Massive 98-Page Consolidated Amended Complaint Filed Today in Polk, et al. v. Schering Plough, et al.

In much the same vein that the ENHANCE Securities Fraud Amended Complaint broke new legal ground, so too, does today’s In Re Vytorin/Zetia Marketing, Sales Practices and Products Liability Litigation (MDL 1938) complaint. Significantly, it recites information clearly obtained from the very same “confidential witnesses” in the ENHANCE securities fraud suit — but, again, refrains from specifically identifying them. I am certain these various camps are paying close attention to, and cribbing from, one anothers’ filings — and quite wisely so.

The other new wrinkle here, is the newly-added detail, and fine-patina, on the various mechanisms Schering’s upper management used to (allegedly) supress the ENHANCE results for almost 24 months. And again, Mr. Hassan’s, and Ms. Cox’s names are prominently associated with these efforts — efforts to negate, or delay, the ENHANCE results. All allegedly. Ahem.

I will have more on this tomorrow, but let’s dive right in — at pages 30 to 35, Paragraphs 72 through 97 (and 110) of the newly-filed complaint. I’ll likely put up a link to the full PDF file, tomorrow.

. . . .Defendants Initiate a Scheme To Suppress the ENHANCE Study Results

72. In response to these results, Defendants immediately delayed public release of the information. In June 2006, a Schering-Plough executive told investors that the ENHANCE data would be ready by the end of 2006, meaning that the results of the study would not be announced, as originally planned, at the American College of Cardiology meeting that fall. At the time, this postponement received little notice in the medical community, since drug studies
frequently are not released on schedule.

73. However, Defendants did not withhold announcement of the ENHANCE results because of ordinary delays in producing a drug study. They delayed because upper management at Schering-Plough already knew that “they were not going to get any good news” from ENHANCE. A former Senior Medical Director in Schering-Plough’s Cardiovascular group, who worked with Schering-Plough’s “Brand Team” during the time that the ENHANCE data was being gathered and finalized, has advised that Schering-P lough performed quality control assessments of the ENHANCE data in late 2005 and 2006. Updates on the progress of the ENHANCE study were shared at the quarterly Brand Review Meetings led by Carrie Cox, Schering-Plough’s Executive Vice President and President of Global Pharmaceuticals.

74. Dr. Kastelein, ENHANCE’s primary investigator, was prepared to publish ENHANCE’s results in early 2007 and present them at the meeting of the American College of Cardiologists in the Spring. However, Defendants sought to further delay publishing the results, in order to find a way to either negate or mitigate the findings of the ENHANCE study.

75. As part of their scheme, in January 2007, Merck and Schering-Plough, through MSP, hired Dr. Michiel L. Bots, M.D., Ph.D., Associate Professor of Epidemiology at the Julius Center for Health Services and Primary Care of the University Medical Center of Utrecht in the Netherlands, as an “independent consultant.” Defendants asked Dr. Bots to advise them about, and to write a report detailing, purported problems with ENHANCE’s CA IMT measurements.

76. Dr. Bots provided Merck and Schering-Plough his report on or about January 26, 2007. The plan to use Dr. Bots to undermine the ENHANCE study results had backfired. He found no problems with ENHANCE data that justified any delay in releasing the study’s results.

77. According to the Bots Report, Merck and Schering-Plough set up three meetings in Amsterdam at the Core Echo Laboratory, where the image database was housed, to address the companies’ purported concerns – one meeting on January 16, 2007 and two on January 18, 2007. The Bots Report defined Dr. Bots’s objectives as:

(i) determining if the reading of the ultrasound images had been done according to the pre-established protocols for the study; and

(ii) determining how to address “outliers,” which were large differences in CA IMT
measurements between visits one week apart, which “were beyond what was to be expected from normal progression.”

78. Dr. Bots wrote in his report that at the January 16, 2007 meeting, “the core lab showed how the measurements were done.” Based upon this presentation and his discussions with the ENHANCE study team, Dr. Bots concluded that the CA IMT measurements “were indeed done in a manner that was described in the protocol.” Twice more, Dr. Bots’s report stated that the “CIMT measurements seem to be done according to the procedures outlined in the protocol.” On this issue, Dr. Bots concluded that the “CIMT measurements in ENHANCE have been done in a consistent manner, leading to reproducibility findings that compare well with that of published studies from other multi-centre randomized trials.”

79. On the purported “outliers” issue, Dr. Bots again found no problems with the ENHANCE data. Dr. Bots stated that the “core lab has re-evaluated all the images of the visits 3-4 [the first two measurement visits] that had a CIMT value that was 50% or more different” and re-evaluated similar images from visits 13-14 (the last two measurement visits). However, with respect to the “mean absolute CIMT difference and the standard deviations,” Dr. Bots concluded that “data are well in line with the studies that have been published in the literature. Based on those findings there seems to be little concern regarding the validity and precision of the data.”

80. Analyzing “how the reproducibility based on the original data changed when the ‘corrected’ outlier data were used,” Dr. Bots found that “[t]his improved . . . the standard deviation of the mean differences” but “the improvement was very modest.” Dr. Bots concluded that the “variability due to imaging and reading” was “excellent” and that the statistician’s concerns about results were “beyond biological variation.” In short, Dr. Bots found no reason to question the ENHANCE trial’s data.

81. The Bots Report addressed the issue of missing data: “Of the common carotid segment CIMT was missing for 4% of the participants, for the bifurcation segment 12% and for the internal segment 12%.” While “[m]issingness may affect the CIMT value,” Dr. Bots concluded that these figures were “in line with observational studies” and that “the current statistical models that were used in the analysis of CIMT trial data do appear to take care of that in an adequate manner.” Dr. Bots further rejected any concerns, saying:

Since the study was blinded, and the sonographer can not identify which participants were “progressors” and which participants are “regressers,” the effect of missing imaging information is likely to be a random phenomenon.

