Merck Will Pay $21.3 Million For Schering’s Drug Pricing Misdeeds

Great story from Pharmalot — do go read it all. Here is the settlement agreement, courtesy of Ed’s server — and here is a snippet [I covered the earlier similar Warrick state settlements here]:

. . . .The three lawsuits were originally filed by a whistleblower, Ven-A-Care of the Florida Keys on behalf of California, Florida and the federal government. Schering-Plough also settled Florida and cut a deal with the federal government that involved a $44.5 million payment.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported to California for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drugmakers, the statement says.

California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, some drugmakers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursement. . . .

Atta’ boy, Fred! You did a great job on this one!

Carrie Cox’s Non-Compete Lasts One Year — For $52 Million In Schering-Plough ‘Chutes?

Given the significant overlap in fields of endeavor between New Merck and Celgene, I thought it a good idea to set out the non-compete Carrie Cox signed — back in 2003, when she joined Schering-Plough (from Pharmacia):

. . . .9. Confidential Information and Competitive Conduct.

(a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its Affiliated Companies and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its Affiliated Companies and which shall not be or become public knowledge or generally known within the pharmaceutical industry (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than to the Executive’s attorneys or to the Company and to those designated by the Company.

(b) During the Noncompetition Period (as defined below), the Executive shall not, without the prior written consent of the Board (which consent shall not be unreasonably withheld), engage in or become associated with a Competitive Activity. For purposes of this Section 9(b): (i) the “Noncompetition Period” means (A) the period during which the Executive is employed by the Company, plus (B) one year following the termination of such employment only (I) in a Specified Termination as defined in the last sentence of this Section 9(b), or (II) if by the Company for Cause; (ii) a “Competitive Activity” means any venture, enterprise, company, business or endeavor which is in competition with the Company or any of its Affiliated Companies in fields in which the Company and its Affiliated Companies have annual sales of more than $10,000,000; and (iii) the Executive shall be considered to have become “associated with a Competitive Activity” if the Executive becomes directly or indirectly involved as an owner, principal, employee, officer, director, independent contractor, representative, stockholder, financial backer, agent, partner, advisor, lender, or in any other individual or representative capacity with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity. . . . the Executive shall not be considered to violate this Section 9(b) as a result of her complying with law or legal process or as a result of her cooperating with any of her prior employers in connection with litigation relating to matters in which she was substantially involved, provided that (A) the Executive does not receive any compensation for such cooperation, other than reimbursement of her expenses, (B) neither the Company nor any of its Affiliated Companies is a party adverse to such prior employer in such litigation, and (C) the Executive notifies the CEO and the General Counsel of the Company before beginning such cooperation and provides them with any information they may reasonably request, from time to time, regarding such cooperation. A “Specified Termination” means a termination of the Executive’s employment by the Executive without Good Reason that occurs before the earlier of a Change of Control or the second anniversary of the Commencement Date (a “Specified Termination”), but only if, within fifteen days after the date that the Company receives the Executive’s Notice of Termination, the Company notifies the Executive that it elects for this Section 9(b) to continue to be applicable and that it agrees to pay the Executive, within 30 days after the Date of Termination, in addition to any other amounts or benefits to which she may be entitled under Section 5(c), the amount determined under Section 5(a)(i)(C) assuming the Multiple equals one, and to continue providing benefits to the Executive as described in Section 5(a)(ii) assuming the Multiple equals one. . . .

(e) In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amount otherwise payable to the Executive under this Agreement. . . .

To cut to the chase, here — Celgene likely has annual sales in excess of $10 million, in each of these overlapping areas (cancer and inflammatory diseases), and we know New Merck does.

So — just as I asked with regard to Ex-CFO Bob Bertolini’s board of directors seat at Genzyme, what exactly did Carrie Cox’s perhaps $52 million in ‘chute payments, all-in, actually buy for the New Merck shareholders — in the way of reasonable protections?

Apparently, a large tract of beachfront property in Florida (for Carrie Cox, personally) — that’s about all.

Celgene — Another Board Seat For Carrie Cox

Another seat — this time, at Celgene — another long freight-train of stock grants, retirement benefits and paychecks. So it goes. And again, I wonder about her vast-payout, all supposedly to secure the non-compete — afterall, Celgene works in the fields of oncology, and inflammatory diseases — just like New Merck:

. . . .Celgene Corp. announced the election of Carrie Cox to Board. Cox is a member of the Board of Texas Instruments and served on their audit and compensation committees, as well as recently being appointed to the Board of Directors of Cardinal Health. . . .

Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. . . .

