BrandweekNRX

Prominent cardiologist: Schering-Plough could have known the result of Vytorin trial before unblinding data.

One important aspect of the "who knew what and when" story related to Schering-Plough executives selling massive amounts of SP stock in 2007 is that while the treatment arms of the Vytorin trial were blinded, the treatment effect on the primary end point—change in mean carotid intima-media thickness (CIMT) after two years—was similar in the Zocor (simvastatin-alone) and Vytorin (ezetimibe/simvastatin-combination) groups.

Some cardiologists believe that unblinding the results would have been unnecessary to know the treatment effect was neutral:

Chart courtesy of PharmaGossip.

"Somebody had looked at the end-point examination, the IMT results, and, irrespective of group assignment, could know that a groupwise comparison of CIMT changes showed no statistically significant difference," Dr Allen Taylor (Walter Reed Army Medical Center, Washington, DC) told heartwire. "In my view, once that is known, the trial is functionally unblinded."

Taylor, a researcher involved in numerous clinical trials, including his role as the lead investigator of the Arterial Biology for the Investigation of the Treatment Effects of Reducing Cholesterol (ARBITER-2) CIMT study, stressed that he has no inside knowledge of when the end-point analysis was completed and does not know whether company officials looked at the blinded data, although he believes it that remains open to speculation.

He said it would be difficult to look across all the data without assigning patients to treatment groups and make any sense of presumed outliers. He added that the 18-month gap after the trial was completed and the reporting of the results leaves the companies wide open to question, especially Merck/Schering Plough's contention that they sought to address quality issues with the images.

"Their sequence of actions to rehabilitate the data is in many ways a signal of distress," said Taylor. "What was fueling that? I can see some may readily speculate that it seems highly implausible that 18 months were spent working on the data without there being a reason related to the overall trial results being known to be negative."

New evidence indicates Schering-Plough insiders knew the Vytorin trial was "a bust" on March 13, 2007.

Evidence has just surfaced that Schering-Plough insiders may have known as early as March 13, 2007 that the ENHANCE trial would not show any statistically significant difference between Vytorin and generic Zocor.

What Schering employees knew--and when--is important, since there have been questions about Schering-Plough President Carrie Cox's sales of $28 million of SP stock in April and May 2007 as well as the fact that  Thomas Sabatino, Executive Vice President and General Counsel, Brent Saunders, Senior Vice President and President, Consumer Health Care, C. Ron Cheeley, Senior Vice President, Global Human Resources also sold millions of dollars of SP stock at the same time.

Schering responded to these questions with an SEC filing which detailed not only the date when the Vytorin data was unblinded, a few weeks ago, but also the actual time of the day when various SP executives learned of the unblinded data. The underlying assumption was that no one knew anything until the data was unblinded.

A survey of Schering Plough's message board on Cafe Pharma has now crushed that assumption.

Every entry on the Cafe Pharma message board is date and time stamped. The message board is mostly frequented by sales reps, but also by others. We don't know who posted, but we do know what was written, and often the language makes it highly probable that these individuals were indeed insiders.

As early as March 13, 2007, there is a detailed record on Schering-Plough's message board of the outcome of the ENHANCE trial, information that was officially available only a few weeks ago. And here's the proof:

SPRI is an abbreviation used by Schering-Plough employees for the Schering-Plough Research Institute, which is the research and development arm of Schering-Plough Corporation.

Let's compare the statement above with SP's January 14, 2008 press release:

"There was no statistically significant difference between treatment groups on the primary endpoint. "

"The incidence of consecutive elevations of serum transaminases (greater than or equal to 3x ULN) was 10 out of 356 for ezetimibe/simvastatin (2.8 percent) as compared to 8 out of 360 for simvastatin (2.2 percent). " [This means there were higher rates of liver problems for Vytorin as stated six months earlier by someone on SP's message board.]

Now let's look at the next post, dated July 24, 2007 (below), in which someone describes how Schering-Plough will: 1. Find some other endpoint, 2. Spin and discredit the trial.

We know this is exactly what happened, because on November 20, 2007 (four months later), the New York Times wrote, "Merck and Schering-Plough said yesterday that they had changed the trial's ''primary endpoint'' -- the main medical result being measured."

Then on January 4, 2008 Reuters reported that Fred Hassan has started discrediting the ENHANCE trial at a Morgan Stanley investor conference: "The chief executive of Schering-Plough Corp on Thursday said poor quality of ultrasound images hobbled a closely watched trial of its Vytorin cholesterol fighter, and stressed that the controversial study involved a "narrow population" of patients. "

Of course, none of the above is proof about what any individual executive at Schering-Plough may have known.

