Justice Dept. and S.E.C. Investigating Merck Drug
By ANDREW POLLACK
Published: November 9, 2004
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Federal prosecutors and the Securities and Exchange Commission are
investigating Merck & Company in connection with Vioxx, the painkiller
that was withdrawn from the market in late September because it
increased the risk of heart attacks in long-term users.
Merck said yesterday that it had received a subpoena from the Justice
Department "requesting information related to the company's research,
marketing and selling activities with respect to Vioxx." It said the
request related to a "federal health care investigation under criminal
Merck, which disclosed the investigations in its quarterly filing with
securities regulators, said the staff of the S.E.C. had told the company
that it had begun an informal inquiry.
Merck did not say what the investigations were about and the federal
agencies do not as a rule comment on such investigations. But since the
Vioxx withdrawal, questions have swirled about whether Merck knew the
risks of Vioxx several years ago but had covered them up. For years,
even as evidence that the medicine might increase risk of heart attacks
mounted, Merck disputed such findings.
A spokeswoman for Merck said yesterday that the company "acted
appropriately and responsibly in our development and marketing of Vioxx"
and would cooperate with the investigation.
One possibility is that the S.E.C. is looking into whether Merck misled
shareholders about the safety of Vioxx. The Justice Department
investigation could be looking at that issue as well as whether Merck
misled regulators or perhaps caused federal health programs to pay for
the prescription drug when its use was not warranted.
The investigations are in addition to hundreds of lawsuits Merck is
facing from people claiming to have been injured by Vioxx and lawsuits
from shareholders claiming the company misled investors.
Merck said in its filing that it could not predict the outcome of the
inquiries, but that "highly unfavorable outcomes" could have a "material
adverse effect on the company's financial position." Merck's filing was
made public after the close of the markets. The company's stock, which
is down about 40 percent from its level before the Vioxx recall, rose 36
cents, to $26.57, in regular trading but then lost 76 cents in
Shares of Pfizer, meanwhile, dropped 38 cents, to close at $28.41,
yesterday after the company said in its quarterly filing late Friday
that it would probably add a "black-box" warning - the strongest kind -
to the label of Bextra, a pain-relieving medicine in the same class as
Vioxx. The warning is about rare but potentially fatal skin reactions to
Pfizer warned doctors about the skin reactions in a letter last month at
the same time as it revealed that Bextra had increased the risk of heart
attacks and strokes in two clinical trials of patients undergoing
coronary bypass surgery.
In that letter, the company said it would seek to highlight the risk of
skin reactions in bolder text. On Friday it said it was likely to add a
stronger warning in a black box.
Tim Anderson, an analyst at Prudential Equity Group, said in a note to
clients that such a warning would impair the ability of Pfizer to market
Bextra, "which suggests the commercial future of Bextra is at risk." Dr.
Anderson said he might reduce his estimate of $1.7 billion in Bextra
sales for 2005 because of the warning and because of the suggestion of
cardiovascular risk. (His note mentioned that "the research analyst, a
member of the team, or a member of the research analyst's household has
a financial interest" in Pfizer.)
Bextra and Vioxx, as well as Celebrex from Pfizer, are known as COX-2
inhibitors, a new class of painkillers used mainly for arthritis.
Regulators in various countries are now investigating whether all drugs
in the class may have the same cardiovascular risks as Vioxx. Pfizer has
insisted that Celebrex has no increased risk and that Bextra is safe
outside of heart bypass surgery.
The skin reactions to Bextra include Stevens-Johnson Syndrome, toxic
epidermal necrolysis and erythema multiforme, which are somewhat similar
conditions. Jean McCawley, head of the Stevens-Johnson Syndrome
Foundation in Westminster, Colo., said the conditions involved severe
Pfizer said that while such reactions occur with many drugs, the rate
for Bextra was higher than for other COX-2 inhibitors, though it did not
say what the rate was.
The label of Bextra was amended to mention the reactions in 2002, a year
after the medicine was approved, and further amended to mention
fatalities last April.
Pfizer also said in its quarterly filing on Friday that the attorneys
general of New York and Connecticut were investigating whether the
company promoted drugs for uses not approved by the F.D.A.
Pfizer said it received a letter from the New York attorney general's
office seeking information on clinical trials and promotions of certain
drugs, which it did not specify. A spokesman for Eliot Spitzer, the
attorney general, would not comment.
Attorney General Richard Blumenthal of Connecticut said in a statement
that he was seeking information on the children's use of the
antidepressant Zoloft, one of Pfizer's top sellers. Zoloft, like most
antidepressants, is not approved for pediatric use and concerns have
grown about suicidal tendencies in children using such drugs.