Saturday, August 31, 2013

Analysis: Judge Keenan's Latest Fosamax® MDL Remand Order Increases Likelihood Of Global Settlement


On a quiet pre-holiday Friday, Judge Keenan entered an MDL remand process order, setting the mechanics for various of the Fosamax® cases to be returned to the local federal district courthouses, for trials. [Judge Keenan's order includes the Boniva® cases as well -- despite earlier GSK and Roche objections.] Here is the 3 page PDF order.

He set the process so that 200 cases at a time will go back -- Merck only wanted to deal with 100 at a time. The plaintiffs suggested 300 at a time. Judge Keenan chose King Solomon's path -- split it down the middle.

Accordingly, the economic burden to Whitehouse Station, of potentially preparing all 200 cases for trial simultaneously is about double what Merck had previously anticipated. The process could easily become burdensome, and even if Merck thinks it can win 5 out of each 7 cases (based on prior bellwether results), the numbers of dollars to be spent will start to pile up -- in favor of some overall global settlement, rather than spending vast sums on legal fees (and losing some trials) for potentially the next decade, or more.

At least, that's my assessment. Here is a Reuters report -- and a bit:

. . . ."It's a big deal as it changes the cost paradigm for Merck exponentially," said Timothy O'Brien, a partner at Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor and lawyer representing Fosamax plaintiffs. . . .

The cases before Keenan comprised roughly one-fifth of the 5,075 lawsuits pending nationally in federal and state courts related to Fosamax, a one-time blockbuster medication.

Keenan's order on Friday came after mediation to resolve 370 cases broke down two weeks ago. O'Brien's law firm and another firm represented plaintiffs in those cases.

Another 104 lawsuits brought by another firm could have been added to the talks if a deal on value was reached, [plaintiffs' lawyer] O'Brien said. . . .


We will -- of course -- keep you posted.

Friday, August 30, 2013

Quiet Week For Merck; Republican "Obamacare Rate Shock" Claim Debunked


Updated: Off-Topic -- Seamus Heaney, a giant of Irish poems, has passed. The Nobel laureate was 74. Travel well through the Universe then, friend.

...And after the commanded journey, what?

Nothing magnificent, nothing unknown.

A gazing out from far away, alone.

And it is not particular at all,

Just old truth dawning: there is no next-time-round....