82. Dr. Bots concluded that all of the supposed issues with ENHANCE’s data that Defendants raised after the fact amounted to nothing.

83. The “Conclusions” section of Dr. Bots’s Report summarizes that “the evidence to me is sufficient to indicate that the data are fine.” In the Report’s “Summary” Dr. Bots likewise stated that “the evidence shown to me is sufficient to indicate that the CIMT data in ENHANCE are fine: i.e., no better, no worse than what has been reported in the literature.”

84. With Dr. Bots’s categorical confirmation of the validity and reliability of the ENHANCE data, Defendants then sought another way to negate the unfavorable study results and to further delay disclosure of the study results.

85. Defendants now suggested changing the way CA IMT was measured through selection of images, or changing the parameters used to define outliers. Dr. Bots refuted these suggestions also, saying they would change nothing:

[It is] [i]mportant . . . to realize that the above mentioned activities might reduce measurement variability to some extent. Since this is expected to involve only a small number of the measurements, the expected effects on variability are likely to be modest. Again, randomization protects against bias in the estimate of the difference between treatment arms.

86. Dr. Bots did not serve Defendants’ purpose, because his Report found no material issues or problems in following the protocols for the ENHANCE trial, taking and recording the CA IMT measurements, dealing with outliers, or addressing missing data. Dr. Bots’s Report supported immediate release of the ENHANCE results, not the delay for which Defendants had hoped Dr. Bots would provide a scientifically plausible pretext.

87. Defendants were aware of the concern surrounding the delay in the release of the ENHANCE study and were already attempting to downplay the importance of the study. For example, at Schering-Plough’s earnings report conference call on April 19, 2007, Tim Anderson, a Prudential Equity analyst, asked Schering-Plough’s new CEO, Fred Hassan, if he was “worried about the outcome of the [ENHANCE] trial,” Mr. Hassan responded by saying, among other things, that “the data analysis is ongoing for the ENHANCE trial,” and that the study “is a surrogate market trial in a very special population with very special doses. There is a much larger trial called the IMPROVE-IT trial which is more of an outcomes trial . . . . [W]e are pretty confident about the overall pattern of data for VYTORIN.”

88. Mr. Hassan did not mention that ENHANCE had demonstrated that Zetia plus simvastatin was no better than simvastatin alone. Mr. Hassan’s qualification that ENHANCE studied only “a very special population with very special doses” and his quick, subject changing jump to discussing other studies and “the overall mix of the data” strongly imply his knowledge of ENHANCE’s bad results and Defendants’ continued scheme to obfuscate and conceal the negative results.

Defendants Further Delay The Release Of The ENHANCE Results

89. After the ENHANCE study was not presented at the American College of Cardiologists meeting in the fall of 2006, the ENHANCE study was rescheduled to be presented at the meeting of the American Heart Association in the fall of 2007. But Defendants also caused that presentation to be cancelled, apparently to Dr. Kastelein’s frustration. On July 6, 2007, in an e-mail5 to Dr. Enrico Veltri, Group Vice President of Global Clinical Development at SPRI, Dr. Kastelein wrote:

Is it correct that SP has decided not to present at AHA, but to await the two other, completely unvalidated endpoints, which analysis is going to take us straight into 2008??!?? If this is true, SP must have taken this decision without even the semblance of decency to consult me as PI of the study. I can tell you if this is the case, our collaboration is over . . . this starts smelling like extending the study for no other then (sic) political reasons and I cannot live with that.

90. Dr. Kastelein communicated with other senior SPRI researchers, asserting no good reason existed to delay disclosing ENHANCE’s results. On July 6, 2007, Dr. Kastelein sent the following email to Schering-Plough’s Dr. John Strony:

Dear John

[I]s it correct that SP has decided not to present at AHA [the American Heart Association conference from November 4-7, 2007], but to await the two other, completely unvalidated, endpoints, which analysis is going to take us straight into 2008 ??!!?? If this is true, SP must have taken this decision without even the semblance of decency to consult me as PI [principal investigator] of the study. I can tell you that if this is the case, our collaboration is over and I will take the appropriate steps to get in touch with the editors of major Journals as well as with the FDA. This starts smelling like extending the publication for no other then [sic] political reasons and I cannot live with that. This is the second day of a long overdue holiday after a terrible year, thank you very much for yet another terrible chapter of this trial.

91. Dr. Strony responded and explained away the delay as follows:

The timeline for the reading of the femorals alone has been a movingtarget [sic]. First it was 8 weeks, then 12, and then 16. This is under the assumption of having 4 readers. However, one of the four has failed qualification and now we are down to three. If all runs smoothly (whichhas [sic] never happened in ENHANCE) we are told it will take 17 weeks for the primary readings. Don’t forget the querying process and clean-up which is still not factored. . .

92. Dr. Kastelein replied to Dr. Strony on July 7, 2007, copying the message to Dr. Enrico Veltri, SPRI’s Group Vice President of Global Clinical Development, Cardiovascular & Metabolic Diseases:

I have been travelling half the globe in the last 6 months to a number of large and important meetings at the strong wish of Merck to chair them or to present ezetimibe data. At every single one of them I was cleared to say that ENHANCE would be presented by me at AHA. There is no reason whatsoever to include femorals; you will be seen as a company that tries to hide something and I will be perceived as being in bed with you

93. Dr. Veltri responded to the July 7, 2007 email. Dr. Veltri tendered still another excuse for delaying disclosure of ENHANCE’s results.

