesday, September 23, 2009

Senate Finance Committee Overrides Several Republican Delays To Health Overhaul, Tonight

Fighting off various largely partisan stall tactics, the Senate Finance Committee made progress today on President Barack Obama's top domestic priority, a broad overhaul of the $2.5 trillion healthcare industry.

The Obama Administration would rein in costs, increase the regulatation of health-insurers and expand coverage to many of the 46 million uninsured Americans. Reuters carries this coverage, tonight:

. . . .The S&P Managed Health Care index of large health insurers' stock prices fell for a second straight day as several analysts said the amendments to the Baucus bill were generally unfavorable to the industry.

Under the Baucus plan, all U.S. citizens and legal residents would be required to obtain health insurance, with subsidies offered on a sliding scale to help people buy it. The plan would create state-based exchanges where individuals and small businesses could shop for insurance. . . .

Roll tide, roll. . . .

Separately, outgoing CEO Fred Hassan told various pundits this afternoon that he might join a "very small health care company," post-merger, one perhaps only on the verge of generating positive cash-flow.

So, the Schering-Plough "CEO-For-Now" goes from widely influencing US health care policy, in his former role as the industry-lead of PhRMA (he last served in that role in early 2008), to watching -- from the sidelines, as many of the measures he actively opposed, with vitriol, are crafted into the coming law. . . . life simply rolls on, doesn't it, Mr. Hassan? It sure does.

Roll tide, roll. . . .

FDA's Oncologic Drugs Advisory Committee, Soon to Meet -- On Pegintron. . . .

As we indicated back in August, the FDA Advisory Committee morning agenda is now set, for October 5, 2009:

. . . .The committee will discuss supplemental biologics license application (sBLA) 103949/5153.0, PEGINTRON (peginterferon alfa-2b) injection, manufactured by Schering Corporation. The proposed indication (use) for this product is as an adjuvant (additional) treatment for melanoma, a kind of skin cancer. The primary treatment for melanoma that is metastatic (has spread) to the lymph nodes is surgery to remove both the original cancer and lymph nodes surrounding the cancer. PEGINTRON’s proposed use is as a treatment in addition to, or as an “adjuvant,” to surgery. . . .
8:10 a.m. | Opening Remarks

8:15 a.m. | Sponsor Presentation -- Schering Corporation

9:00 a.m. | FDA Presentation -- sBLA 103949/5153.0

9:45 a.m. | Break

10:00 a.m. | Questions to the Presenters

10:30 a.m. | Open Public Hearing

11:00 a.m. | Questions to the ODAC and ODAC Discussion

12:00 p.m. | Lunch. . . .

[Another drug candidate will be discussed at the afternoon session. . . .]

October 5, 2009, Hilton Washington DC North/Gaithersburg, The Ballrooms, 620 Perry Parkway, Gaithersburg, Maryland. . . .

To date, no coflicts have been reported at FDA, by any ODAC member as to Schering-Plough, or Pegintron. I'll post full-text PDFs of all the background materials, as they become available -- which usually occurs about 48 hours before the committee meets.

Will Phred's Packet O' Pharmacia Secret-Case Materials Soon Be "Sunshine Liberated"?

At the moment, the early-2000s era federal class-action securities litigation -- based on the alleged conduct of CEO Hassan (and his then-deputy, Carrie Smith Cox), while both were employed as executive officers of Pharmacia -- is stayed, or "on-hold", pending a decision in an unrelated United States Supreme Court case (involving, as irony would have it, Merck -- on procedural matters that could well have an impact on procedural matters in this Pharmacia case). Got all that? Good.

Now, while they were waiting (image of Celebrex®, at right -- the drug involved in the allegedly-incomplete prior-disclosures by Pharmacia), the Pharmacia case plaintiffs' lawyers filed papers asking the very-able New Jersey federal District Court Judge Anne E. Thompson to unseal portions of the docket that were previously sealed in this litigation. Today, she held an "in camera", or a private, inside-chambers, not in open court, hearing on that motion -- and elected to reserve judgment on it.