So true.

~~~~~~~~~~~~~~~~~~~~~~


Going into the long weekend, it seems that news on (or involving) Whitehouse Station has all but dried up.

So -- we will take this Friday morning moment to note -- with the aid of Bloomberg News Service -- that most of the claims of the Republican leadership in Tennessee, Florida, Missouri and Ohio (among other states) have been debunked. The claim was that most consumers would see staggering premium increases in individual health care insurance rates, post the October 1, 2013 implementation of the ACA of 2010. It is -- and was -- false. Now, a Rand study confirms this:

. . . .Out-of-pocket premiums for most individuals who buy health plans through new insurance exchanges will decline because of federal subsidies, the Santa Monica, California-based nonprofit research group said today in a report. The researchers looked at insurance markets in 10 states to project costs as core parts of the 2010 health law kick in next year. . . .

The Rand study was conducted on behalf of the U.S. Health and Human Services Department and looked at insurance rates in Florida, Kansas, Louisiana, Minnesota, New Mexico, North Dakota, Ohio, Pennsylvania, South Carolina and Texas. . . .


It seems the radical right wing of the Republican party was comparing apples to. . . bicycles. Huge surprise. In fact, the Tea Partiers were soliciting quotes for Cadillac coverage (post October 1, 2013, under Obamacare), and comparing that rate to the rates quoted on bare bones coverage, pre-Obamacare.

Cherry picking your numbers? I'm shocked. Shocked -- I tell you. So it goes.

Have a safe and relaxing long weekend, one and all.

Tuesday, August 27, 2013

Immaterial, But Cargill Joins Tyson's Zilmax® Sales "Beef"


Once again: this will be immaterial to Merck's consolidated results of operations.

Overnight, Cargill announced that it would follow Tyson's lead effective September 30, 2013 and no longer purchase cattle fed Merck's muscle builder, Zilmax®.

Here is Reuters reporting, on the Cargill update:

. . . .Cargill, the United State's third-largest meat producer, said more testing needs to be done on Zilmax and the last cattle fed with the feed additive will be out of its production supply by the end of September.

Zilmax became the focus of attention in the livestock industry after Tyson Foods Inc said on August 7 that it will stop buying Zilmax-fed cattle for slaughter beginning next month. . . .


So it goes.

Monday, August 26, 2013

Judge Keenan Rules Against Merck's Expansion Of Lone Pine Process


On August 12, 2013, we reported on the oral arguments, here.

Last Thursday -- while I was busy with other affairs -- Judge Keenan declined to follow Merck's suggestion. He won't get involved in mini-trials, at the fact discovery stage -- for a wider class of Fosamax claims.

And that all makes good sense -- in streamlining, rather than compounding -- the litigation proceedings. Here is his opinion (in the form of a five page low res PDF).

Thursday, August 22, 2013

Roche and GSK Seek To Exclude Boniva® Cases From Manhattan Federal Remand Orders: Fosamax® MDL


Not entirely surprisingly, GSK and Roche have asked the very able Judge Keenan, sitting in the federal District Court in Manhattan, to exempt all Boniva® (ibandronate) cases from his coming MDL orders in the Fosamax® (alendronate sodium) MDL on the process for remand to local District Courts for trials on the merits. Of course, it is possible -- and perhaps likely even -- that a settlement will be reached before Judge Keenan orders that the individual cases be returned to various districts.

But between now and then, GSK and Roche want Judge Keenan to retain, or hold onto, the Boniva cases (a Fosamax competitor -- in the bisphosphonates class) so that more discovery may be conducted -- to determine whether factual differences exist -- as emerging pattern(s) -- in the cases of plaintiffs who took the slightly chemically different Boniva ibanronate osteoporosis medicine, as opposed to the alendronate sodium compound in Fosamax. Here is the full letter in PDF format -- and a bit:

We will keep you posted.

Wednesday, August 21, 2013

Seamus Fernandez Steady On Merck -- But With A Curiously-Low 12 Month NYSE Target Price

Back in February 2013, coming out of its annual healthcare investors' conference, Leerink Swann (driven by the analysis of Seamus Fernadez) marked Merck as a "Market Perform". Yesterday, Seamus reaffirmed, but moved the NYSE 12 month price target to only $48.45 -- essentially flat with today's trading. Odd.

Since February 2013, almost nothing has changed at Merck -- of a material nature. As we enter the turn, on the thrid quarter of 2013, Merck continues to make bank, more by financial lever-pulling, than pure operational improvement. Even so, Whitehouse Station can continue to deliver, through about mid-2017, even if nothing gets better organically, within the operations of the businesses -- and probably through late 2015, even if there is some material erosion in the businesses. That's my assessment. Do your own diligence here.

In short, I'd say don't bet against Merck in the near term -- it is a great defensive play at the moment, with a lush dividend to clip. So do so, by all means.

However, Ed Silverman -- whose opinion I greatly respect -- made the case, in Forbes yesterday, that Merck needs another major restructuring. I am unconvinced, despite how much I like Ed.