But there is simply a bit too much smoke, and too detailed information, for this not to look like a highly suspicious fire somewhere.

For any of the regular media or Congressional investigators who want to continue to look into this, here are the links for the images above:

http://208.101.7.228/boards/showthread.php?t=186039&highlight=Enhance

http://208.101.7.228/boards/showthread.php?t=190971&highlight=Enhance

http://208.101.7.228/boards/showthread.php?t=215654&highlight=Enhance

http://208.101.7.228/boards/showthread.php?t=227167&highlight=Enhance

http://208.101.7.228/boards/showthread.php?t=234144&highlight=Enhance

Did Fred Hassan use smoke-and-mirrors to “turn around” both Pharmacia and Schering-Plough?

Schering-Plough’s CEO Fred Hassan has two years left to retirement as he faces the most serious challenge to his personal legacy: One failed trial, two Congressional investigations, subpoenas from the New York State Attorney General, a separate investigation by the Connecticut Attorney General, an SEC investigation, and a brutal 40% drop in Schering-Plough stock price from its peak.

Until a few weeks ago Hassan was God's gift to the pharmaceutical industry (according to Forbes). But was it all just a mirage--a skillfully played con-game?

In this article BrandweekNRX will take you behind the glossy numbers and show you what really happened during Hassan’s tenure as CEO of two major drug companies and how he managed to fool almost everyone into thinking he had created successful turn-arounds.

Hassan built his stellar reputation during his first CEO job, heading up Pharmacia. He straightened out a messy Pharmacia and UpJohn merger, moved company headquarters from London to New Jersey, and acquired Monsanto which gave him the two blockbusters Celebrex and Bextra.

In spite of all this activity, from May 1997 when Fred became CEO, to April 2003, Pharmacia stock increased by only 18%, and if it hadn’t been for Pfizer’s offer to buy Pharmacia in 2002, stock would have actually been way down. New York Times wrote that Pfizer’s offer to buy Pharmacia “represents a 38 percent premium over Pharmacia's stock price of $32.59.”

And that’s not all--there is also evidence that a significant part of Pharmacia sales were based upon selling drugs to its wholesalers ahead of demand, “stuffing the channels,” resulting in revenue of $500 million from such sales

Pfizer’s 2004 annual report states, “We completed the harmonization of Pharmacia’s trade-inventory practices in 2003, however, such harmonization of trade-inventory practices with those of legacy Pfizer negatively impacted revenues by approximately $500 million in 2003.”

Associated Press wrote that “When Pfizer bought Pharmacia, Pharmacia had products sitting on wholesaler’s shelves for an average of 2.2 months. Pfizer’s products, which include Viagra and Lipitor, sit on wholesalers’ shelves for an average of 0.8 months.”

Pfizer’s reversal of $500 million inventory has some uncanny resemblance to what happened at Bristol-Myers Squibb:

Bristol-Myers sold excessive amounts of pharmaceutical products to its wholesalers ahead of demand, improperly recognizing revenue from $1.5 billion of such sales to its two largest wholesalers.

When Bristol-Myers got caught the company was forced by SEC to pay $150 million dollars in fines. Timothy L. Warren, Associate Regional Director of the SEC's Midwest Regional Office, stated, “For two years Bristol-Myers deceived the market into believing that it was meeting its financial projections and market expectations, when, in fact, the company was making its numbers primarily through channel-stuffing and manipulative accounting devices.”

Ken Banta, a strategic adviser to Hassan, defends Hassan and claims that Pharmacia's wholesaler activities were no different than the rest of the drug industry. “The way which inventory levels were controlled were recognized as inline with the industry and that was recognized by Pfizer at the time they acquired Pharmacia,” Banta said. “Pharmacia was recognized as having very strong financial controls, compliance systems, and management teams.”

But if this "recognized channel stuffing” hadn’t taken place, Pharmacia’s past sales increases would have been 11 percentage units lower and the stock would have suffered accordingly.

The WSJ wrote on July 15, 2002 (the day of Pfizer’s take-over announcement), “In Pharmacia, Pfizer is acquiring a relatively strong drug company, with four drugs that have $1 billion-plus sales or potential sales. That could give Pfizer, with eight drugs already at those sales levels, an even dozen blockbusters.”

This is what Hassan had told Wall Street, but was it really true?