94. Still not satisfied, Dr. Kastelein sent the following e-mail on July 13, 2007:

Dear Rick,

I am glad you took the trouble of providing me with such a long answer. The raging part of my former emails comes from an enormous amount of frustration and a feeling that I have no control whatsoever on anything that relates to ENHANCE. As you know, in my normal state of mind, I am a controlled individual and I am not hard to work with. However, in all my previous experiences as a member of a Steering Committee or as a PI [primary investigator], I felt I was in control. With ENHANCE, that is totally the opposite.

The database is at SP, consultants like Gene Bond are in my opinion impossible to work with and never agree with me, Bo Yang has made several crucial mistakes on the way that cost us 9 months, Eric is a nightmare to work with in terms of organization and I can go on and on. The last example of this “never working with me” is the fact that you have decided to withdraw the abstract. This is not necessary. You could have sent in an empty abstract that as my friends at AHA tell me can be filled with data one week before AHA itself and if you were too late, you simply withdraw it. One phone call to me would have cleared all of this. This is exactly what I have done with Pfizer for the Torcetrapib latebreakers at ACC this year. The data were ready 3 days before ACC.

Also, I am constantly under pressure from Merck to plan all sorts of activities, before, at and after AHA. Because I !! will be the one who have [sic] to stand up and present and defend the data, and I would deeply appreciate being involved again and not just simply at the end of a long decision line.

95. On August 20, 2007, seven months after issuance of Dr. Bots’s Report, and after Dr. Kastelein’s requests to publish the data had been rejected, Dr. Kastelein met with Merck and Schering-Plough executives to discuss releasing the ENHANCE results. Merck and Schering-Plough demanded that the test data be reviewed yet again. Under pressure, Dr. Kastelein agreed to their request to convene an expert panel to further analyze the issues Defendants had invented regarding the data’s reliability.

96. The panel’s members included John Robert Crouse, M.D. of Wake Forest University; James Stein, M.D., of the University of Wisconsin; David Orloff, M.D., of Med Pace, Inc., Cincinnati; Greg Evans, M.S., of Wake Forest University; and Dr. Bots, author of the aforementioned Bots Report.

97. Having extracted Dr. Kastelein’s agreement to the formation of the expert panel, Merck and Schering-Plough continued to stall. They did not convene the independent expert panel until mid-November 2007. . . .

110. Merck’s and Schering-Plough’s effort to manipulate the panel by showing them only the worst slides, and by using highly pejorative descriptions of those slides, creates a substantial inference that Defendants knew the content and ramifications of the ENHANCE results, and the negative impact such facts would have on Defendants’ marketing strategy and market share, long before they disclosed them. . . .

By then, Congress was already investigating the almost two year delay.

More to come — including the Full, Amended Consolidated Complaint (Large PDF File).

Massive 98-Page Consolidated Amended Complaint Filed Today in Polk v. Schering Plough, et al.

In much the same vein that the ENHANCE Securities Fraud Amended Complaint broke new legal ground, so too, does today’s In Re Vytorin/Zetia Marketing, Sales Practices and Products Liability Litigation (MDL 1938) complaint. Significantly, it recites information clearly obtained from the very same “confidential witnesses” in the ENHANCE securities fraud suit — but, again, refrains from specifically identifying them. I am certain these various camps are paying close attention to, and cribbing from, one anothers’ filings — and quite wisely so.

The other new wrinkle here, is the newly-added detail, and fine-patina, on the various mechanisms Schering’s upper management used to (allegedly) supress the ENHANCE results for almost 24 months. And again, Mr. Hassan’s, and Ms. Cox’s names are prominently associated with these efforts — efforts to negate, or delay, the ENHANCE results. All allegedly. Ahem.

I will have more on this tomorrow, but let’s dive right in — at pages 30 to 35, Paragraphs 72 through 97 (and 110) of the newly-filed complaint. I’ll likely put up a link to the full PDF file, tomorrow.

. . . .Defendants Initiate a Scheme To Suppress the ENHANCE Study Results

72. In response to these results, Defendants immediately delayed public release of the information. In June 2006, a Schering-Plough executive told investors that the ENHANCE data would be ready by the end of 2006, meaning that the results of the study would not be announced, as originally planned, at the American College of Cardiology meeting that fall. At the time, this postponement received little notice in the medical community, since drug studies
frequently are not released on schedule.

73. However, Defendants did not withhold announcement of the ENHANCE results because of ordinary delays in producing a drug study. They delayed because upper management at Schering-Plough already knew that “they were not going to get any good news” from ENHANCE. A former Senior Medical Director in Schering-Plough’s Cardiovascular group, who worked with Schering-Plough’s “Brand Team” during the time that the ENHANCE data was being gathered and finalized, has advised that Schering-P lough performed quality control assessments of the ENHANCE data in late 2005 and 2006. Updates on the progress of the ENHANCE study were shared at the quarterly Brand Review Meetings led by Carrie Cox, Schering-Plough’s Executive Vice President and President of Global Pharmaceuticals.

74. Dr. Kastelein, ENHANCE’s primary investigator, was prepared to publish ENHANCE’s results in early 2007 and present them at the meeting of the American College of Cardiologists in the Spring. However, Defendants sought to further delay publishing the results, in order to find a way to either negate or mitigate the findings of the ENHANCE study.

75. As part of their scheme, in January 2007, Merck and Schering-Plough, through MSP, hired Dr. Michiel L. Bots, M.D., Ph.D., Associate Professor of Epidemiology at the Julius Center for Health Services and Primary Care of the University Medical Center of Utrecht in the Netherlands, as an “independent consultant.” Defendants asked Dr. Bots to advise them about, and to write a report detailing, purported problems with ENHANCE’s CA IMT measurements.