MSD to Acquire CMO in England: Avecia Biologics; Price Not Disclosed

This deal follows-up on, and completes an earlier collaboration covering specific microbial-derived biologics efforts between the parties:

. . . .Avecia Investments Limited announced that it entered into a definitive agreement by which Merck will acquire the biologics business of the Avecia group through a Merck affiliate, in the U.K. (MSD). Avecia Biologics is a contract manufacturing organization with specific expertise in microbial-derived biologics. Financial details of the transaction were not disclosed. Under the terms of the agreement, Merck will acquire Avecia Biologics Limited and all its assets, including all the company’s process development and scale-up, manufacturing, quality and business support operations located in Billingham, UK. In addition to honoring all Avecia Biologics contractual commitments, Merck plans to engage in discussions with individual customers relating to their specific ongoing and future biological process development and manufacturing needs after the transaction is closed. . . .

Closing of the transaction is subject to regulatory approval, as well as other customary closing conditions. The Oligomedicines Business of the Avecia group based in the United States does not form part of this transaction. . . .

Makes sense — in part, to control the channel, here.

New Boxed Warnings From FDA: On Remicade®, and Simponi®

This might be why Merck’s stock price declined on the NYSE, this afternoon, despite being started at “Buy“, in a new UBS analysts’ research report of this morning (link in drug’s brand name is to FDA’s updated notice text):

. . . .Remicade^® (infliximab) for IV injection

Detailed View: Safety Labeling Changes Approved By FDA Center for Drug Evaluation and Research (CDER) – November 2009

BOXED WARNING
Malignancy

Lymphoma and other malignancies, some fatal, have been reported in children and adolescent patients treated with TNF blockers, including Remicade.

WARNINGS
Malignancies

Cases of acute and chronic leukemia have been reported with postmarketing TNF-blocker use in rheumatoid arthritis and other indications. Even in the absence of TNF blocker therapy, patients with rheumatoid arthritis may be at a higher risk (approximately 2-fold) than the general population for the development of leukemia.

MEDICATION GUIDE

Updated information pertains to the risk of malignancies in pediatric patients, leukemia in adults, and psoriasis-like lesions associated with use of products within the class of TNF-blockers. . . .

~~~~~~~~

. . . .Simponi^® (golimumab)

Detailed View: Safety Labeling Changes Approved By FDA Center for Drug Evaluation and Research (CDER) – November 2009

BOXED WARNING
Malignancy

Lymphoma and other malignancies, some fatal, have been reported in children and adolescent patients treated with TNF blockers, of which Simponi is a member

WARNINGS and PRECAUTIONS
Malignancies

Malignancies, some fatal, have been reported among children, adolescents, and young adults who received treatment with TNF-blocking agents (initiation of therapy ≤ 18 years of age), of which Simponi is a member.

Approximately half the cases were lymphomas, including Hodgkin’s and non-Hodgkin’s lymphoma. The other cases represented a variety of malignancies, including rare malignancies that are usually associated with immunosuppression, and malignancies that are not usually observed in children and adolescents. The malignancies occurred after a median of 30 months (range 1 to 84 months) after the first dose of TNF blocker therapy. Most of the patients were receiving concomitant immunosuppressants. These cases were reported post-marketing and are derived from a variety of sources, including registries and spontaneous postmarketing reports.

MEDICATION GUIDE
Cancer

There have been cases of unusual cancers in children and teenage patients taking TNF-blocking agents.

For children and adults taking TNF-blocker medicines, including Simponi, the chances of getting lymphoma or other cancers may increase.

People with inflammatory diseases including rheumatoid arthritis, psoriatic arthritis, or ankylosing spondylitis, especially those with very active disease, may be more likely to get lymphoma. . . .

Vytorin also got a less-alarming new FDA warning on the package insert and label — I’ll post that in a moment.

New Vytorin® Warnings — From FDA, Released Tonight

UPDATED: 12.17.09 @ 8:40 AM EST – Per Salmon’s keen eye:

EM has 10% mortality.

It’s also considered a mild form of more serious skin toxicities including Stevens Johnson Syndrome (SJS) and Toxic Epidermal Necrosis (TENS).

In SJS, mucus membranes are involved so you have burning in the vagina, mouth, urethra, eyelids etc.. SJS also has 10% mortality. Survivors often have scarring.

In TENS, sheets of skin die and slough off the body. Mortality is 40%.

Salmon

December 17, 2009 8:05 AM

~~~~~~~~~~

Significantly less alarming than the Remicade/Simponi warnings (see below), yet these new FDA warnings are likely to continue to add to the looming government-reimbursement tangles, and more general Vytorin/Zetia sales erosion, in the United States:

. . . .Vytorin^® (ezetimibe/simvastatin) tablets

Detailed View: Safety Labeling Changes Approved By FDA Center for Drug Evaluation and Research (CDER) – November 2009

ADVERSE REACTIONS
Post-Marketing Experience

erythema multiforme

PATIENT PACKAGE INSERT

What are the possible side effects of Vytorin?