The text of her order appears below, but it is significant that Judge Thompson did not simply reject the motion to unseal, outright. One could read it as a hint, that if the unrelated Supreme Court case resolves itself in a manner which suggests the Pharmacia litigation may continue to proceed down its present track, toward a trial on the merits, she might be inclined to unseal those records. I strongly suspect those Hassan-Cox Pharmacia-era records might reverberate with a "pre-echo" of the (alleged) Schering-Plough conduct:

. . . .Minute Entry for proceedings held before Judge Anne E. Thompson:

In Camera Hearing held on September 23, 2009 re: Plaintiffs' motion to vacate the sealing order.



LATER: I would be remiss, here, if I did not note in passing that outgoing Schering-Plough "CEO-For-Now" Fred Hassan just told reporters stringing for the Wall Street Journal that he might join a "very small health care company," post-merger, one perhaps only on the verge of generating positive cash-flow. [Insert quip here, about needing to deploy his own cash-flow to defend some 150 pieces of pending litigation.]

Credit, Where Credit Is Due -- Merck's $500 Million Gardasil® Donation

Merck has today committed $500 million of free HPV vaccine to Bill Clinton's developing world basic health initiative:

. . . .Under the plan, announced at the annual meeting of the Clinton Global Initiative, Merck will provide up to 5 million free doses of Gardasil and Qiagen intends to add to its existing 1 million test donation program by providing HPV DNA tests to screen an additional 500,000 women. . . .

Offered in fairness, as compared to this other item, of mine this morning.

When Merck's Mandate-Marketing Meets Local Politics -- Ugly Truths Emerge

This story has been circulating for a while, but it is time to highlight the most odious corner of it, here.

When Merck's marketing-to-governments arm marched forward to seek state and local changes of law -- changes that would require vaccination of female children against HPV -- with products like Merck's Gardasil®, it set in motion an occasionally repugnant political and xenophobic process -- per EcoChildsPlay:

. . . .Seventeen-year-old Simone Davis has been applying for citizenship for almost 10 years. When she was 3, she was abandoned and then adopted by her paternal grandmother, who married an American. The family moved to Port St. Joe, Fla.

Now, because she refuses to get the HPV vaccine, she may be sent back to England. That’s because Gardasil is among the required vaccines for citizenship. This vaccine is not mandated for [US Citizen] American girls [in Florida], though different [States] have their own laws. . . .

The problem is that politicians actually write the laws, and do stupid things -- things like exempting citizens from their application. I am fairly certain such a law wouldn't survive Supreme Court scrutiny (on "equal protection", or "free exercise" grounds), but for now, it stands -- until the inevitable ACLU challenge wends its way through the courts.

Note also that if this girl lived in California, Iowa, Colorado or Illinois, she would not be subject to deportation for refusing the vaccine (but in Texas she might). None of that makes any sense (there is no "rational relationship" -- in Supreme Court speak -- between the law's supposed aim of stopping a sexually-transmitted-disease, and wholesale exempting girls born as US citizens from getting the vaccine), as underneath this law is the whiff of something that suggests non-citizens are dirty, promiscuous or disease ridden.

And, all in the name of selling more Gardasil®. It is a good vaccine, if appropriately deployed, voluntarily. Mounting it as the business-end of a deportation order is another matter.

Perhaps Meck should intervene, and express its opposition to such an inhumane application of a policy Merck itself set in motion.

Just a thought.

Tuesday, September 22, 2009

"Progress, Over Perfection" -- Paul Begala, in Last Month's Wa Po. . . .

I think this a very worthwhile read, for anyone who is genuinely earnest about discussing real health care delivery and reimbursement reform -- whether an ardent opponent, or a deeply blue "public option progressive" -- here's a snippet:

. . . .It would be a bitter disappointment if health reform did not include a public option. A public plan that keeps the insurance companies honest is, I believe, the right policy and the right politics. I believe subsidies should extend to as many Americans as need help and that the hard-earned health benefits of middle-class Americans should not be taxed. I believe insurer abuses like the preexisting-condition rule should be outlawed. The question is not whether I or other progressives will support a health-reform bill that includes everything we want but, rather, whether we will support a bill that doesn't.