76. Dr. Bots provided Merck and Schering-Plough his report on or about January 26, 2007. The plan to use Dr. Bots to undermine the ENHANCE study results had backfired. He found no problems with ENHANCE data that justified any delay in releasing the study’s results.

77. According to the Bots Report, Merck and Schering-Plough set up three meetings in Amsterdam at the Core Echo Laboratory, where the image database was housed, to address the companies’ purported concerns – one meeting on January 16, 2007 and two on January 18, 2007. The Bots Report defined Dr. Bots’s objectives as:

(i) determining if the reading of the ultrasound images had been done according to the pre-established protocols for the study; and

(ii) determining how to address “outliers,” which were large differences in CA IMT
measurements between visits one week apart, which “were beyond what was to be expected from normal progression.”

78. Dr. Bots wrote in his report that at the January 16, 2007 meeting, “the core lab showed how the measurements were done.” Based upon this presentation and his discussions with the ENHANCE study team, Dr. Bots concluded that the CA IMT measurements “were indeed done in a manner that was described in the protocol.” Twice more, Dr. Bots’s report stated that the “CIMT measurements seem to be done according to the procedures outlined in the protocol.” On this issue, Dr. Bots concluded that the “CIMT measurements in ENHANCE have been done in a consistent manner, leading to reproducibility findings that compare well with that of published studies from other multi-centre randomized trials.”

79. On the purported “outliers” issue, Dr. Bots again found no problems with the ENHANCE data. Dr. Bots stated that the “core lab has re-evaluated all the images of the visits 3-4 [the first two measurement visits] that had a CIMT value that was 50% or more different” and re-evaluated similar images from visits 13-14 (the last two measurement visits). However, with respect to the “mean absolute CIMT difference and the standard deviations,” Dr. Bots concluded that “data are well in line with the studies that have been published in the literature. Based on those findings there seems to be little concern regarding the validity and precision of the data.”

80. Analyzing “how the reproducibility based on the original data changed when the ‘corrected’ outlier data were used,” Dr. Bots found that “[t]his improved . . . the standard deviation of the mean differences” but “the improvement was very modest.” Dr. Bots concluded that the “variability due to imaging and reading” was “excellent” and that the statistician’s concerns about results were “beyond biological variation.” In short, Dr. Bots found no reason to question the ENHANCE trial’s data.

81. The Bots Report addressed the issue of missing data: “Of the common carotid segment CIMT was missing for 4% of the participants, for the bifurcation segment 12% and for the internal segment 12%.” While “[m]issingness may affect the CIMT value,” Dr. Bots concluded that these figures were “in line with observational studies” and that “the current statistical models that were used in the analysis of CIMT trial data do appear to take care of that in an adequate manner.” Dr. Bots further rejected any concerns, saying:

Since the study was blinded, and the sonographer can not identify which participants were “progressors” and which participants are “regressers,” the effect of missing imaging information is likely to be a random phenomenon.

82. Dr. Bots concluded that all of the supposed issues with ENHANCE’s data that Defendants raised after the fact amounted to nothing.

83. The “Conclusions” section of Dr. Bots’s Report summarizes that “the evidence to me is sufficient to indicate that the data are fine.” In the Report’s “Summary” Dr. Bots likewise stated that “the evidence shown to me is sufficient to indicate that the CIMT data in ENHANCE are fine: i.e., no better, no worse than what has been reported in the literature.”

84. With Dr. Bots’s categorical confirmation of the validity and reliability of the ENHANCE data, Defendants then sought another way to negate the unfavorable study results and to further delay disclosure of the study results.

85. Defendants now suggested changing the way CA IMT was measured through selection of images, or changing the parameters used to define outliers. Dr. Bots refuted these suggestions also, saying they would change nothing:

[It is] [i]mportant . . . to realize that the above mentioned activities might reduce measurement variability to some extent. Since this is expected to involve only a small number of the measurements, the expected effects on variability are likely to be modest. Again, randomization protects against bias in the estimate of the difference between treatment arms.

86. Dr. Bots did not serve Defendants’ purpose, because his Report found no material issues or problems in following the protocols for the ENHANCE trial, taking and recording the CA IMT measurements, dealing with outliers, or addressing missing data. Dr. Bots’s Report supported immediate release of the ENHANCE results, not the delay for which Defendants had hoped Dr. Bots would provide a scientifically plausible pretext.

87. Defendants were aware of the concern surrounding the delay in the release of the ENHANCE study and were already attempting to downplay the importance of the study. For example, at Schering-Plough’s earnings report conference call on April 19, 2007, Tim Anderson, a Prudential Equity analyst, asked Schering-Plough’s new CEO, Fred Hassan, if he was “worried about the outcome of the [ENHANCE] trial,” Mr. Hassan responded by saying, among other things, that “the data analysis is ongoing for the ENHANCE trial,” and that the study “is a surrogate market trial in a very special population with very special doses. There is a much larger trial called the IMPROVE-IT trial which is more of an outcomes trial . . . . [W]e are pretty confident about the overall pattern of data for VYTORIN.”

88. Mr. Hassan did not mention that ENHANCE had demonstrated that Zetia plus simvastatin was no better than simvastatin alone. Mr. Hassan’s qualification that ENHANCE studied only “a very special population with very special doses” and his quick, subject changing jump to discussing other studies and “the overall mix of the data” strongly imply his knowledge of ENHANCE’s bad results and Defendants’ continued scheme to obfuscate and conceal the negative results.