Here’s what happened to Pharmacia’s top five franchises:

Sales of Top Pharmacia
Products (millions)	2002	2007	% Change
CELEBREX/BEXTRA	3,520	2,290	-35%
XALATAN	928	1,604	73%
DETROL	757	1,190	57%
CAMPTOSAR	574	969	69%
GENOTROPIN	551	843	53%
TOTAL	6,330	6,896	9%

Most of Pharmacia’s blockbuster products did well, but overall performance was severely hampered due to the Vioxx/Bextra/Celebrex debacle, with growth of less than 2% per year. This is hardly a performance that would have had Wall Street cheering.

So what about those new billion dollar products?

Inspra was going to become Pharmacia’s biggest new blockbuster: “Inspra sales are predicted to be $400 million in 2004, between $750million and $760 million in 2005 and $1 billion in 2006” wrote Amanda Lopez-Darriba, Pharmaceutical Report Analyst.

And what happened?

Inspra, sales were around $40 million in 2006, no number has been found for 2007.

It is likely that if Fred Hassan had not been pushed out from Pharmacia in 2003, he would have been covered with tar and feathers today.

Instead Hassan joined Schering-Plough with impeccable timing in April 2003, when that company was hitting rock bottom and had literally no way to go but up. Schering-Plough sales dropped from $10.2 billion in 2002 to $8.3 billion in 2003 and stayed there in 2004 due to the patent expiration of the $3 billion allergy pill Claritin.

Schering's abysmal manufacturing standards led to a consent decree and $500 million fine from the FDA; the largest in FDA history. In August 2006 Schering-Plough cleared up the remaining mess by agreeing to pay $435 million to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for several drugs.

Hassan also didn’t waste any time cleaning house. He replaced almost all of Schering's executives with his own managers, most of them from Pharmacia.

At the time he took over Schering-Plough’s stock price hovered around $18 and peaked at $20 in June 2003. The stock didn’t stay consistently above $20 until after July 2006, and then rocketed to $33 in May 2007. At that time Schering President Carrie Cox dumped $28 million of her stock options, and several others among Hassan’s direct reports also sold large amounts of stock. From an investment point of view this was a brilliant decision; almost as if they could look into the future.

In November 2007 a media firestorm erupted after the companies said they were changing the primary endpoints for the Vytorin trial. This is a move generally considered a violation of scientific protocol and it triggered complaints from cardiologists and eventually resulted in two Congressional inquiries.

Senator Grassley also wrote to the SEC: “What disturbs me is that, according to news reports, while the Companies failed to release the ENHANCE trial results, several executives at Schering-Plough sold stock. This sequence of events raises serious questions about whether executives at the Companies sold stock because they knew that the results of ENHANCE were negative which in turn would negatively affect stock value. Please take whatever action you deem appropriate in this matter.”

Already before the perfect storm descended on Hassan, Schering-Plough insiders claim Hassan had started to change. “We have two Town Hall meetings every year. Recently, he’s been stumbling on the words; he hasn’t had his act together. Hassan has been tired, not just lately but during the past year.”

Friday last week, Schering-Plough stock was back under $18, meaning everything Fred had tried to do to pump the Schering-Plough stock since 2003 had been for naught. Compared to the S&P500 the entire period was a disaster:

As if all this wasn’t enough, the New York Attorney General Andrew Cuomo this weekend announced that he has launched an investigation into Merck and Schering-Plough Corp.'s handling of the controversial Vytorin study. Mr. Cuomo served the companies with subpoenas as part of a probe into whether the companies “deliberately concealed” negative results from the Enhance study, his office said in a news release on Saturday, January 26.

And today Connecticut Attorney General Richard Blumenthal announced that he is also investigating the companies: "We are investigating whether state funds were spent on false assurances about the safety and effectiveness of these drugs," Mr. Blumenthal said, referring to Vytorin and its sister, Zetia, which Merck and Schering co-market in a joint venture.

“What's very important to us is our integrity, our reputation and the robustness of what we do,” Hassan told to Forbes. “It's not the actual trial. This thing runs on trust, and we'd like to say Schering-Plough is a very improved company since 2003.”

Those words may come back to haunt Fred Hassan. Hassan briefly got pulled into the Genotropin illegal marketing scandal which resulted in Pfizer paying a $35 million criminal fine. In January of 2000, Hassan received a letter from William Abelove, a medical doctor who specialized in “anti-aging” therapies. According to Brandweek, Abelove told Hassan he was seeking a “strategic alliance” with Pharmacia for “the marketing of growth hormone injections” through his business, the Renaissance Longevity Center chain of clinics in Southern Florida. The letter was stamped “Received” by Hassan's office on Jan. 14, and in the margin was scribbled, “Pl. follow up.” The handwriting was signed “FH.” On May 1 of that year, Abelove signed a $50,000 contract as a consultant to Pharmacia on the “adult growth hormone market.”