Baucus and the others working on health care have earned the right to take their best shot, and we progressives should hold them to a high standard. I carry a heavy burden of regret from my role in setting the bar too high the last time we tried fundamental health reform. I was one of the people who advised President Bill Clinton to wave his pen at Congress in 1994 and declare: "If you send me legislation that does not guarantee every American private health insurance that can never be taken away, you will force me to take this pen, veto the legislation, and we'll come right back here and start all over again." I helped set the bar at 100 percent -- "guarantee every American" -- and after our failure it's taken us 15 years to start all over again.

So I am trying to find the right blend of principle and pragmatism -- ever mindful that, aside from race, health care is the most difficult domestic issue of the past century. FDR couldn't pass it. Nor could Truman, nor Nixon nor Carter nor Clinton. Lesser presidents like George W. Bush didn't even try.

The Founders gave us a standard: "a more perfect Union." It's an odd phrase; we don't generally speak of something becoming "more perfect." I believe it means that we have a duty, every generation, to make progress. For a dozen generations we have done that, in our imperfect way. . . .

Do go read it, if you missed it while vacating "down the shore", in mid-August.

How Long Should A Cancer-Drug Patent Last? Is 32 Years Too Long?

Tonight we ask whether -- for a revolutionary and life-extending cancer drug -- a 32 year period of patent protection is excessive. The drug?

Schering's Temodar® -- my backgrounder may be found, here. Barr Labs has, earlier this year, tried the issue of the validity of Schering's efforts to extend the life of the Temodar® '291 patent before a federal district judge in Delaware -- it is presently awaiting a ruling. At right (click to enlarge) is page 7 of Barr's post trial brief.

More background: most drug patents last either 17, or 20 years, by statute -- but are often extended in various ways -- per the kind collection of volunteer knowledge at Wikipedia:

. . . .In the United States, under current patent law, for patents filed on or after June 8, 1995, the term of the patent is 20 years from the earliest claimed filing date. For patents filed prior to June 8, 1995, the term of patent is either 20 years from the earliest claimed filing date or 17 years from the issue date, whichever is longer. Extensions may also be had for various administrative delays. The exact date of termination may be zealously litigated, especially where daily profits from a patent amount to millions of dollars, e.g., pharmaceuticals. . . .

"Zealously litigated", indeed. After 32 years of exclusive sales, shouldn't we say "enough, already" -- and allow lower cost generic versions onto the market, to allow more people of limited means, or no insurance, a more cost-effective but nonetheless life-extending cancer option?

I am a capitalist -- I am in favor of the pharmaceutical companies recouping very-generous returns -- on the considerable investments each must make to bring a new drug candidate to market.

But I think it fair to ask whether "gaming the system" -- for 32 years (as opposed to the usual 20). . . . is simply beyond the pale. There is no doubt that Schering has made ten or twenty times its investment in Temodar, over all these years. Is that not adequate incentive?

I am interested in serious replies to this question.

Why We Need To "Help Protect Health Insurance Executives". . . .

Pretty good vid -- Will Ferrell, Donald Faison and compadres send up those [nameless] Health Insurance Co. CEOs:

. . . .Afterall, only 80 percent of us support it -- found it via "", and . . .

When Is A Joint-Venture Termination Agreement. . . Not. Really. A. Termination?

. . . .When one gives a would-be terminating co-venturer a call option on a large chuck of the other's to-be-acquired businesses, that's when.

"This grand illusion brought to you by the good people at Merck -- who make chemicals that help people see things that aren't there -- and not see things. . . that are!":

Consider this -- from Section 5.7 of Exhibit 10.1 to the SEC Form 8-K Merck filed last night:

. . . .5.7 Post Contribution Revival

Notwithstanding Sections 5.5 and 5.6, from and after the closing of the transactions contemplated by the Contribution Agreement (as defined in the Call Option Agreement, dated as of July 29, 2009, among Schering-Plough, Merck and Sanofi-Aventis) or from and after any such time as Merck or Schering-Plough or any of their Affiliates, on the one hand, and Sanofi-Aventis or any of its Affiliates, on the other hand, consummate a joint venture, contribution, purchase or other transaction similar to that contemplated by the Contribution Agreement (the “JV Reconstitution”), each Human Health Utility Provision and Consultant Provision shall again apply to, and be binding upon, Merial (and its Subsidiaries) to the extent that such provision was binding upon Merial (and its Subsidiaries) prior to the date hereof. . . .