Defendants Further Delay The Release Of The ENHANCE Results

89. After the ENHANCE study was not presented at the American College of Cardiologists meeting in the fall of 2006, the ENHANCE study was rescheduled to be presented at the meeting of the American Heart Association in the fall of 2007. But Defendants also caused that presentation to be cancelled, apparently to Dr. Kastelein’s frustration. On July 6, 2007, in an e-mail5 to Dr. Enrico Veltri, Group Vice President of Global Clinical Development at SPRI, Dr. Kastelein wrote:

Is it correct that SP has decided not to present at AHA, but to await the two other, completely unvalidated endpoints, which analysis is going to take us straight into 2008??!?? If this is true, SP must have taken this decision without even the semblance of decency to consult me as PI of the study. I can tell you if this is the case, our collaboration is over . . . this starts smelling like extending the study for no other then (sic) political reasons and I cannot live with that.

90. Dr. Kastelein communicated with other senior SPRI researchers, asserting no good reason existed to delay disclosing ENHANCE’s results. On July 6, 2007, Dr. Kastelein sent the following email to Schering-Plough’s Dr. John Strony:

Dear John

[I]s it correct that SP has decided not to present at AHA [the American Heart Association conference from November 4-7, 2007], but to await the two other, completely unvalidated, endpoints, which analysis is going to take us straight into 2008 ??!!?? If this is true, SP must have taken this decision without even the semblance of decency to consult me as PI [principal investigator] of the study. I can tell you that if this is the case, our collaboration is over and I will take the appropriate steps to get in touch with the editors of major Journals as well as with the FDA. This starts smelling like extending the publication for no other then [sic] political reasons and I cannot live with that. This is the second day of a long overdue holiday after a terrible year, thank you very much for yet another terrible chapter of this trial.

91. Dr. Strony responded and explained away the delay as follows:

The timeline for the reading of the femorals alone has been a movingtarget [sic]. First it was 8 weeks, then 12, and then 16. This is under the assumption of having 4 readers. However, one of the four has failed qualification and now we are down to three. If all runs smoothly (whichhas [sic] never happened in ENHANCE) we are told it will take 17 weeks for the primary readings. Don’t forget the querying process and clean-up which is still not factored. . .

92. Dr. Kastelein replied to Dr. Strony on July 7, 2007, copying the message to Dr. Enrico Veltri, SPRI’s Group Vice President of Global Clinical Development, Cardiovascular & Metabolic Diseases:

I have been travelling half the globe in the last 6 months to a number of large and important meetings at the strong wish of Merck to chair them or to present ezetimibe data. At every single one of them I was cleared to say that ENHANCE would be presented by me at AHA. There is no reason whatsoever to include femorals; you will be seen as a company that tries to hide something and I will be perceived as being in bed with you

93. Dr. Veltri responded to the July 7, 2007 email. Dr. Veltri tendered still another excuse for delaying disclosure of ENHANCE’s results.

94. Still not satisfied, Dr. Kastelein sent the following e-mail on July 13, 2007:

Dear Rick,

I am glad you took the trouble of providing me with such a long answer. The raging part of my former emails comes from an enormous amount of frustration and a feeling that I have no control whatsoever on anything that relates to ENHANCE. As you know, in my normal state of mind, I am a controlled individual and I am not hard to work with. However, in all my previous experiences as a member of a Steering Committee or as a PI [primary investigator], I felt I was in control. With ENHANCE, that is totally the opposite.

The database is at SP, consultants like Gene Bond are in my opinion impossible to work with and never agree with me, Bo Yang has made several crucial mistakes on the way that cost us 9 months, Eric is a nightmare to work with in terms of organization and I can go on and on. The last example of this “never working with me” is the fact that you have decided to withdraw the abstract. This is not necessary. You could have sent in an empty abstract that as my friends at AHA tell me can be filled with data one week before AHA itself and if you were too late, you simply withdraw it. One phone call to me would have cleared all of this. This is exactly what I have done with Pfizer for the Torcetrapib latebreakers at ACC this year. The data were ready 3 days before ACC.

Also, I am constantly under pressure from Merck to plan all sorts of activities, before, at and after AHA. Because I !! will be the one who have [sic] to stand up and present and defend the data, and I would deeply appreciate being involved again and not just simply at the end of a long decision line.

95. On August 20, 2007, seven months after issuance of Dr. Bots’s Report, and after Dr. Kastelein’s requests to publish the data had been rejected, Dr. Kastelein met with Merck and Schering-Plough executives to discuss releasing the ENHANCE results. Merck and Schering-Plough demanded that the test data be reviewed yet again. Under pressure, Dr. Kastelein agreed to their request to convene an expert panel to further analyze the issues Defendants had invented regarding the data’s reliability.

96. The panel’s members included John Robert Crouse, M.D. of Wake Forest University; James Stein, M.D., of the University of Wisconsin; David Orloff, M.D., of Med Pace, Inc., Cincinnati; Greg Evans, M.S., of Wake Forest University; and Dr. Bots, author of the aforementioned Bots Report.

97. Having extracted Dr. Kastelein’s agreement to the formation of the expert panel, Merck and Schering-Plough continued to stall. They did not convene the independent expert panel until mid-November 2007. . . .

110. Merck’s and Schering-Plough’s effort to manipulate the panel by showing them only the worst slides, and by using highly pejorative descriptions of those slides, creates a substantial inference that Defendants knew the content and ramifications of the ENHANCE results, and the negative impact such facts would have on Defendants’ marketing strategy and market share, long before they disclosed them. . . .

By then, Congress was already investigating the almost two year delay.

More to come — including the Full, Amended Consolidated Complaint (Large PDF File).

Great stuff on Merck and Schering at Ed Silverman’s Pharmalot — of “Transparency”. . . .

He is right on time, here — do go read it all:

. . . .Today, Merck has joined the party. The drugmaker issued a statement saying next month, grants to patient groups, professional medical societies and other organizations will be posted on its web site. Next year, payments to docs who serve as speakers will also be posted. Also next month, Merck will post study results on the ClinicalTrials.gov site.