. . . .Leerink Swann increased its EPS estimates on shares of Merck (MRK) through 2014 as lower R&D costs will help improve earnings over the next few quarters. In the report, Leerink Swann maintained its market perform rating and set a price target of $48.45. . . .

[And Ed's take:]

Actually, Fernandez is being kind by describing top-line growth as lackluster. For the first six months of the year, Merck sales fell nearly 10 percent, to nearly $21.7 billion. Meanwhile, R&D spending was essentially flat at roughly $4 billion, which means R&D spending accounted for 18.5 percent of sales compared with 16.7 percent during the same period last year. And marketing and administrative expenses fell 3 percent, to $6.13 billion, but accounted for 28.3 percent of sales, up from 26.3 percent. . . .


Of course, both of them can be right -- Merck could do just fine through 2017; and it might also benefit from a shakeup between now and then. My bet? Not on Chairman Kenneth Frazier's watch. In any event, here is the lead-off item -- on Seamus Fernadez's price target.

Tuesday, August 20, 2013

Legal Wrangling Today -- Over What Happens When Fosamax® Cases Are Returned To Local Districts For Trial



I'll not quote either proposal in much detail -- but simply note that Merck's lawyers, and the plaintiffs' steering committee lawyers, have radically differing thoughts for the remand process, here.

Do go read it all, if you'd like (a five page PDF letter summarizing the proposals, for Judge Keenan) but here's a bit:

. . . .The history of this MDL has demonstrated that attrition is likely once cases are subject to discovery. Merck's proposal, involving a large collection of 100 cases, will provide the Court with valuable information regarding what will happen once cases are subjected to discovery and will give the Court assurance that only viable cases are transferred. Depending on what happens with the first wave of 100 cases, the Court: (1) may determine that it is necessary to continue to subject cases to preliminary fact discovery in the MDL, as the Court has little assurance that the cases are viable; (2) may determine that more or less time should be afforded for the case specific discovery; or (3) may determine that it can remand/transfer, without any discovery in the MDL, several hundred cases with the assurance that they are viable. Through this process, the Court will unquestionably have the opportunity to provide guidance to the parties on how the cases should be transferred under a Section 1404 analysis; and will be able to work through the administrative process of ensuring efficient remands and transfers. . . .


So it goes. We will let you know what Judge Keenan decides to do.

Friday, August 16, 2013

Still Not Material: Merck Halts Zilmax® Sales In US; Canada


I just wanted to update this item, since all outlets, from Reuters to Bloomberg are reporting it.

It is -- and remains -- immaterial to overall Merck.

That's definitive -- even so, it's not good news. Here's the Bloomberg version:

. . . .Merck & Co., which sells veterinary and farm products in more than 140 countries, will suspend sales of its livestock-feed supplement Zilmax in the U.S. and Canada after cattle taking it had trouble walking or standing.

The sales halt is temporary while the company plans a study of the drug, Whitehouse Station, New Jersey-based Merck said in a statement today. . . .

Merck is taking the action after Tyson Foods Inc. (TSN), the Springdale, Arkansas-based beef, poultry and pork producer, said on Aug. 8 that it was halting its use of Zilmax because of lame livestock found at its factories. Merck’s animal health business brought in $3.39 billion last year.

“This important step demonstrates our commitment to providing our industry partners with data that will reaffirm confidence in Zilmax,” said KJ Varma, senior vice president global R&D of the animal-health unit. “We sincerely regret that this situation creates business challenges for our customers but it is critical to ensure that this process is conducted appropriately and with rigorous scientific measures. . . .”


Of course, we will keep an eye on this.

Thursday, August 15, 2013

Not All Claims Against Generic Versions Of Fosamax® Are Preempted: Judge Keenan Ruled In Manhattan Today


This afternoon, Judge Keenan published his memorandum opinion on the topic of whether generic manufacturers of alendronate sodium (the compound that Merck has branded as Fosamax®) will be completely excused from the ongoing Fosamax ONJ MDL -- under the preemption principles set down by the Supremes in Wyeth v. Levine.

This will not likely directly impact Merck's overall fortunes -- except insofar as Merck might be able to assign some of the damages it ultimately ends up paying (to the extent an MDL settlement is reached) for payment, by the generic manufacturers.

Now -- to make the background theory here a little clearer -- if a generic simply copies a branded drug, in general, the generic may rely on the labels and warnings provided by the branded drug manufacturer (here Merck), verbatim -- in the generic's own inserts, all as approved by FDA, to escape liability from various plaintiffs' claims under the theory of federal preemption of state law claims.

Judge Keenan generally agreed with that idea -- but ruled (full 15 page PDF here) that if the generic companies did not promptly update the label copy for alendronate sodium as Merck revised it, with FDA concurrence over the years, the generics may be held seperately liable for not promptly warning doctors and their patients about the emerging risks. In sum, then, this clearly opens the door at least a bit -- to Merck's making the generics kick in to the proposed settlement funding.

