Merck's upper management was innocent of any wrongdoing that led to the withdrawal of Vioxx, a $21 million report paid for by the company has found.

Merck researchers misattributed the reasons for Vioxx's (rofecoxib) cardiovascular side effects, but they never set out to conceal the risks of taking the drug, the 20-month investigation by Judge John S. Martin Jr., a former US District Judge for the Southern District of New York, and his colleagues at law firm Debevoise & Plimpton asserts.

Criticized in the press as a self-serving rebuttal to charges leveled by plaintiffs' lawyers and journalists, the so-called "Martin Report" holds that the aggressive--and perhaps unscrupulous--marketing tactics the company began to use even before the drug was approved came from inside the sales team, and not from senior management.

By blaming the sales team, the report absolves Merck's leadership of flagrant wrongdoing. The report also praises the company's new set of checks and balances on sales and marketing activities.

Merck had a responsibility to pay for the report, noted William Bowen, former president of the Andrew W. Mellon Foundation and a member of Merck's board of directors. Bowen chaired a special committee that organized the review. "The company had no effect at all on the findings and the conclusions," he said, noting that he has previously worked with Martin on another corporate investigation that produced unfavorable findings.

The report lists some of the sales and marketing tactics proposed to win over physicians who were considered anti-Vioxx. In the pre-approval period, the company sought to create physician advocates by holding advisory board meetings, giving grants to medical schools and medical education programs, starting a speakers' bureau, and hiring investigators for post-marketing studies. The focus of these activities was marketing-oriented, rather than educational, according to the report.

"While we do not condone such practices, we found no evidence that anyone in senior management encouraged or condoned them," the report said. "Nor did we review evidence that the sales representatives' recommendations for developing the physician into an advocate were followed."

The Martin investigation also scrutinized the now-infamous VIGOR trial, which studied the gastrointestinal effects of Vioxx by comparing the COX-2 inhibitor with non-steroidal anti-inflammatory drug (NSAID) naproxen. Merck scientists, the report found, attributed the greater number of cardiovascular events in the Vioxx arm to the cardio-protective effects of naproxen, which acts as an anticoagulant similar to aspirin. Vioxx, the scientists concluded, was cardio-neutral.

The VIGOR trial did not include a placebo arm, and Merck researchers decided that conducting such a Vioxx versus placebo trial would be unethical.

Merck disclosed the VIGOR findings to FDA, and after a back-and-forth, the agency agreed with the company that the cardiovascular data belonged in the "precautions" section, rather than under "warnings."

The report doesn't include anything that juries haven't already heard, noted Kent Jarrell, a spokesman for Merck's outside counsel. "We don't think it should impact the litigation because there?s nothing factually new," he said.

The next step is to have CEO Richard Clark read through the 183-page report and its 1,400 pages of appendices to see what lessons Merck can learn from it, Bowen said.

"We had an obligation to find out as much as we could about the development and marketing of Vioxx," Bowen said. "We want to be satisfied above all that no one had foolishly and recklessly put patients at risk. The findings gave us considerable reassurance."

The report could inspire changes in activities ranging from communications to sales, and might also aid Merck?s defense in the court of public opinion. "We do hope-because there?s been a lot of unfair criticism--that the report will help," Bowen said.

Articles

Company-commissioned report exonerates senior managers, points fingers at sales team

'Merck Did Nothing Wrong,' Martin Report says

Pharmacy benefits managers were more likely than managed care organizations to accept Merck's discounted price for Zocor after the launch of generic simvastatin, a new study by Cognet-X finds.

In the wake of Merck's surprising decision to slash the price of Zocor to compete with Teva's simvastatin, 80 percent of PBMs placed Zocor on tier 1, compared with only a quarter of MCOs, according to a Cognet-X survey of 74 health plan executives. The exact number of health plans that had been offered the discounted price from Merck was not disclosed, but Sharon Bender, director of strategic initiatives at Cognet-X, said that the "vast majority" received the proposal.

"The MCO respondents seemed to view this process as being counter to the generics-first message," Bender said, adding that executives at PBMs were more likely than their MCO counterparts to believe that other drug makers will follow Merck's lead.

In a separate report, Cognet-X, a healthcare research and consulting firm that conducts weekly audits of PBM and MCO executives, looked at how other product teams responded to the launch of generic simvastatin.

It found that AstraZeneca, Pfizer, and even Merck, in its co-promotion deal with Schering-Plough for Vytorin (ezetimibe, simvastatin), used more aggressive contracting to increase market share.

"Contracting isn't always a main focus during a quarter," Bender said. But the release of generic simvastatin "really put pressure on the manufacturers of the competing brands."

Pfizer in particular vied for exclusivity for Lipitor (atorvastatin). The company said it would discontinue rebates if Lipitor were not given exclusivity on tier 2--its predominant strategy for holding on to market share.

AstraZeneca also offered rebates when Crestor (rosuvastatin) was placed on a preferred tier.  However, "they weren't so much pushing exclusivity as acknowledging the new generic reality," Bender said.