These steps are occuring before the Physicians Payments Sunshine Act even becomes law (back story). Who’s next? How far will they go? And what about Schering-Plough? Will it win the Tin Ear award again next year?

I’d bet the Whole Ranch on it, here, Ed! Strongly bucking yet a[nother] clear trend in pharma, Schering’s political donations in 2008 (image) remained heavily skewed to the Republican side of the ticket, in most races. Most of its fellow-pharma big-hitters have come much closer to parity, this year — and several (including JNJ) have actually given more to Democrats than Republicans.

[I realize it's a tangent, above, but I've been meaning to post on it for about a week -- having noticed that Ed had also posted, this week, on the larger trend, earlier.] Just for the record, here is Schering’s earlier (largely non-responsive) letter on the topic:

Great stuff on Merck and Schering at Ed Silverman’s Pharmalot — of "Transparency". . . .

He is right on time, here — do go read it all:

. . . .Today, Merck has joined the party. The drugmaker issued a statement saying next month, grants to patient groups, professional medical societies and other organizations will be posted on its web site. Next year, payments to docs who serve as speakers will also be posted. Also next month, Merck will post study results on the ClinicalTrials.gov site.

These steps are occuring before the Physicians Payments Sunshine Act even becomes law (back story). Who’s next? How far will they go? And what about Schering-Plough? Will it win the Tin Ear award again next year?

I’d bet the Whole Ranch on it, here, Ed! Strongly bucking yet a[nother] clear trend in pharma, Schering’s political donations in 2008 (image) remained heavily skewed to the Republican side of the ticket, in most races. Most of its fellow-pharma big-hitters have come much closer to parity, this year — and several (including JNJ) have actually given more to Democrats than Republicans.

[I realize it's a tangent, above, but I've been meaning to post on it for about a week -- having noticed that Ed had also posted, this week, on the larger trend, earlier.] Here is Schering’s earlier letter on the topic — it is largely non-responsive, as you will see — just for the record:

Vertex Common Stock: up 31 percent from Secondary Offering Price of $25.50, on September 18, 2008

Yesterday, VRTX rose about 16 percent on the day, now up another 6 percent this morning (Just for those keeping score at home, I had predicted a strong stock price effect for this data, about 20 days ago). I’d say that Teleprevir, the company’s next generation Hep C candidate, has hit each of its pre-market trials out of the park. See this update, of yesterday, for more on the results — the Vertex candidate outperformed the Schering candidate by a margin of more than two-to-one — 81 percent response v. 35 percent response. So, an outfit called JMP Securities (no relation to JP Morgan Chase, nor Pinnacle) has upgraded its outlook on Vertex — to “Outperform” — just this morning.

. . . .On Wednesday, the company said 85 percent of patients taking telaprevir twice a day with the drugs Pegasys and Ribavirin had undetectable levels of hepatitis C after four weeks, while 68 percent of those taking the drug with Peg-Intron and Ribavirin had undetectable levels. Taking the drug three times daily, the percentages were 82 percent for the Pegasys combination and 71 percent for the Peg-Intron combination, respectively. The midstage study involves 161 people. . . .

These are smaller study populations — but we’re seeing very-strong efficacy — no doubt. And so is Wall Street — with 2 to 3 million still-largely latent Hep C infections, in the US alone.

Once again, Goldman Sachs (lead banker for the $25.50 common stock offering of last week) look to be “the smartest guys in the room“. . . . the bank (and/or its clients) watched its holdings rise 31 percent in seven days. Warren Buffett was no fool to “stake” the Goldman firm a cool $5 billion this week, amid the market turmoil, either.

Vertex Common Stock: up 31 percent from Secondary Offering Price of $25.50, on September 18, 2008

Yesterday, VRTX rose about 16 percent on the day, now up another 6 percent this morning (Just for those keeping score at home, I had predicted a strong stock price effect for this data, about 20 days ago). I’d say that Teleprevir, the company’s next generation Hep C candidate, has hit each of its pre-market trials out of the park. See this update, of yesterday, for more on the results — the Vertex candidate outperformed the Schering candidate by a margin of more than two-to-one — 81 percent response v. 35 percent response. So, an outfit called JMP Securities (no relation to JP Morgan Chase, nor Pinnacle) has upgraded its outlook on Vertex — to “Outperform” — just this morning.

. . . .On Wednesday, the company said 85 percent of patients taking telaprevir twice a day with the drugs Pegasys and Ribavirin had undetectable levels of hepatitis C after four weeks, while 68 percent of those taking the drug with Peg-Intron and Ribavirin had undetectable levels. Taking the drug three times daily, the percentages were 82 percent for the Pegasys combination and 71 percent for the Peg-Intron combination, respectively. The midstage study involves 161 people. . . .

These are smaller study populations — but we’re seeing very-strong efficacy — no doubt. And so is Wall Street — with 2 to 3 million still-largely latent Hep C infections, in the US alone.

Once again, Goldman Sachs (lead banker for the $25.50 common stock offering of last week) look to be “the smartest guys in the room“. . . . the bank (and/or its clients) watched its holdings rise 31 percent in seven days. Warren Buffett was no fool to “stake” the Goldman firm a cool $5 billion this week, amid the market turmoil, either.

