Schering-Plough

Hassan's advice for hard times

Tracy Staton — Fri, 20 Jun 2008 09:48:49 -0400

When the interview subject is adversity, who better to question than Schering-Plough's Fred Hassan, who's seen his share this year? BusinessWeek chatted with the Schering CEO about dealing with hard times, and he delivered some familiar words about tough times making people stronger. One key, Hassan says, is facing up to problems instead of ignoring them or submitting to "a downward spiral of complaining and commiserating." Another: seeking help from colleagues.

For anyone who's followed the whole Vytorin-Zetia-Enhance series of unfortunate events, the advice is familiar. When the American College of Cardiology meeting yielded advice against Vytorin--one of Schering Plough's biggest moneymakers, in partnership with Merck--Hassan didn't waste time. He asked Schering's key execs for their input and came up with a cost-cutting plan to help make up the revenues Schering was sure to lose to falling Vytorin sales. We suppose that qualifies as facing up to a problem. Maybe Hassan wishes he'd faced up to the original problem--releasing the not-too-flattering data on Vytorin from the Enhance study--a little sooner than he did.

- read the Business Week interview

Vytorin, Zetia scrips drop 11% in April

Tracy Staton — Thu, 29 May 2008 10:21:48 -0400

Prescriptions for Vytorin and Zetia, Merck/Schering-Plough's co-marketed cholesterol meds, fell off by 11 percent just during the month of April, to less than 2.5 million from 2.8 million in March. Cumulatively, they're down by 22 percent since January.

You'll recall that in early January, the joint venture announced the results of the long-awaited Enhance study, which showed that the Vytorin combo of Zetia and Zocor didn't prevent artery-clogging any better than Zocor did alone. Predictably, scrip volume dropped by more than 13 percent month-over-month in February. But the numbers edged back upward in March as Merck and Schering-Plough did damage control with doctors.

Then, at the end of March, the Enhance data was presented at the American College of Cardiology meeting; doctors there recommended limiting use of Vytorin and Zetia to patients who'd tried a host of other alternatives. So it's not surprising that April scrips dropped so dramatically. Year over year, first-quarter sales of the meds rose about 6 percent to $1.2 billion, a big slowdown from the 30 percent growth in 2007.

- read the CNN Money article

Schering-Plough's Fred Hassan - CEO Pay

Tracy Staton — Mon, 19 May 2008 14:38:14 -0400

Fred Hassan - Schering-Plough

Total Compensation: $30.1M

2007 Revenue: $12.69B
2006 Revenue: $10.59B
Change: 19.8%

Details: Salary came to $1.67 million, up from $1.65 million in 2006. He got no bonus, but did rake in $18.4 million in stock and options, more than double the amount he brought in last year. He also collected $608,000 in perks, which included $75,544 for use of the company aircraft, $1,101 for a car and driver, $146,680 for personal security, among other expenses.

Schering-Plough News:
A turbulent week for Fred Hassan
Hassan bullish on Schering-Plough
Schering-Plough laying off 5,500
Schering CEO defends Vytorin decisions
A new 'religion' at Schering-Plough

Should Hassan forfeit $13 million?

Tracy Staton — Mon, 19 May 2008 10:22:17 -0400

Should Fred Hassan (photo) give back his bonus? That's what Forbes is asking this week, saying that the Schering-Plough CEO's 2007 compensation package was probably artificially inflated by the fact that sales-damaging study results were held back until early January 2008. If the Enhance study--which pitted Merck/Schering-Plough's big moneymaker Vytorin against the now-off-patent Zocor--had been unveiled in November 2006 or March 2007 as cardiologists had long expected, Hassan might not have received $13 million of his cash compensation over those two years. The trial, you'll recall, showed that the Zocor-plus-Zetia combo Vytorin was no better than Zocor alone at preventing artery-clogging.

Here's how Forbes figures it: Hassan got $19 million in bonuses in 2006, including $9 million in cash, based largely on a Vytorin-fueled increase in Schering's market cap. The Enhance results probably would have eaten into that gain. But it's more likely that the study might have been ready for prime time in 2007, when Hassan got $4 million in cash bonus. If the study results simply stalled Vytorin and Zetia sales, Schering's EPS could have dropped to as low as $1.05 from 2007 actuals of $1.37. That would have wiped out $2 million of Hassan's cash bonus. If sales dropped, the hit would have been even bigger.

Schering protests, and rightly so, that this sort of hindsight isn't exactly 20/20. The company probably would have cut costs to minimize the EPS drop, for instance. And the company justifies the bonuses because it needs to hang onto its executive talent. But one corporate governance expert told Forbes that Hassan of all people might be one to give up a bonus under these circumstances. "[G]iven Hassan's reputation for open-mindedness in terms of compensation...if there were some doubts about whether he should receive a bonus, he would be more likely than others to voluntarily forfeit it. There are not many CEOs I'd say that about, but he would be one of them."