For Vytorin, much of the focus was on unrestricted formulary access, as well as better rebates for tier-2 status.

Bender called the different approaches "striking," and said they might speak to the companies' negotiating styles, and how much lost revenue companies are willing to trade in return for preferred status.

The tactics also were met with different degrees of success, according to Cognet-X. Lipitor appeared on the preferred tier of 77 percent of MCO formularies last month, compared with 81 percent in August 2005. Crestor experienced an upward trend; it was a preferred drug on 53 percent of MCO formularies, compared with 29 percent the previous year. Vytorin received preferred status on 73 percent of formularies, compared with 37 percent the previous year.

The report also found that while MCO executives were far more likely to say that Vytorin represents the best value (63 percent compared with 23 percent for Lipitor and 14 percent for Crestor), they also admit that cost is a key factor for deciding formulary status.

Companies are also using other tactics to retain market share.

Pfizer, for instance, has been conducting additional studies to show that Lipitor is more effective than simvastatin in cutting cardiovascular risks, according to Adam J. Fein, president of Pembroke Consulting, who was not involved with the Cognet-X report. "They've taken the approach of creating some consumer resistance to being switched," Fein said, adding that physicians are also reluctant to switch patients who are doing well on a particular treatment.

Fein also noted that other companies might imitate Merck's strategy--though perhaps more quietly.

In the past, companies would raise a brand's price before and immediately after the launch of a generic, in order to reap additional profits at the end of a product's lifecycle. Now, generic substitution happens at a much faster speed, and new tactics are required, Fein noted.

"In the short term, this is a win for the healthcare system," Fein said. "I think the payers have been pretty happy with this strategy--it benefits them, and in some ways it lowers healthcare costs."

Drug makers used aggressive contracting to retain marketshare after launch of generic simvastatin

PBMs Liked Zocor Deal

In the latest settlement of a whistleblower lawsuit against a major pharmaceutical company, Schering-Plough and a sales subsidiary will pay $435 million in restitution and penalties after pleading guilty to conspiracy to withhold money from state Medicaid programs, among other offenses.

The payout is the third largest (settlements against TAP and Serono were first and second), and it is certainly not the last fraud lawsuit against pharma.

"The government will continue to scrutinize conduct both at the corporate level and the field, sales force level," said Laurence Freedman, a partner at Patton Boggs who specializes in the False Claims Act and its 

 (or whistleblower) provisions. "It is absolutely a trend and growing trend," said Freedman, who was not involved in this case. "It's been going strong for years and it's going to continue."

 is the latest in a long string of successful FCA lawsuits, Freedman noted, adding that state and county governments have become "interested and active" in investigating what they regard as a low-level of compliance with sales and marketing regulations. 

"The government is dead serious about vigorous and vigilant prosecution," Freedman said.

The first charge against Schering-Plough addressed allegations that the company provided a discounted price for Claritin Redi-Tabs (fast-dissolving loratadine tablets) to Kaiser Permanente without offering the same price to state Medicaid programs, as required under the Medicaid Rebate Program.

Kaiser representatives had been willing to pay only $1.10 per Redi-Tab, a price that would have required the drug maker to increase its rebates to the government. For about 18 months, Schering-Plough conspired to "ship sufficient trade size packages of Claritin Redi-Tabs to the HMO for free as 'samples' so that the blended price between the drug purchased by the HMO and the drug provided for free was $1.10 per Redi-Tab," a settlement document states.

Manufacturers may legally provide samples to HMOs as long as they are not contingent on the purchase of that or another product.

Separately, Schering-Plough marketed cancer drugs Intron A (interferon alfa-2b) and Temador (temozolomide) for off-label uses, and then lied to FDA about the scope of these marketing tactics, according to a settlement document. Those tactics included off-label sales training classes, business plans that included off-label sales goals, and compensation to drug reps based on off-label sales, the charges state.

In addition, the drug maker paid physicians up to $500 for each patient that was started on its hepatitis C drugs PEG-Intron (pegylated interferon alfa-2b), Rebetron (interferon alfa-2b, ribavirin), and PEG-Intron combination therapy, according to the settlement. It adds that other inducements included funding physician assistants at busy practices and paying for attendance at Schering-sponsored events.

In a report, Fitch Ratings praised Schering-Plough's new management team for reducing and settling litigation it inherited from the company's former leaders. It does not expect the large settlement to impact the drug maker's turnaround efforts.

Freedman also acknowledged that many of the recent decisions--including the Schering-Plough settlement--came out of a "pipeline" of old cases finally being settled. But he noted that the government will continue to investigate such cases, and it's important to understand reporting and promotion requirements.

Pricing, marketing cases expected to escalate in the future

Pharmaceutical Executive-09-13-2006

'Merck Did Nothing Wrong,' Martin Report says

PBMs Liked Zocor Deal

Schering-Plough Settlement Represents Third Largest Against Pharma