This type of marketing later led to Pharmacia pleading guilty to illegal promotion of Genotropin and Pfizer paying the $35 million fine.

Hassan, of course, gets lots of mail, and can’t be held accountable for every scribble he makes. He can be held accountable, however, for the personnel decisions he makes.

In spite of being fully aware of the Genotropin situation, due to an internal Pharmacia investigation in 2002, Hassan promoted Sean McNicholas to Senior Vice President for Vytorin. McNicholas had been the Vice President of Genotropin in 2000, which is when Pfizer admitted the illegal acts had been started.

In summary, the only reason shareholders have to be happy with Hassan is that he was lucky enough to be bought out by Pfizer. Without that deal, he would have delivered zero share price growth during his time as CEO for Pharmacia and for Schering-Plough.

Hassan insist that Schering didn't mean to do anything wrong, and he doesn't know exactly what went wrong. “I'm quite sure nobody had bad intentions,” Hassan told Forbes.

BrandweekNRX politics - perhaps a surprise?

Some people try to classify various blogs as left, right, anti-industry, or something else.

Now there's a test, and Blumesohn has helped us compare ourselves!

First BrandweekNRX results .  .  .

Then the other pharma bloggers . . .

Seems like BrandweekNRX is an almost perfect match (only a bit more right), to Jack Friday at Pharmagossip! And pharma industry consultant John Mack is both more left and libertarian. For more data go to Blumsohn's post.

A diverse professional team has assessed the words and actions of internationally known contemporary leaders to give you an idea of how they relate to each other on the political compass.

Schering-Plough employees who lost money can sue company.

Some Schering-Plough employees who lost money have asked BrandweekNRX what they can do.

If you are a current or former employee or are a member of any of Schering-Plough Corporation investment plans or profit sharing retirement plans you may be included in a possible Schering-Plough Corporation 401K or Employee Retirement Income Security Act (ERISA) class action. If you purchased or held Schering-Plough Corporation stock in one of those plans during the periods July 24, 2006 to January 14, 2008, you may have a claim.

Under ERISA, Schering-Plough Corporation employees can file a lawsuit against the company for putting stock options at risk. Schering-Plough Corporation employees have a claim if they can prove their employer violated its fiduciary duty to its employees. Fiduciary duty refers to a company's responsibility to the people who invest in it. If an employer puts the company's interest ahead of the investors', it has broken its fiduciary duty. A fiduciary is a person that exercises discretion over the management of plan assets or exercises discretionary control over the administration of the plan.

See LawyersandSettlements.

Open letter to Mr. Hassan from a Schering-Plough Employee

Dear Mr. Hassan,

Sir, I am just one of the faceless little people working in SPRI, no fancy title, no big stock option packages, just a long serving and loyal employee of SP, hoping to retire at the end of the year. I started at our site in Bloomfield (now closed) many years ago, and looking back over my long career I have invariably been proud to work at SP, the best company, in the best industry in America, just as I was proud to serve my country prior to joining SP.

I have, maybe foolishly, invested much of my savings in SP stock over the years and though I've lost quite a bit of money in the past few days, over the long haul, SP stock has been a pretty good investment, so I have few complaints. And I'm hopeful that, under your excellent leadership, the stock can bounce back, but, sir, it will require absolute candor from you and your management team about the ENHANCE trial to regain our hard won prestige with our customers and employees.

Over the years at SP there have been several ups and downs, as we all know, and I, for one, was very glad when you joined SP in 2003 to initiate our turnaround after one of the most difficult periods of the company's history.

I was at your very first town hall meeting. Sir, you were like a breath of fresh air and you convinced me to believe in SP, in our people and in our products. I remember thinking at the time, here is an honest man that, like a new broom, will sweep away the sleaze that infected our fine company under Mr. Kogan.

I was sold on the 'earn trust, every day' outlook that you introduced, and even practice daily it in my personal life. While many of the 'legacy' employees thought it was a bit corny, I believed in you and the corniness was, in fact, a plus, especially after all of the fast talking, sharp suits that ran the place before you came. I guess you might call me a bit old-fashioned.

