The AHF has persuaded two large California institutional investors, CalPERS and CalSTRS -- both long term, large Merck shareholders (in the aggregate, controlling almost $500 million worth of Merck stock) -- to write CEO Clark about the continuing top-of-market pricing for Isentress®. It outstrips all competing therapies, on price at least -- ringing the register-drawer at over 20 percent higher than any other therapy on the market.
The previously-publicly announced Isentress pricing strategy -- under which Merck sought an initial, narrow approval indication, called "salvage therapy" -- and thus won a speedy FDA approval -- was that Merck would then later reduce Isentress pricing, if it were to win a more general, broader "first line" therapy approval from FDA. That much broader FDA approval came in July of last year. Yet the price of Isentress hasn't come down -- even as it is sold to hundreds of thousands of additional AIDS patients, at nearly $13,000 a year, in most states. Many US patients without Cadillac plans simply cannot afford the co-pays for the therapy; and for almost all of the uninsured (additional hundreds of thousands of AIDS patients), it will forever be beyond reach -- even as Merck makes modest assistance programs available to some. More here, but here is a snippet:
. . . .With a $156 billion investment portfolio, CalSTRS is the second-largest public pension fund in the United States. According to CalSTRS, the fund -- which provides retirement, disability and survivor benefits to California's 776,000 public school educators -- is a long-term owner of Merck & Co. stock, with more than 3.5 million shares currently worth over $100 million dollars.
Writing on behalf of the more than 1.6 million State, school and local public employees, retirees and their families they represent, CalPERS also sent a letter to Mr. Clark inquiring about Isentress pricing. With more than $200 billion in market assets, CalPERS is the nation's largest public pension fund and a long-term owner of approximately 9,107,000 shares of Merck common stock. . . .
[One of the letters reads, in part:] [W]e would like to encourage you to meet with representatives of AHF to discuss access to the drug, particularly to the uninsured both in California and other states. . . .
This is the right thing for Merck to do, and would now be a particularly timely and smart move -- to address these major shareholder concerns, lest it bubble up, and over -- at the Annual Meeting of Merck Stockholders due to be held in May, 2010. Some times, a bull does well to pull-in its horns -- even as it rumbles across one of the richest markets on Earth.
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