Wild. "Pay no attention to the un-divestiture behind the curtain.

Focus only upon the current termination/divestiture of our joint venture interest in Merial, to Sanofi. Your eyes are growing heavy. . . heavier. . . you are growing sleepy. . . sleepy. . . sleepier
. . ."

Come 2010: Presto-Change-o! You are now. . . reconstituted.

Again, this grand illusion brought to you by the good people at Merck -- making chemicals that help people see things that aren't there -- and not see things. . . that are.

Monday, September 21, 2009

Merck Finally Announces an ECC Filing on the "Main Deal". . . .

After I yet-again inquired here about it, over the weekend, Whitehouse Station is -- as of about 19 minutes ago -- indicating it is filing with the EU antitrust authorities for approval of the overall Schering-Plough bust-up, styled as a reverse merger transaction, per the AP:

. . . .Drugmaker Merck & Co. is filing papers with regulators in the European Union seeking approval to buy Schering-Plough Corporation.

"We are formally seeking approval for the merger in the EU now that we have divested our interest in Merial," Merck spokeswoman Amy Rose says. . . .

Merck expects the European Union to issue a ruling on the Schering-Plough acquisition by Octocber 23, 2009. . . .

Of course, that "expectation" turns on whether the ECC agrees that no issues are presented by the main deal. Remember also that the US authorities haven't cleared the main deal, nor have Japanese regulators.

Still unresolved, as well, is whether the ECC will allow the Intervet call option in favor of Sanofi-Aventis to go forward, post the close of the main deal.

Sunday, September 20, 2009

When SHOULD A Schering-Common-Stock 401-K Trading-Blackout ACTUALLY Begin?

A poster over at the Yahoo! stock chatboard, set up for Schering-Plough, posted the below, yesterday afternoon:

. . . .There could be no trading [in] Schering-Plough stock for those who hold stock in Schering's 401K, beginning the week of October 18, 2009. Vanguard has mailed the required 30 day advance notice of merger. Of course, merger could occur later than this. . . .

Of course, assuming this information is accurate, Vanguard would only send such a notice at the direction of either out-going CEO Hassan, or incoming "New Merck" CEO Clark.

How upset will plan participants be if CEO Hassan has (once again!) been overly optimistic about a time-frame for some important event?

That is, I think holders in the plans may be disappointed here, if Schering-Plough (and/or Merck) gave an overly optimistic notice to the fiduciaries, like Vanguard. . . .

Just for fun, posit that this deal doesn't close until late December 2009, or perhaps even in January of 2010.

How much blowback is going to come "New Merck" CEO Clark's way, for effectively locking these plan participants/employees out for a full-quarter, or more?

We shall see.

Saturday, September 19, 2009

New, Stronger FDA Warning on A Label -- Should It Be Proof of Prior Inadequacy?

The New York Times is running coverage of the FDA's enhanced warning, issued Wednesday, on the drug at the heart of Levine v. Wyeth, decided in the Supreme Court's last term, thus:

. . . .The fundamental issue was whether Wyeth or the F.D.A. was most responsible for warning consumers about the potential risks of Wyeth’s drugs. The Bush administration argued that the F.D.A. was the only agency with enough expertise to regulate drug makers and that its decisions should not be second-guessed by courts.

Had the [Bush] administration strengthened the warning on Phenergan while Ms. Levine’s case was being considered, the action might have undermined Wyeth’s case by confirming Ms. Levine’s argument that the previous warning was inadequate.

The F.D.A.’s new ruling, made Wednesday, resulted from a review of reports of "severe tissue injury, including gangrene, requiring amputation."

The change suggests that the Obama administration may view lawsuits as helpful to its work, a position that had been the policy of the drug agency before the Bush administration. . . .

I think this is accurate -- I think there is merit to allowing some enforcement to occur through the channel of private litigation.

19 September 2009 @ ECC -- One Down, THREE to Go. . . .

Here (at right) is the ECC Official Journal clearance of the least problematic step of the transactions contemplated by the reverse merger. It was posted four days late.

