This new corporate integrity agreement (mentioned on page 26 of the just-filed SEC Form 10-Q) is plainly material, and will have to be disclosed as an exhibit to the Form 10-Q, for the third quarter of 2010.
Do look for it then; I know I will:
. . . .Effective August 2, 2010, Merck and HHS-OIG executed a Unified CIA, which replaced the individual CIAs that had been signed by Old Merck and Schering-Plough prior to the Merger. The Unified CIA incorporates certain of the requirements of the individual CIAs of Old Merck and Schering-Plough and is similar, although not identical, to those legacy CIAs. Merck assumes the compliance obligations of the Unified CIA through February 5, 2013, which is the same as the Old Merck CIA. The Company believes that its promotional practices and Medicaid price reports meet the requirements of the Unified CIA.
The Company has received letters from the DoJ and the SEC that seek information about activities in a number of countries and reference the Foreign Corrupt Practices Act.The Company is cooperating with the agencies in their requests and believes that this inquiry is part of a broader review of pharmaceutical industry practices in foreign countries. . . .
Adverse outcomes here would be material to New Merck. I do wonder whether -- at least in part -- the DoJ/SEC investigations will focus on allegedly corrupt foreign practices like those allegedly undertaken by legacy Schering-Plough -- in its marketing of PegIntron® in Vietnam, over the last few years (earlier April 2010 backgrounders here and here). Yes, -- if adversely determined -- these will be material.
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