. . . .For the reasons stated above, the Generic Defendants' motion to dismiss is granted with respect to the design defect claims. The motion to dismiss is also granted as to the failure to warn claims, except to the extent that plaintiffs may claim that the Generic Defendants failed to timely update their labels after Merck updated the Fosamax label. . . .


Separately, we are reliably informed that Judge Keenan expressed displeasure today about the lack of progress on a mediated settlement -- for about 300 of the ONJ (or osteonecrosis of the jaw) cases. I think there will be a renewed effort, even though the parties report that talks have foundered -- because the able judge is suggesting that both sides have a lot to lose, if all 300 proceed to trial. That said, this opinion may ultimately increase the probability of the settlement being funded adequately -- and thus allow the two sides to close the gap, whatever that might be.

Wednesday, August 14, 2013

MSD Ireland (Legacy Organon/S-P) Posts Diminished Pre-Tax 2012 Income (Vs. 2011)



Here is the local in-Ireland report -- from required governmental filings. The trend is not surprising, but it is unhappy news.

[I usually don't follow country-by-country year end results -- but I'll always make an exception for my Emerald Isle(!). I feel for my people. . . . right?]

. . . .Accounts just filed by Organon (Ireland) with the Companies Office show that pre-tax profits dropped €50m after revenues decreased by 2.6pc to €792.6m last year.

Numbers employed by the Dublin-based firm last year increased by 70 to 591 with the firm's staff costs totalling €38.9m.

The Swords plant sells to 44 countries around the world and its main activities on site relate to the manufacture of women's health products.

The plant is part of the MSD group in Ireland – formerly known as Merck Sharp and Dome – which employs over 2,000 in Ireland today. . . .


So it goes -- to be expected, post the Schering-Plough bust-up/yard-sale.

Tuesday, August 13, 2013

Merck's Temodar® Is Now Available As A Generic -- Revenue From Merck's Branded Sales To Plummet


As we reported back in early March of 2010, Merck had struck a deal with Teva to delay the introduction of a generic temozolomide cancer fighting drug until August 2013. Merck sells temozolomide under the brand name Temodar®. My guess back then was that Merck saved something like $500 million by cutting the Teva pay to delay deal.

Very recently, the delay ended -- per Zacks Investment Services, just now.

. . . .Teva and Perrigo have a collaboration agreement for generic Temodar under which Teva will manufacture, market and distribute the product in the U.S. while both companies will share the cost and profit on the sales of the generic version of the drug in the U.S.

As Teva was the first to file for a generic version, it will enjoy 180 days marketing exclusivity.

We note that Temodar is indicated for the treatment of adults suffering from newly diagnosed glioblastoma multiforme along with radiotherapy and subsequent maintenance.

Temodar is also approved to treat refractory anaplastic astrocytoma in patients whose disease has progressed while being treated with a regimen containing nitrosourea and procarbazine

. . .Temodar generated sales of $423 million in the U.S. in 2012. We remind investors that Temodar lost patent exclusivity in the EU in 2009. . . .

So it goes.

Monday, August 12, 2013

Today's Federal Fosamax® MDL Oral Argument Recap: Maybe 600 More Cases To Be Bounced, Via "Lone Pine" Orders?


I mentioned this pending oral argument date at the end of last week. Should Judge Keenan, sitting in Manhattan's federal District Court, agree with Merck's legal teams, it is possible that up to another 600 cases will be bounced from the consolidated Fosamax® proceedings. At a minimum, those 600 will need doctors' opinions and causual analyses.

A bit from Law360.com (subs. $$):

. . . .Lawyers for Merck said that they have identified nearly 600 questionable cases in the MDL. They asked U.S. District Judge John Keenan to enter an order that would require plaintiffs in those cases to substantiate their claims by showing the drug's connections to their alleged illnesses. . . .


Stay tuned. We should hear -- via a memorandum opinion -- from the very able Judge Keenan in about two months' time.

Merck's Zilmax® Rejoinder -- To Tyson's "Beef" -- Bonus! A Most Likely Explanation/Analysis


First, let's reiterate the basics (from Thursday past): this Tyson "Beef" development -- in a small part of Merck's Animal Health businesses -- is not likely to be material to Merck, overall.

With that out of the way, we will link to a public radio report that likely explains the real reason for Tyson's banning of Zilmax® in its purchased cattle as of August 1, 2013. [The implication is that certain large export markets -- the EU and Japan, in particular -- won't accept any of Tyson's beef treated with hormone-style growth enhancers -- without regard to whether there is a specific complaint about Zilmax.] Here is Merck's official response, in part:

. . . .The company that manufactures Zilmax, Merck Animal Health, issued a statement saying the product is safe.

"We are surprised by Tyson's letter," the statement said. "We are confident that, based on all of the available data on Zilmax, the experience reported by Tyson is not attributable to Zilmax."