Raised red rash, sometimes with target-shaped lesions. . . .

Ick.

Sunscreen “Battle Royale” Heats Up, Again — And Just In Time For “Cruise Season”!

The trial date in this massive federal Lanham Act suit-and-countersuit (underway in the Delaware district courts) resembling nothing so much as a celebrity cage-match now draws near. Last night, the parties filed a proposed joint pre-trial order. In October 2009, each of J&J’s Neutrogena group, and Merck’s Schering-Plough (Coppertone) unit agreed to cease the complained-of adverts, on both sides. But they agreed to do so only until January 31, 2010. I doubt the action will be the subject of a final dispositive order by then. So, the battle may begin anew, as winter cruise season gets underway, in earnest. [Both sides have also agreed to forego money damages, preferring to accept banishment/removals of the allegedly offending ads, instead.]

From the final pre-trial papers, then:

[According to J&J's Neutrogena,] in its television advertisement for Coppertone Sport, Schering [now New Merck] makes three false claims: (i) Neutrogena Ultimate Sport spray users cover themselves with 28% chemical propellant, (ii) Coppertone Sport sprays provide better sun protection than Neutrogena Sport sprays, and (iii) studies prove that Coppertone Sport sprays provide better coverage than Neutrogena Ultimate Sport sprays. . . .

. . . .when a party’s advertising refers to studies or data — a so-called “establishment claim” — the challenger can satisfy its burden of proving falsity by “demonstrat[ing] the tests relied upon [] do not establish the proposition for which they are cited.” Syncsort Inc. v. Sequential Software, Inc., 50 F. Supp. 2d 318, 341-42 (D.N.J. 1999), or that such tests are “not sufficiently reliable to permit one to conclude with reasonable certainty that they established the claim made.” McNeil-P.P.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir. 1991). . . .

[In response,] Schering alleges that Neutrogena’s advertising is false in three respects: (i) Neutrogena falsely asserts that only products with Helioplex provide protection from UVA and UVB rays, even though the literal words of Neutrogena’s ads state no such thing [(!)]; (ii) Neutrogena falsely asserts that Neutrogena Ultimate Sport is the “Best line of sport sun protection,” and (iii) a bar graph in Neutrogena’s advertising communicate[s] falsehoods. In denying Schering’s motion for a preliminary injunction addressed to these claims, the Court already has determined that none of these asserted messages is a literal falsehood under the Lanham Act. See Schering Plough v. Neutrogena Corp., 642 F. Supp. 2d 304 (D. Del. Aug. 5, 2009) (the “Order”). In the five months since the Court issued the Order, nothing has changed that would render these claims literally false, and Schering has conducted no survey addressed to the Helioplex claims in Neutrogena’s advertising. Schering recently produced a consumer survey that purports to show that consumers took away the message from a Neutrogena Ultimate Sport print advertisement that Neutrogena Ultimate Sport is superior to or more durable than Coppertone Sport. Schering’s survey effectively has no control, is not addressed to the relevant issues, and otherwise fails to establish that Neutrogena’s advertising communicates any implied false messages. . . .

Should be grin-inducing. . . if not tan-producing. Why? Well, the court has already signaled it likely won’t side with New Merck — as noted above “. . .in denying Schering’s motion for a preliminary injunction addressed to these claims, the Court already has determined that none of these asserted messages is a literal falsehood under the Lanham Act.”

As I have repeatedly opined, I think this is but a straw-man/proxy for the fight (between the same parties, and filed at about the same time, to boot!) over $8 billion in sales of Remicade and Simponi (via J&J’s Centocor unit — previously distributed outside the US by Schering-Plough), now deep in arbitration proceedings.

Newly-Coordinated Discovery — In A Slew Of NJ Federal “Enhance Debacle” Cases

As a result of the reverse merger — and the veritable plethora of pending would-be federal class actions — alleging various sorts of securities fraud, ERISA violations, civil RICO violations and false-advertising infractions — Judge Cavanaugh has agreed with the parties in each of these MDL suits (click image at right, to enlarge) that discovery ought to be coordinated.

At first blush, this development would nominally seem to favor New Merck, as it should reduce the number of potentially-duplicating appearnces and productions for Lowenstein Sandler (Merck’s defense firm).

