Fred Hassan joined Schering Plough as its CEO five years ago. At that time, Mr. Hassan inherited a company that was being investigated by FDA for regulatory compliance violations and the SEC was investigating it former CEO for investing and accounting irregularities. Since his arrival at the company, Mr. Hassan increased sales of key products, filled an empty product pipeline and returned profitability to a company that posted losses in 2003 and 2004.
Much of his success can be attributed to Zetia and Vytorin, cholesterol-lowering drugs Schering Plough sells jointly with Merck & Co. Zetia lowers blood cholesterol levels by preventing absorption of dietary cholesterol from the gut. Vytorin is a combination product that contains Zetia and Merck’s statin drug called Zocor. Statins help to reduce blood cholesterol by inhibiting its production in the liver. Sales of both drugs have doubled to $5 billion a year since 2005. But that rich revenue stream is at risk following this week's disclosure that results from a large scale clinical trial called ENHANCE (which was initiated in 2002) showed that Vytorin did not reduce the incidence of atherosclerosis or lower the risk of heart attacks or strokes.
Schering and Merck said Monday that results of the now-controversial ENHANCE study showed that Vytorin failed to slow progression of heart disease more effectively than simvastatin generic form of Zocor that is sold at a far lower price. After learning about the results of the study, Dr. Steven E. Nissen, chairman of cardiovascular medicine at the Cleveland Clinic quipped "Here we are, six years after this drug was marketed and promoted with a massive marketing campaign and has become a $5 billion drug" without evidence that it works as well as a statin. Now, "the first trial we have, is reported much too late and doesn't show really any evidence of benefit."
As reported in the Wall Street Journal “The impact of the finding was amplified by a long delay in releasing the results, and the revelation in November that the researchers considered altering the study's primary goals -- widely considered a violation of scientific protocol. The developments exposed the companies to suspicions -- which they have denied -- that they had postponed announcing the results because they were unfavorable. Also, the results of the Enhance trial were announced at a press conference rather than published in a peer reviewed scientific journal.”
“The missteps are likely to dent the companies' finances and reputation. Congress is investigating whether the companies improperly deferred publicizing the results, and yesterday lawmakers expressed concern about Vytorin ads. In addition, prominent medical professionals have questioned the drug's benefits.”
The fallout from ENHANCE is having other negative effects and possible long term consequences at Schering Plough. Yesterday, for example, widely circulated reports questioned the timing of stock trades made by the president of Schering's pharmaceutical division, Carrie Cox, in April and May 2007 that totaled about $28 million. Also, yesterday, leaders of the House Energy and Commerce Committee widened their investigation of the Enhance trial disclosure to include Ms. Cox’s stock sale and the high-profile Vytorin "food and family" ad campaign (the ones where people are dressed to resemble the food that they can eat while taking Vytorin).
Investor unrest is focused less on Merck than on Schering, whose bottom line relies much more on the drugs than Merck's does. Analysts estimate that Vytorin and Zetia account for more than half of Schering's earnings. Other analysts estimate the figure is closer to 60% for 2007, compared with about 15% in 2007 for Merck.
The big question that still remains is: If Vytorin has no greater benefit than a statin, why did FDA approve it? The drug was approved by the Food and Drug Administration based on its ability to reduce low density lipoprotein cholesterol (LDL). As is the case with many drugs the agency didn't demand proof that using the drug actually reduced the risk of heart attacks or stroke. Instead, they relied solely on surrogate markers like LDL cholesterol levels.
The Enhance results are now part of a larger debate over what kind of evidence the FDA should require before approving a drug. Drug manufacturers argue that studies that answer questions about heart attacks, strokes and mortality can take many years, thousands of patients, cost millions of dollars and would lead to prolonged delays getting a drug to market. Consequently, drug companies should be allowed to use surrogate markers to prove drug efficacy. Using this logic, it appears perfectly reasonable for drug manufacturers to bring expensive, new drugs to market (to increase profits and bolster their stock prices) despite the fact that they offer no greater health benefits than cheaper generic versions of similar drugs! According to FDA regulations, drugs will be approved only when available evidence indicates that they are SAFE and EFFICACIOUS —not one or the other!
Until next time…
Good Luck and Good Job Hunting (I would avoid New Jersey for now)!!!!!!!!!
Generic manufacturer Mylan announced that it is cutting jobs at a pharmaceutical manufacturing plant in central Puerto Rico. According to a company spokesperson, 100 jobs will be eliminated in coming weeks. Mylan had announced in February that it would be eliminating jobs at five locations as part of a companywide restructuring. The Pittsburg, PA-based company is the latest pharmaceutical company to announce cuts in Puerto Rico. The industry has eliminated more than 3,000 jobs here since mid-2006.
It looks as though Enzon Pharmaceuticals, the first company to successfully commercialize protein PEGylation, finally buckled under the pressure exerted by Carl Icahn, one of its major shareholders. As I mentioned in a 