TRENTON, N.J. (AP) – Merck & Co. and Schering-Plough Corp. said they will pay $41.5 million to settle lawsuits claiming the drugmakers, partners on two blockbuster cholesterol drugs, delayed unfavorable study results because they would hurt sales.
Shares of both companies initially rose after the news, then fell with the broader market.
In January 2008, the companies released long-awaited study data showing Vytorin and Zetia were no more effective than an older, less-expensive cholesterol treatment at reducing plaque buildup in arteries of people whose genes gave them stratospheric cholesterol.
Instead, the study showed $100-a-month Vytorin, which combines Zocor and Zetia, was perhaps a bit worse than Zocor alone, which is sold as a generic for a third as much. The study also cast doubt on whether Zetia, which works by a different mechanism, has much effect on cholesterol levels, and subsequent data have raised questions about their safety.
The companies finished the study, called ENHANCE, in 2006. Merck and Schering-Plough were criticized for not releasing the data earlier, and didn’t do so until Congress began investigating the delay.
The lawsuits, brought by consumers, insurers and others who paid for the two drugs, questioned both their effectiveness and their safety.
Since the study results, sales of both drugs have been sinking steadily from their combined $5.2 billion in revenue in 2007. Sales dropped by 12 percent in 2008 and another 17 percent in the first half of this year, when sales totaled just under $2 billion.
“These agreements will allow the companies to avoid continuing defense costs and remain focused on discovering, developing and delivering novel medicines and vaccines,” said Bruce N. Kuhlik, executive vice president and general counsel at Merck.
In morning trading, shares of Merck were down 26 cents at $29.58 and shares of Schering-Plough were down 20 cents at $26.26.
Merck and Schering-Plough did not acknowledge any wrongdoing or liability as part of the settlement, which comes a month after a separate $5.4 million settlement with attorneys general from 35 states and the District of Columbia who had made similar allegations. That settlement covers the cost of the authorities’ investigation.
Whitehouse Station, N.J.-based Merck is in the midst of a $41.1 billion buyout of Kenilworth, N.J.-based Schering-Plough. Shareholders of the two companies have separate meetings on Friday to vote whether to approve the deal, set to close in the fourth quarter. The combined company would become the world’s No. 2 drugmaker by revenue, with about $42.4 billion in annual sales.
The settlement ends more than 140 previously disclosed lawsuits pending in federal court in New Jersey. The deal covers both a group of health insurance plans and plaintiffs seeking to represent a proposed class action group including consumers, insurers and other entities. Court approval is required for settlement with the latter groups.
Charges for the settlement were included in the companies’ second-quarter results for the cholesterol drug joint venture.
Date: August 5, 2009
Source: Associated Press
Filed Under: Drug Discovery