Zilmax, approved by the FDA for use in livestock, is a beta-agonist and acts as a steroid, turning fat into muscle. As the Chronicle of Higher Education reported in 2012, the drug can make meat tough and tasteless. But new reports have surfaced recently suggesting that cattle are growing so large — up to 1,300 pounds — that they can't walk. . . .


Finally, recall that this is a legacy Schering-Plough/Intervet acquired product -- thus the special interest in the story -- here on this blog. All things ex-SP, is where this all began, of course. Enjoy your Monday!

Sunday, August 11, 2013

There Are Over 5,400 Plaintiffs Groups Seeking Fosamax® Relief From Merck -- As Of June 30, 2013


Scant surprise here, but the number of Fosamax® cases pending against Merck in the US continues to rise. The latest trendlines are disclosed in Merck's SEC-filed Form 10-Q, as of this past Thursday. [Prior update here.]

Even so, Merck has been able to rid itself of around 335 plaintiffs' claims via the Lone Pine order mechanics.

That is, those 335 claimants -- all claiming "atypical" injuries -- were unable or unwilling to provide a detailed written doctor's report, with specific explanations of how and when the "atypical" injuries were sustained, and then (the toughest part), an opinion from the doctor that the injuries were related to the claimant's Fosamax use.

Here is a bit from the Merck SEC Form 10-Q (starting at page 17), but there are no major Fosamax trials left on the calendar in 2013, at this point. The next one will be early 2014 -- unless one of the state-court trial calendars loosens up (or Judge Keenan in Manhattan picks a replacement case or two on an expedited basis).

. . . .As previously disclosed, Merck is a defendant in product liability lawsuits in the United States involving Fosamax (the “Fosamax Litigation”). As of June 30, 2013, approximately 5,075 cases, which include approximately 5,440 plaintiff groups, had been filed and were pending against Merck in either federal or state court, including one case which seeks class action certification, as well as damages and/or medical monitoring. In approximately 1,135 of these actions, plaintiffs allege, among other things, that they have suffered osteonecrosis of the jaw (“ONJ”), generally subsequent to invasive dental procedures, such as tooth extraction or dental implants and/or delayed healing, in association with the use of Fosamax. In addition, plaintiffs in approximately 3,940 of these actions generally allege that they sustained femur fractures and/or other bone injuries (“Femur Fractures”) in association with the use of Fosamax. . . .

In August 2006, the Judicial Panel on Multidistrict Litigation (the “JPML”) ordered that certain Fosamax product liability cases pending in federal courts nationwide should be transferred and consolidated into one multidistrict litigation (the “Fosamax ONJ MDL”) for coordinated pre-trial proceedings. The Fosamax ONJ MDL has been transferred to Judge John Keenan in the U.S. District Court for the Southern District of New York. As a result of the JPML order, approximately 855 of the cases are before Judge Keenan. In the first Fosamax ONJ MDL trial, Boles v. Merck, the Fosamax ONJ MDL court declared a mistrial because the eight person jury could not reach a unanimous verdict. The Boles case was retried in June 2010 and resulted in a verdict in favor of the plaintiff in the amount of $8 million. Merck filed post-trial motions seeking judgment as a matter of law or, in the alternative, a new trial. In October 2010, the court denied Merck’s post-trial motions but sua sponte ordered a remittitur reducing the verdict to $1.5 million. Plaintiff rejected the remittitur ordered by the court and requested a new trial on damages. Plaintiff and Merck subsequently entered into a confidential stipulation as to the amount of plaintiff’s damages that enabled Merck to appeal the underlying judgment, and Merck filed its appeal in the Boles case in October 2012. Prior to 2013, three other cases were tried to verdict in the Fosamax ONJ MDL. Defense verdicts in favor of Merck were returned in each of those three cases. Plaintiffs have filed an appeal in two of the cases – Graves v. Merck and Secrest v. Merck. On January 30, 2013, the U.S. Court of Appeals for the Second Circuit affirmed the judgment in Merck’s favor in Secrest. Plaintiff in the Secrest case subsequently filed a petition for a writ of certiorari with the U.S. Supreme Court, but that petition was denied on June 3, 2013. . . .

As ever -- we will keep you posted. And we will monitor the oral argument tomorrow morning, via web. Be excellent to one another!

Saturday, August 10, 2013

Merck's $330 Million Writeoff Of Legacy Schering-Plough Saphris® (Asenapine) Assets: Predicted By "Salmon" & Me -- In 2010


Since early 2009, my erstwhile, but lately translucent compatriot called "Salmon" and I had predicted either that (1) asenapine would not win FDA apprval, or (2) whenever it did, it would never become a blockbuster antipsychotic drug -- even though then-CEO (at legacy Schering-Plough) Fast Fred Hassan was touting it as one of his five stars for the future. [Right along, Sycrest® was being sold in the EU -- in small quantity -- as the brand name for asenapine, in the euro zone.]

And so, now Merck is required to charge off yet more of the $41 billion it paid for Mr. Hassan's pig in a poke pipeline. That is unfortunate -- and could have been mostly avoided with more unbiased diligence reviews -- and corresponding merger price reduction demands, from the Merck negotiating team. And as we all now know, Fred Hassan would have had no choice but to agree, because over 60 percent of his company's profitability was dependent on Vytorin® -- which was looking like a very expensive placebo, by then (and I would argue -- even now). From Merck's SEC Form 10-Q, just filed Thursday (at pages 20 and 36), then:

. . . .During the second quarter and first six months of 2013, the Company recorded an intangible asset impairment charge of $330 million within Materials and production costs related to Saphris/Sycrest. During the second quarter, the Company reduced cash flow projections for Saphris/Sycrest as a result of reduced expectations in international markets and in the United States. These revisions to cash flows indicated that the Saphris/Sycrest intangible asset value was not recoverable on an undiscounted cash flows basis. Utilizing market participant assumptions, and considering several different scenarios, the Company concluded that its best estimate of the current fair value of the intangible asset related to Saphris/Sycrest was approximately $170 million, which resulted in the recognition of an impairment charge. . . .

In 2009, the FDA approved Saphris (asenapine), an antipsychotic indicated for the treatment of schizophrenia and bipolar I disorder in adults. In 2010, asenapine, sold under the brand name Sycrest, received marketing approval in the European Union (“EU”) for the treatment of bipolar I disorder in adults. In 2010, Merck and H. Lundbeck A/S (“Lundbeck”) announced a worldwide commercialization agreement for Sycrest sublingual tablets (5 mg, 10 mg). Under the terms of the agreement, Lundbeck paid a fee and makes product supply payments in exchange for exclusive commercial rights to Sycrest in all markets outside the United States, China and Japan. Merck’s sales of Saphris were $42 million and $43 million in the second quarter of 2013 and 2012, respectively, and were $73 million and $83 million in the first six months of 2013 and 2012, respectively. During the second quarter, the Company reduced cash flow projections for Saphris/Sycrest as a result of reduced expectations in international markets and in the United States. These revisions to cash flows indicated that the Saphris/Sycrest intangible asset value was not recoverable on an undiscounted cash flows basis. Utilizing market participant assumptions, and considering several different scenarios, the Company concluded that its best estimate of the current fair value of the intangible asset related to Saphris/Sycrest was approximately $170 million, which resulted in the recognition of an impairment charge of $330 million during the second quarter and first six months of 2013, which is reflected within Materials and production costs. . . .
That means it was on the books at $500 million prior to the $330 million writedown.

And yes, at the end of the day, $330 million in impairments are scarcely material to Merck. But the idea that Saphris was supposed to be a $2 billion or $3 billion juggernaut for New Merck, on an annual basis. . . well, that delta -- of around $1.7 to $2.7 billion in annual sales? That is -- and was -- material. From the negotiating team at Merck, then: "thanks yet again, Fast Fred!"

Friday, August 9, 2013

Ongoing Fosamax® Wars: Oral Argument On Monday August 12 -- Merck Seeks Broader "Lone Pine" Orders


I'll have more on this over the weekend, but Merck's lawyers are deep into motion practice -- before Judge Keenan in Manhattan's federal District Court -- in the Fosamax® MDL. Merck is seeking an expansion of the sorts of claims to which so-called Lone Pine procedures would apply.

So stay tuned, here -- more after a hectic Friday largely off the grid:

. . . .Entered August 5, 2013 | Cause 06-1789 | Oral Argument: August 12, 2013 10:30 AM EDT. . .
Travel safely, one and all.

Thursday, August 8, 2013

Immaterial To Overall Merck 2013 Sales, But Legacy Intervet/S-P AH Zilmax® Sales Will Decline For Balance Of 2013


This story will almost certainly drive the price of beef up (futures are rising at the open this morning), as cattle will not grow as heavy or large without Merck's Zilmax® in their feed. It is highly unlikely to affect Merck's stock price, as the sales decline will not be material in view of Merck's nearly $50 billion of annual revenue.

From the Bloomberg story, overnight -- then, a bit:

. . . .“Some animal-health experts have suggested that the use of the feed supplement Zilmax, also known as zilpaterol, is one possible cause” for the animals being unable to walk, according to a letter sent by Springdale, Arkansas-based Tyson to cattle suppliers. The “interim measure” is effective Sept. 6, and the “evaluation of these problems is ongoing,” according to the letter provided yesterday by Tyson spokesman Gary Mickelson.

“This is not a food-safety issue,” according to the letter. “It is about animal well-being and ensuring the proper treatment of the livestock we depend on to operate. . . .”


Just the same, we will keep you posted. Zilmax was also linked in late 2010, to racehorse trainers' allegedly illicit efforts to improve muscle mass and speed, in thoroughbred racing.

Tuesday, August 6, 2013

One New Lobbying Facet: Merck Is Lobbying Congress On India's Patent System


Okay -- truth be told -- I held this one back, as a separate item, for this morning's top post. Hidden in plain view, among the weedy details of Merck's $5.7 million in spending on lobbyists in the first half of 2013 -- is this: Merck is suddenly seeking (as all new spending in Q2 2013) a United States-imposed legislative solution of some sort, to what I'll call the evolving populists' approach to patent law, inside India.