Upon a closer review, though, I suspect this will benefit the various plaintiff-groups even more than New Merck, and its current and former officers (which term, loosely defined, still includes Hans Becherer, Fred Hassan, Carrie Smith Cox and Tom Sabatino, among others).

How so? Well, now all the various groups of plaintiffs’ lawyers will likely share discovery strategy efforts, and share the financial burden of seeking the truth, all while minimizing New Merck’s ability to slow-roll the process, by claiming conflicting discovery calendar obligations, or claiming “other duties” preclude the various executives’ appearances at depositions, for example.

. . . .for the purpose of pre-trial discovery only. . . . these matters will be coordinated. . . .

“Deal Of The Year”? If Obfuscation Is The Key Criterion

The generally excellent, and ever provocative In Vivo blog has nominated the Merck-Schering-Plough “Bust-Up, Styled As A Reverse Merger” transaction for its Roger^® award — the pharma deal of the year 2009. In doing so, it explains that the deal is not as transformative as Pfizer’s purchase of Wyeth, and likely only buys some moderate extension of time for Merck, on its patent-cliff — and finally, that 40 percent of the deal’s synergy value will likely come from layoffs and plant closings. And still the editors picked it, as a nominee. Uh-huh.

What In Vivo calls “crafty“, I would call borderline sham-transactional ledger-domain — but that will be for a panel of arbitrators to ultimately decide, if Schering/Merck shot itself in the foot, to the tune of $8 billion in annual revenue (via openly picking the J&J Remicade/Simponi fight, rather than negotiating a settled distribution deal ex-US, in advance of the big deal’s announcement), thus:

. . . .The second clever bit was the deal’s structure, designed to minimize the chance that Johnson & Johnson comes in to spoil the party. Per the companies’ 1998 agreement granting Schering ex-US rights to anti-TNF drugs Remicade (and follow-on Simponi), J&J has a change of control clause allowing it to scoop back those rights in the event that Schering-Plough is taken over. (The two drugs in question are potentially worth up to $8 billion together.)

But technically Schering-Plough isn’t being taken over: the deal is a reverse-merger in which Schering is the surviving entity–renamed as Merck. And run by Merck’s CEO Dick Clark out of Whitehouse Station, N.J.. . . .

Now okay, J&J has sought arbitration. So that crafty bit may not work out. . . .

Do go read it all — to my eye, it is sorta’ like the bespectacled nerdy kid in the front of the class, admiring the unruly kid in the back, who is forever stealing, via-strong-arm tactics, the others’ lunch money. I guess we’ll have to wait and see whether the arbitrators force the unruly kid to pay some, or all of that lunch-money back (some $8 billion, annually).

Odd.

[H/T Anonymous, in comments, below -- for the lead.]

New Merck Names “The Fosamax® Guy” As Its New Chief Medical Officer

The guy apparently led the development efforts on Fosamax^® (a drug the subject of over 900 lawsuits alleging jaw bone death, as a side effect of taking it, longer term). Let’s hope his instincts have improved since then. I trust he is better than that would suggest — here is his prior life, in summary fashion:

. . . .Dr. Rosenblatt has served as Dean of Tufts University School of Medicine since 2003. Prior to Tufts University, Dr. Rosenblatt held the appointment of George R. Minot Professor of Medicine at Harvard Medical School and Chief of the Division of Bone and Mineral Metabolism Research at Beth Israel Deaconess Medical Center (BIDMC). He served as the President of BIDMC from 1999-2001. Previously, he was the Harvard Faculty Dean and Senior Vice President for Academic Programs at CareGroup and BIDMC and a founder of the Carl J. Shapiro Institute for Education and Research at Harvard Medical School and BIDMC.

Prior to that, he served as Director of the Harvard-MIT Division of Health Sciences and Technology. And earlier, he was Senior Vice President for Research at Merck Sharp & Dohme Research Laboratories where he co-led the worldwide development team for alendronate (FOSAMAX), Merck’s bisphosphonate for osteoporosis and bone disorders. In leading most of Merck’s international research efforts, he established two major basic research institutes. He also headed Merck Research’s worldwide University and Industry Relations Department.

Dr. Rosenblatt is the recipient of the Fuller Albright Award for his work on parathyroid hormone and the Vincent du Vigneaud Award in peptide chemistry and biology, and the Chairman’s Award from Merck. Dr. Rosenblatt received his undergraduate degree summa cum laude from Columbia and his M.D. magna cum laude from Harvard. His internship, residency, and endocrinology training were all at the Massachusetts General Hospital. . . .

Well, I guess Merck just found a permanent expert witness for its defense of these cases — and probably cheaper (all-in) than his day-rate, too.