Interesting Testimony Before Congress — on Determining Insurance Coverage

During the September 23, 2008 Senate Finance Committee Hearing (see webcast at that link) on US Health Care Reform — Covering the Uninsured, the following prepared remarks, among others, were offered by a former chief actuary of Humana, John Bertko. I offer them for the public service/educational value they hold — do take the time to read it all (PDF file) through — you may find (as did I) that there are several entrenched practices working to decrease the ability of insurers to reform their own practices. They will plainly need legislative relief from some of these rate-setting mandates, in order to deliver more affordable care to more Americans:

. . . .The private health insurance market in the U.S. is frequently described as three separate segments: the Individual insurance market, the small group segment for employers with 2 to 50 employees, and the large group segment for employers with more than 50 employees. Each segment has different rating practices and regulation. To give an idea of the size of these
segments, there are:

• About 17 million covered individuals in the Individual Insurance market

• About 30 million in the Small Group market

• More than 120 million in the Large Group market.

Rating practices, or setting premium rates, differ for each of the segments and also differ by state. Premium rating is mostly regulated by state insurance law but also follows the requirements of several federal laws, including ERISA (for large employers mainly), COBRA (for extension of benefits coverage) and HIPAA (for certain provisions related to group insurance waiting periods and insurance continuation plans). I will provide a very brief summary of the rating methods used by private health insurers.

Individual Health Insurance Segment

For the Individual health insurance market, there are two distinct approaches to rating methods allowed by states. For five states, insurers in those states must offer policies to all applicants (guaranteed issue) and are limited to rates that are similar regardless of health status, called adjusted community rating. For these states, rates will generally vary by age and gender but not with health conditions.

In the other states, individual health insurance policies are underwritten, meaning that past health conditions of individuals are examined and rates are set according to the health risk of the applicant. Generally, there are three possible outcomes:

• An applicant answers a variety of health status questions and is underwritten as a “standard risk” and receives an offer of insurance at standard rates that are generally lower than those for an employee or dependent in the employer market. This occurs since the person is found to be healthy at time of policy issue, rather than being of “average health” typical of an employee or dependent of an employee.

• An applicant with some past or current health conditions might be offered a policy at higher rates than average (called a “rate up” offer) or with coverage of certain specified conditions excluded for a period of time (called a “pre-ex” offer).

• Some applicants with more serious health conditions will be denied coverage since the insurer would not be able to charge a sufficient premium in an underwritten market to pay for the average claims for these individuals.

In underwritten markets, about 70% of applicants will qualify for standard policies, about 15-20% will be offered policies at higher rates or with pre-existing conditions not covered and about 10-15% of applicants will not be offered any coverage. Additionally, agents or brokers may inform some individuals interested in obtaining coverage that they are likely to be denied coverage, so there is another group of people who do not apply for individual insurance coverage at all.

Individual health insurance rates in states allowing underwriting can vary with age and gender and with health status. On average, rates for the under-65 population may vary by an actuarial factor of 6:1 (or so) without regard to health status, meaning that rates for the oldest group (say, in the 60-64 year old bracket) will be six times the rate for the youngest adults (18-24 year old bracket). Some states place restrictions on the total variance of premium rates, including health status, but generally rates offered to those with health conditions will not exceed twice standard rates offered to the healthy individuals of the same age.

In 32 states, individuals who are denied coverage might be able to obtain coverage from High Risk Pools (HRPs), if they can afford the HRP premium and there is capacity in the HRP. About 200,000 Americans are covered by HRPs, with an average of about 6000 individuals in each state HRP. Premiums in the HRP are usually 200% to 250% of standard premiums paid by individual applicants and are heavily subsidized by insurance assessments or other funding sources in addition to the premiums charged. Access to a HRP is generally limited by the amount of subsidy available in a state and by the ability of a HRP applicant to afford the higher HRP premium.

Small Employer Segment

In the Small Group (SG) market, all states have followed HIPAA provisions and require Guaranteed Issue. This means that any small employer will be made an offer of insurance as long as certain requirements are met: typically, these include some minimum employer contribution requirement and participation or alternative coverage for all or nearly all employees.

Premium rates in the SG market are generally subject to rating band limitations, determined first based on “case characteristics,” consisting of age and gender of employees, location, number of employees and type of insurance product, which determine the “manual” or average rate for a premium. Then, in most states a factor for health status or industry is applied to calculate premium rates within certain rate bands. Model legislation from the National Association of Insurance Commissioners (NAIC) specifies that rates may deviate from the manual rate by no more than + or – 35%. However, there are variations in many states and the most common rate band is +/- 25%. A few states also specify Adjusted Community Rating in which no variation by health status or other factors is allowed.

Large Employer Segment

For large employers with more than 50 employees, premium rates are determined either from an individual firm’s claims experience or from a blended average of manual rates and claims experience. Firms with 500 or more employees are almost always experience-rated, meaning that their past year of claims experience is projected with health insurance trend to determine future premium rates. In addition, many of these firms are self-funded, meaning that the insurance risk for future claims is borne entirely by the employer, perhaps using re-insurance as protection against the possibility of catastrophic claims. For both these larger firms and for the smaller firms choosing to purchase insurance, there are generally no restrictions on premium rates that are charged. Regulation of the large employer market is split between limited state regulation and ERISA.

Some states regulate all health insurance rates to assure that they are necessary and adequate, but without formal limits on rates that can be charged. Larger self-insured employers generally use the ERISA exemption from state regulation to allow them to offer the same benefits for multistate locations.

Key Issues

There are at least two major issues in private health insurance market today: affordability and access. As you may know, the average health insurance premium this year is around $13,000 for a family covering two adults and children. Even with an average employer subsidy of 75%, this amounts to an employee payroll deduction for health insurance of over $3000 per year for the average employee. Out of pocket cost sharing generally amounts to about 20% of covered services in addition to payroll deductions for premiums. . . .

Indeed.