After the Gleevec® "No Patent in India" decision this past Spring, and Glenmark's "at risk" launch of a generic sitagliptin phosphate franchise in India (causing a rather great tumult in Merck's Januvia® franchise in-country), it is easy to see why Whitehouse Station's lawyers would be talking to Congress about ways to press US-style intellectual property rules more forcefully back upon India's body politic. Of course, it is also easy to see why India might herself seek a lower cost approach to providing life-saving medicines to her vast, and vastly poor, population.

The relevant bit, then, from Merck's federal lobby disclosure form filings, of early last week:

. . . ..Trans-Pacific Partnership (no specific bill); biologic data exclusivity (no specific bill); US-EU trade agreement (no specific bill); trade promotion authority (no specific bill); treatment of intellectual property in India (no specific bill); additives in beef cattle (no specific bill); treatment of intellectual property in India. . . .


It will be interesting to see who comes out on top, in this battle of the titans. And to be sure, Pfizer, BMS, Sanofi, Abbott, Baxter, Lilly and Novartis (just to name a few) are also keenly interested, and spending like it -- on this issue.

Closer to home, Merck is also lobbying Congress about compounders -- likely seeking tougher regulation of them -- so as to protect its market share, and margins -- for its premixed drug solutions. Scant news there -- as all the pure drug makers would be seeking the same, arguing primarily on supply-chain safety -- after the scandals earlier this year. Now go have a productive, healthy choice infused day!

Monday, August 5, 2013

Merck Spent About $5.7 Million -- On Lobbying, In The US In First Half Of 2013 -- Down A Bit From 2012 Levels

So -- the vast bulk of the required quarterly federal disclosure forms have been filed within an office of the US Senate, now. And the below is what the $5.7 million has been spent on, thus far this year, by Whitehouse Station's lawyers:

. . . .▲ Patent settlements (no specific bill).

▲ Non-interference in Medicare Part D (no specific bill); Medicaid-style rebates in Medicare Part D (no specific bill); Independent Payment Advisory Board (S. 351, H.R. 351).

▲ Alzheimer's education (no specific bill); 340b (no specific bill); hepatitis C education (no specific bill).

▲ Comprehensive tax reform (no specific bill); transfer pricing of intangibles (no specific bill); territorial tax system (no specific bill); deferral of taxation of foreign earned income (no specific bill); tax base erosion (no specific bill).

▲ Trans-Pacific Partnership (no specific bill); biologic data exclusivity (no specific bill); US-EU trade agreement (no specific bill); trade promotion authority (no specific bill); treatment of intellectual property in India (no specific bill); additives in beef cattle (no specific bill); treatment of intellectual property in India.

▲ Supply chain safety (no specific bills).

▲ Access to over-the-counter medications (no specific bill); compounding (no specific bill).

▲ Deficit reduction (no specific bill); ADAP funding (no specific bill).

▲ Animal Drug User Fee Act (ADUFA). . . .


Certainly no surprises there. We will keep you posted -- if any later reports surface, here.

One More Minor Political Observation -- "Three Stooges" Edition


I tend to leave almost all the negative political theatre (and there is plenty of it -- on both sides of the aisle) to one side. But this one deserves mention, since many members of these "stooges'" own party are making public comments about how these three are playing into Mr. Obama's hand, here. Nice.

Reps Rubio, Lee and Cruz are pushing the notion that the full House ought to vote to defund the entire federal government -- cause a government shutdown -- in order to prevent the January 1, 2014 rollout of the next phase of Obamacare.

Brilliant. US House Rep. Rubio would say that our wounded Iraq war vets shouldn't get treatment at VA hospitals, and kids shouldn't receive their Early Head Start lunches, and federal Marshals should stop chasing bad guys. . . all to stop health care reform's rollout. I say -- let them move forward! That (a failed home-grown "terrorist-style" attack on the US social services delivery system) will show plainly just how dysfunctional the Republican Party is, at the moment -- and how divided, within its own ranks it remains. Of course, such a move has zero chance of actually working. But let them make it. And let them own it, at the ballot box -- in the coming mid-term elections. Here's a bit from Bloomberg -- do go read it all:

. . . .About 25 million people who lack health insurance are expected to gain coverage from the Affordable Care Act by 2016, through provisions that include government subsidies and an expansion of state Medicaid programs. The complexity, reach and cost of the bill, which Republicans opposed when it passed Congress in 2010, has spurred efforts to derail or defund the core provisions before they take hold Jan. 1.

Senator Richard Durbin of Illinois, the chamber’s No. 2 Democrat, said on “Meet the Press” that Cruz’s efforts have held up otherwise bipartisan appropriations bills.

“Senator Cruz is part of the few extreme people in the Senate when it comes to this subject, calling for shutting down the government of the United States, even shutting down the American economy to make his political point,” Durbin said on the program. . . .