- see the Forbes article

U.S. Attys probe Schering over Vytorin

Wed, 07 May 2008 06:59:55 -0400

The ranks of investigators probing Schering-Plough and its Vytorin drug are broadening. In a recent SEC filing, Schering disclosed that U.S. Attorneys have been asking for info and documents related to the controversial Enhance trial, which pitted the combo cholesterol drug Vytorin against partner Merck's statin drug Zocor.

That trial, as you know, has been under scrutiny for months now as Merck/Schering-Plough dragged its feet in releasing the results, considering changing its primary endpoint, and then finally reported that Vytorin performed no better than Zocor alone at treating arterial clogging (though it did a better job of lowering bad cholesterol).

Details of the U.S. Attorneys' probes are scant; at this point, all we know is that another government official (or two or more, we don't know how many) has joined the investigatory fray. It's already well crowded with Senators, Congressional committees, state attorneys general and the like. We'll keep you posted.

- see the Pharmalot item
- check out the Shearlings Got Plowed dissection of the 10-Q filing
- read the filing itself at the SEC website

FDA nixes Merck, Schering allergy combo

Mon, 28 Apr 2008 06:59:56 -0400

In another blow to the Merck/Schering-Plough joint venture, the FDA rejected a proposed allergy and asthma treatment that would have combined Schering's Claritin and Merck's Singulair into one pill. In announcing the "not-approvable" letter from the FDA, the two companies wouldn't say why the med was rejected or whether the venture intends to resubmit.

Claritin was a heavy-hitter drug for Schering until it went off-patent and over-the-counter. Singulair, of course, is among Merck's best-sellers, with $4.3 billion in 2007 sales. The combo wasn't expected to be a home run, but losing the opportunity to sell it at all will no doubt cost millions. So why not try again? "We're still looking at it, and still evaluating the future of the joint venture as well," a Schering spokesperson said.

Evaluating the future of the joint venture, you say? Inquiring minds want to know whether that last phrase was just a throwaway comment--or a harbinger of change.

- check out the Schering press release
- see the item at PharmaGossip
- read the Associated Press story

GSK, Schering-Plough profits drop

Wed, 23 Apr 2008 06:59:58 -0400

When big drugs tank, they take their makers down with them. Witness first-quarter reports from GlaxoSmithKline and Schering-Plough. GSK is suffering on a sharp decline in Avandia sales, reporting a 9 percent decline in profits to $3.9 billion. Sales of the embattled diabetes med--which has been fighting safety concerns since a now-infamous meta-analysis linked it with cardiac troubles last May--dropped by 56 percent in the first quarter.

Trying to put a good face on it, outgoing CEO Jean-Pierre Garnier (photo) said that, without the impact of Avandia and generics, the pharma business would have grown by 7 percent--a meaningless statistic, of course, because Avandia and generics are reality. He should have simply pointed out that GSK had some bright spots, too: Asthma drug sales rose, and two new vaccines got the FDA nod.

Schering-Plough's earnings make Glaxo look positively glowing: The Zetia-and-Vytorin maker saw profits plunge by 48 percent to $291 million. Now, a chunk of that decline came from Organon acquisition costs. The drug maker also blamed increased R&D spending and higher overhead. Sales actually grew by a whopping 57 percent--but that was due to the inclusion of Organon's products. Vytorin and Zetia, the newly controversial cholesterol drugs, toted up $1.2 billion in sales, a 6 percent rise since the first quarter of 2007, but a big drop from fourth quarter figures. (And more declines are on the way, PBMs and managed care companies say.)

- see the Financial Times' take on Glaxo
- read the Wall Street Journal's article on Glaxo
- check out MarketWatch's brief on Schering-Plough
- find the item on further Vytorin and Zetia declines at Pharmalot

Vytorin news buried in Merck report

Tue, 22 Apr 2008 06:59:57 -0400

Read deep into Merck's first-quarter earnings report and you'll find some Vytorin secrets spilled. First off, the company expects to lose some $700 million in revenues off the blockbuster cholesterol drug, which has been dropping off, scrips-wise, since the big Enhance announcement in January (you remember all that news). This is the first time we've seen a real number applied to the potential sales slide. That figure might help a savvy prognosticator ballpark lost sales at Schering-Plough, which reports its earnings tomorrow; Schering is Merck's partner on Vytorin, a combo of Merck's Zocor statin and Schering's cholesterol-lowering Zetia pill.