Interesting Testimony Before Congress — on Determining Insurance Coverage

During the September 23, 2008 Senate Finance Committee Hearing (see webcast at that link) on US Health Care Reform — Covering the Uninsured, the following prepared remarks, among others, were offered by a former chief actuary of Humana, John Bertko. I offer them for the public service/educational value they hold — do take the time to read it all (PDF file) through — you may find (as did I) that there are several entrenched practices working to decrease the ability of insurers to reform their own practices. They will plainly need legislative relief from some of these rate-setting mandates, in order to deliver more affordable care to more Americans:

. . . .The private health insurance market in the U.S. is frequently described as three separate segments: the Individual insurance market, the small group segment for employers with 2 to 50 employees, and the large group segment for employers with more than 50 employees. Each segment has different rating practices and regulation. To give an idea of the size of these
segments, there are:

• About 17 million covered individuals in the Individual Insurance market

• About 30 million in the Small Group market

• More than 120 million in the Large Group market.

Rating practices, or setting premium rates, differ for each of the segments and also differ by state. Premium rating is mostly regulated by state insurance law but also follows the requirements of several federal laws, including ERISA (for large employers mainly), COBRA (for extension of benefits coverage) and HIPAA (for certain provisions related to group insurance waiting periods and insurance continuation plans). I will provide a very brief summary of the rating methods used by private health insurers.

Individual Health Insurance Segment

For the Individual health insurance market, there are two distinct approaches to rating methods allowed by states. For five states, insurers in those states must offer policies to all applicants (guaranteed issue) and are limited to rates that are similar regardless of health status, called adjusted community rating. For these states, rates will generally vary by age and gender but not with health conditions.

In the other states, individual health insurance policies are underwritten, meaning that past health conditions of individuals are examined and rates are set according to the health risk of the applicant. Generally, there are three possible outcomes:

• An applicant answers a variety of health status questions and is underwritten as a “standard risk” and receives an offer of insurance at standard rates that are generally lower than those for an employee or dependent in the employer market. This occurs since the person is found to be healthy at time of policy issue, rather than being of “average health” typical of an employee or dependent of an employee.

• An applicant with some past or current health conditions might be offered a policy at higher rates than average (called a “rate up” offer) or with coverage of certain specified conditions excluded for a period of time (called a “pre-ex” offer).

• Some applicants with more serious health conditions will be denied coverage since the insurer would not be able to charge a sufficient premium in an underwritten market to pay for the average claims for these individuals.

In underwritten markets, about 70% of applicants will qualify for standard policies, about 15-20% will be offered policies at higher rates or with pre-existing conditions not covered and about 10-15% of applicants will not be offered any coverage. Additionally, agents or brokers may inform some individuals interested in obtaining coverage that they are likely to be denied coverage, so there is another group of people who do not apply for individual insurance coverage at all.

Individual health insurance rates in states allowing underwriting can vary with age and gender and with health status. On average, rates for the under-65 population may vary by an actuarial factor of 6:1 (or so) without regard to health status, meaning that rates for the oldest group (say, in the 60-64 year old bracket) will be six times the rate for the youngest adults (18-24 year old bracket). Some states place restrictions on the total variance of premium rates, including health status, but generally rates offered to those with health conditions will not exceed twice standard rates offered to the healthy individuals of the same age.

In 32 states, individuals who are denied coverage might be able to obtain coverage from High Risk Pools (HRPs), if they can afford the HRP premium and there is capacity in the HRP. About 200,000 Americans are covered by HRPs, with an average of about 6000 individuals in each state HRP. Premiums in the HRP are usually 200% to 250% of standard premiums paid by individual applicants and are heavily subsidized by insurance assessments or other funding sources in addition to the premiums charged. Access to a HRP is generally limited by the amount of subsidy available in a state and by the ability of a HRP applicant to afford the higher HRP premium.

Small Employer Segment

In the Small Group (SG) market, all states have followed HIPAA provisions and require Guaranteed Issue. This means that any small employer will be made an offer of insurance as long as certain requirements are met: typically, these include some minimum employer contribution requirement and participation or alternative coverage for all or nearly all employees.

Premium rates in the SG market are generally subject to rating band limitations, determined first based on “case characteristics,” consisting of age and gender of employees, location, number of employees and type of insurance product, which determine the “manual” or average rate for a premium. Then, in most states a factor for health status or industry is applied to calculate premium rates within certain rate bands. Model legislation from the National Association of Insurance Commissioners (NAIC) specifies that rates may deviate from the manual rate by no more than + or – 35%. However, there are variations in many states and the most common rate band is +/- 25%. A few states also specify Adjusted Community Rating in which no variation by health status or other factors is allowed.

Large Employer Segment

For large employers with more than 50 employees, premium rates are determined either from an individual firm’s claims experience or from a blended average of manual rates and claims experience. Firms with 500 or more employees are almost always experience-rated, meaning that their past year of claims experience is projected with health insurance trend to determine future premium rates. In addition, many of these firms are self-funded, meaning that the insurance risk for future claims is borne entirely by the employer, perhaps using re-insurance as protection against the possibility of catastrophic claims. For both these larger firms and for the smaller firms choosing to purchase insurance, there are generally no restrictions on premium rates that are charged. Regulation of the large employer market is split between limited state regulation and ERISA.

Some states regulate all health insurance rates to assure that they are necessary and adequate, but without formal limits on rates that can be charged. Larger self-insured employers generally use the ERISA exemption from state regulation to allow them to offer the same benefits for multistate locations.

Key Issues

There are at least two major issues in private health insurance market today: affordability and access. As you may know, the average health insurance premium this year is around $13,000 for a family covering two adults and children. Even with an average employer subsidy of 75%, this amounts to an employee payroll deduction for health insurance of over $3000 per year for the average employee. Out of pocket cost sharing generally amounts to about 20% of covered services in addition to payroll deductions for premiums. . . .

Indeed.