On a brighter note, here's another Bloomberg report -- this time on the quants' efforts to get healthy younger people enrolled -- and thus speed the success of real health care delivery reform, in the US. Now, go "be excellent! -- to one another."

Saturday, August 3, 2013

Colorado's Gov. Hickenlooper: "We'll Show The Nation What's Possible" With Health Care Reform


I am especially proud of my birthplace and family of origin, here. In a front-page article in the morning's New York Times, Colorado is embracing the coming October 1, 2013 health care insurance exchange roll-out -- with gusto. [Here's a link to the state's website for health care exchange insurance coverage.]

The people of Colorado aim to make their roll-out a model for the entire nation. Here is what is possible when politicians embrace the change, and put aside differences. [It helps just a little that Democrats firmly control both of the legislature's houses and the Governor's mansion, as well!] True enough, Colorado is financially more sound than the average southern state, and her population is generally healthier than the average state -- but what will make the difference -- in all states -- is widespread enrollment, not slight socio-economic differences among subgroups.

Say whatever else you like, here -- and there will be some wrinkles in any rollout of this size and scope -- but I encourage the readership to keep an eye on the Centennial State -- to see how it's done. From the Gray Lady (that grand old dame!) then -- a bit:

. . . .[Supporters] are traveling the state to explain how it will work, often in electric yellow T-shirts with the message, “Got Insurance?” In the coming weeks, 400 guides will be trained to help the uninsured sign up for coverage, with some targeting groups like Hispanics, gay and lesbian citizens, and even truckers.

This is Colorado, five months before the central provisions of President Obama’s health care law take effect: a hive of preparation, with a homegrown insurance market working closely with state agencies and lawmakers to help ensure the law’s success. Gov. John W. Hickenlooper, a Democrat, is a firm supporter, and the state legislature, controlled by Democrats, has not thrown up any obstacles.

When the legislature voted to allow a state-based insurance market in 2011, Republicans controlled the House of Representatives, but many supported the bill, contending that it would give Colorado more control over how the health care law played out here. This spring, state lawmakers voted along party lines to approve an expansion of Medicaid, which is encouraged but not required under the law. . . .


The deeper the penetration into younger and healthier demographic subsets -- the more robust the savings, system wide will be. I do think Colorado's young people will embrace the exchanges -- and join. So, I for one, am hopeful. [The graphic includes a background photo of the Maroon Bells -- not far from where I grew up.]

And hope is a good thing. In fact, "it may be the best of all things."

Friday, August 2, 2013

"Reserved?" Or "Reversed?" Spellings Count In Glenmark India Sitagliptin Patent Case

UPDATED | 08.02.13 @ 3:30 PM EDT:

I am not at all sure (afterall -- no Indian patent lawyer, am I), but it would seem that "reserved" is the right word.

I think, in the parlance of Indian patent law, that means the Indian three judge court won't rule from the bench, orally -- now that the proceedings have concluded. No, they will wait, and issue a formal, published written opinion, at some later date. So, again, we wait.

I think it is significant, however that just this morning, a second Indian patent appeals court has followed the watershed Gleevec holding -- this time, on a cancer drug -- and invalidated an "incremental" patent claim, by the original branded innovator.

Moreover, the latest invalidated branded pharmaco patent simply claimed a salt form of the original, patented base compound -- in an apparent Evergreening attempt in India. [Sounds a bit like sitagliptin vs. sitagliptin phosphate, no?]

END, UPDATED PORTION.

I'll try to get a better translation, but here is a bit, local to India. We still don't know the outcome, for certain. Depends on translation/spelling of one word. Wild.

Do stay tuned -- I'll source a more authoritative answer.

. . . .The Delhi High Court reserved [Ed. Note: Sp?] its order on the appeal of US drug major Merck Sharp and Dohme's (MSD) against a single judge order which had turned down the patent rights of the company and allowed Indian firm Glenmark to manufacture and sell the ant-diabetic drug Zita and Zita-Met. . . .


As I say -- wild. Wild Wild.

Thursday, August 1, 2013

Manufacturing Operation At Legacy Schering-Plough Kenilworth Complex Closing; 113 Cashiered


Here is the now confirmed story, in a local New Jersey paper's online edition.

Far from unexpected -- but a sad, echoing whimper, just the same. Thanks again Fred.

. . . .Drugmaker Merck will close its manufacturing facility in Kenilworth and lay off 113 employees there, a company official confirmed today. The move will take effect by October.

Merck announced the pending closure two years ago, when it began a company-wide reshuffling following its merger with Schering-Plough, said Lainie Keller, a spokeswoman for Merck. . . .


Recall that we've learned that B&L is moving its executive HQ to New Jersey -- might we see the Saunders/Hassan duo -- in an eerie return to K-1 -- this time under a differing logo? Yikes.