Second, New Jersey's attorney general has issued subpoenas to Merck and Schering-Plough, probing the Enhance study, which found that Vytorin did no better at treating artery-clogging than Zocor did alone. The study results, remember, were delayed for some two years while the companies and their researchers wrangled with the data. New Jersey joins a queue of states and feds looking into that delay and the marketing of the expensive drug in the meantime. New York and Connecticut are investigating, as are two Congressional committees.

Meanwhile, another Enhance-related lawsuit has hit the courts--and this one is a civil suit filed under RICO, alleging racketeering-type fraud. Interestingly, this suit uses the e-mailed comments of Dr. James Stein, who hit the news last week when his criticism of some "meeting minutes" was released by one of the Congressional committees investigating the whole affair. The suit also includes letters and statements by Sen. Chuck Grassley, who's leading the charge for that committee.

- check out Pharmalot's New Jersey AG news
- see the RICO lawsuit
- view the CNBC video of CEO Richard Clark on Merck's Vytorin numbers

ALSO: Merck CEO Richard Clark says he's "aggressively looking" for the right biotech deal, but declined to identify any targets. He's said the same before, however, so there's no indication that anything is imminent. Report

Did Vytorin data really need cleanup?

Wed, 16 Apr 2008 06:59:54 -0400

What would bring one Vytorin-study consultant to say, "I'm an honest guy, and my first obligation is to tell the truth. Even if it means I'll probably never get to do a scientific investigation with Schering-Plough again."

Those are the words of James Stein, a University of Wisconsin researcher who finds himself in the middle of a Congressional probe of the much-ballyhooed Enhance study. He's the one who took issue with the "minutes" of a panel meeting in November, where experts discussed changing the Enhance endpoint. An imaging expert, he was shown some of the Enhance images, and pointed out potential problems with them--but when he saw the final study results, he concluded that those potential problems didn't materialize. He said so, contradicting Merck and Schering-Plough's contention that the study results were delayed because the data needed extensive cleanup.

Schering's Enrico Veltri told Forbes that the reason the data looks good now is that the company spent so much effort cleaning it up. But another imaging expert who had access to more of the data back in January 2007 said that they were "no better, no worse" than that used in previous studies. Perhaps the ongoing Congressional investigation will eventually provide clarity. So far, it's just been raising more questions.

- see the Forbes article
- check out the WSJ Health Blog item

Related Articles:
Vytorin records created after the fact. Vytorin report
Insurers, PBMs mull Vytorin data. Vytorin report
Congress: M/S-P sat on bad news. Report from Congress
Companies saw Vytorin threat in 2005. Vytorin report
Congress: Were Enhance results secret? Enhance report
Congress promises Vytorin hearings. Vytorin report
Merck, Schering's Vytorin fails trial. Vytorin report

Vytorin records created after the fact

Mon, 14 Apr 2008 06:59:58 -0400

Misleading minutes, swearing execs--just another day at the office for Vytorin's critics. Merck and Schering-Plough face new questions about their controversial Enhance trial as a Congressional committee releases documents that raise "serious concerns" about the companies' delay in reporting the results of that study, which showed that their high-priced combo drug Vytorin did no better at preventing artery-clogging than Zocor alone. The documents--unearthed by the committee in an ongoing probe of Enhance--show friction between Merck and Schering-Plough and questions about why the results weren't reported sooner. At one point, the tensions ran so high, a top Schering exec resorted to, shall we say, colorful language in an email.

But the most obvious question raised by the document dump is this: Why did the companies create minutes for a key meeting--in which experts and company execs discussed changing the study's primary endpoint--a month after the fact? Are those minutes inaccurate, as one participant in that meeting alleges? The minutes suggested that outside consultants recommended changing the endpoint--but James Stein, an imaging expert at the University of Wisconsin, said Merck and Schering-Plough made that choice. "We did not vote on this," Stein said in an email.

Meanwhile, some FDA documents have surfaced, showing just why Merck and Schering-Plough elected to pull Vytorin ads back in January. Apparently, the agency had been asking the joint venture to tone down the ads--which claimed superiority for Vytorin over statin therapy alone--at least since January 23. DTC promotions needed to be revised to show that "Vytorin has not been shown to provide any additional cardiovascular outcome benefits compared to using Zocor alone," the FDA letter said. Reps. John Dingell and Bart Stupak want to know what the company has done to comply--especially given that their deadline is April 24.

- see the M/S-P documents released by Congress (.pdf)
- read the story in Forbes
- see the Wall Street Journal article about the minutes
- check out the DTC item and FDA letters at Pharmalot

Related Articles:
Insurers, PBMs mull Vytorin data. Vytorin report
Congress: M/S-P sat on bad news. Report from Congress
Companies saw Vytorin threat in 2005. Vytorin report
Congress: Were Enhance results secret? Enhance report
Congress promises Vytorin hearings. Vytorin report
Merck, Schering's Vytorin fails trial. Vytorin report