Still pending are notices from (1) the ECC that the larger, main transaction -- between Merck and Schering-Plough -- is clear to close. Also still missing are notices from (2) the US authorities (FTC/DoJ) that the larger deal is clear to close. Also STILL missing, and most problematic of all -- is a clearance from (3) the European Competition Commission, holding that the "Intervet call option", in favor of Sanofi-Aventis -- to acquire Intervet from "New Merck", is clear to close.

Of these three missing clearances, there is evidence that only one of them has even been filed. That one is the US FTC main deal HSR filing. The parties are awaiting word as to whether a third request for information will be forthcoming (having already submitted answers to a second request). In any event, here is the AP report of the notice at upper-right:

. . . .French drugmaker Sanofi-Aventis SA has completed its $4 billion purchase of Merck & Co.'s half interest in their veterinary medicine business, Merial Ltd., the companies said Friday.

The move was required by regulators before Merck can close its $41 billion purchase of New Jersey neighbor Schering-Plough Corp., which also sells animal health products.

Merial, a joint venture founded in 1997, sells two widely used pet medicines, flea-and-tick blocker Frontline and chewable heartworm preventer Heartgard. It also sells Ivomec, which kills parasites in hogs and cattle, and other medicines and vaccines for livestock. . . .

Net/net -- there is still "a lot of regulatory wood to chop", before this can close.

Thursday, September 17, 2009

CEO Clark -- In London -- On the Rest of Pharma Eschewing Mega-Deals. . . .

In a Reuters-London interview tonight, Merck CEO Dick Clark candidly admits that most of the rest of pharma has not followed his (and Pfizer's CEO Kindler's) lead -- and why:

. . . .Rival drugmakers are likely to wait and see how this year's mega-mergers turn out before considering another round of big-ticket acquisitions, according to Merck & Co's chief executive.

Richard Clark, whose company agreed to buy Schering Plough. . . said the industry was looking for proof that deals could provide more than just cost savings.

"I would suspect some companies may sit on the side line just to see how well these activities are taking place," Clark told Reuters during a visit to London to unveil a vaccine joint venture with the Wellcome Trust medical charity. . . .

Credit Suisse analyst Catherine Arnold said in a report on Thursday that the next wave of deals by major pharmaceutical companies would emphasise revenue augmentation over cost savings.

She also predicted a divergence of activity between U.S. and European drugmakers, given new European chief executives' stated disinterest in large deals. . . .

Clark (surprisingly-candidly) likens these cost-slashings-only (headcount-reduction) mergers to "kicking the can" down the alley: when you later catch up to the can, you have to kick it again, just to stay-even, at the EPS line. His suggestion is that Merck is trying to redesign the way it does research -- so that can-kicking (or, mass-layoffs) will become rarer, in the future.

Color me rather-skeptical about that particular notion.

ECC Official Journal Watch -- Merial's Gone Missing(!) -- Day Three. . . .

UPDATED 09.17.09 @ 10 AM EDT: Mystery solved -- an "en" version (English PDF) of notice to appear, at ECC, shortly.

It is now after lunch on the third business day after the earliest ECC clearance date, for the easiest part of the Schering-Plough/Merck transactions, and still no ECC Official Journal notice on the proposed Merial Merck/Sanofi Animal Health transfer -- despite one lonely little press report of its occurence. Here's what did officially clear the ECC today, the 17th, in Brussels:

. . . .2009/C 224/01 -- Non-opposition to a notified concentration (Case COMP/M.5603 — ENI/TEC)

2009/C 224/02 -- Non-opposition to a notified concentration (Case COMP/M.5506 — Sabena Technics/TNT Airways/JV)

2009/C 224/03 -- Non-opposition to a notified concentration (Case COMP/M.5568 — Volkswagen/Fleet Investments/Leaseplan Corporation JV)

2009/C 224/04 -- Non-opposition to a notified concentration (Case COMP/M.5180 — Manitowoc/Enodis). . . .

This is truly puzzling -- as the office of the ECC Directorate Generalé is ordinarily as punctual as the trains in Genevé -- with these Official Journal notices of clearance. And usually, the involved companies also announce the receipt of ECC clearance. So far, none of the involved companies have.