Now we are once again in difficulties but this time I find that my faith in you is being tested. I'm finding that this business with ENHANCE is bringing up the bad old memories of 2001 and 2002. Sir, I am worried that the carefully worded press releases drafted by our legal team don't really answer the key questions that I, and many others, including Congress, have. I'm sure that this is due to the abundance of lawyers that are currently infesting SP. Everywhere I turn there is another lawyer. Don't misunderstand me, I'm sure they are fine people, and I do understand that you need some legal advice from time to time, but sometimes a man just has to do the right thing even if his lawyers tell him to say nothing. Mr. Hassan, this is one of those times.

Sir, I am using this forum as there is no other way of anonymously posing these questions to you. I'm sure that as an transparently honest leader, you will answer them in plain language, without resorting to all the caveats and lawyerly words that our legal friends are so fond of.

What worries me about all of our lawyerly statements in the press is that they seem to imply that nobody in SP could possibly have known anything about the negative ENHANCE results because the blind wasn't broken until Dec 31st 2007. I do know something about the running of clinical trials and although don't have direct experience in monitoring them, I do know that even blinded results can, and often do, reveal a lot about a study.

So my first question is: sir, were you ever made aware, before the blind was broken, that there was no difference in the primary endpoint between the treatment groups in the ENHANCE study? If so, when was this known? This seems to me to be a much more important timepoint than the date on which the study was unblinded and which is widely reported in the press.

The second question: did anybody in SP, at a vice president level or above, know that there was no difference between the groups while the study still blinded? Did this knowledge lead to any extra analysis of the the data in an attempt to change or delay the result in any way? Sir, it seems to me that if anyone knew that there was no difference in the primary endpoint, even though the study was still blinded, then they knew that the ENHANCE results would disappoint Wall Street and would have a negative material impact on Vytorin and Zetia sales. This could possibly have led to requests to conduct additional fruitless re-analyses of the images in the hope that the outcome may be changed or at the very least that the publication of the results may be delayed.

The third question: sir, will you give me your undertaking as CEO that if it emerges that anyone knew that the results would not show a difference in the primary endpoint, and that they used such knowledge for personal gain eg by selling company stock, that you will fire that person(s)?

The final question: sir, assuming that there was no dishonesty, and that no-one knew from the blinded results that there was any possible problem with not meeting the primary endpoint, then it appears that SP's handling of the PR has been a complete fiasco. Will you be holding those responsible for the PR fiasco, and huge losses incurred by the stockholders, accountable for their incompetence?

Mr. Hassan, you were a hero to me and I sincerely want to believe in the dream of the New Schering-Plough. The silence of Ms. Cox and the ambiguous press releases that seem to be carefully drafted by lawyers is hurting mine, and many of my colleagues, belief in the core values of our company, and sadly, sir, in you personally. You send us many emails and we are all very grateful that you take the time to communicate with those lower down the totem pole. Please take the time to send us an email that answers these questions in plain language and helps to restore the faith of SP's excellent workforce in you.

Thank you, sir.

Schering-Plough's Magic Show!

A good magicians always shows the audience what he wants them to see and leads their eyes away from the solution to the tricks he performs before them.

Schering-Plough has now employed the same trick, by releasing not just the dates, but the exact time of the hour when each Schering executive found out about the unblinded ENHANCE data.

In an SEC filing today Schering-Plough told us some amazing details, never before revealed in any company filing, demonstrating just how concerned the company is about recent allegations of possible insider trading.

Q		When was the Schering-Plough CEO informed of the top line results of ENHANCE?
A		Fred Hassan was informed on January 10, 2008 at 8:00 a.m by Tom Koestler, the head of Schering-Plough Research Institute.
Q		When were the Executive Vice Presidents informed about these top line results?
A		Certain other members of the company’s senior leadership team were informed of the top line results of ENHANCE as part of a pre-determined process.

		Tom Koestler, EVP,		on January 7, 2008 at 2:00 p.m.
		Tom Sabatino, EVP,		on January 10, 2008 at 8:00 a.m.
		Carrie Cox, EVP,		on January 10, 2008 at 8:30 a.m.
		Bob Bertolini, EVP,		on January 10, 2008 at 9:00 a.m.

So why is this a trick?

It is a magical trick, because none of this matters.

What matters is what Carrie Cox and the others key execs knew last year when Carrie sold $28 million of Schering stock.

What matters is not if she followed procedure, but if she had non-public information that the trial was a mess and the images showed no difference among most patients, leading her to believe the trial would negatively impact SGP stock. What matters is if she had information the public didn't have. Or if she was just a very lucky girl, selling at the top.

When she and others found out about the unblinded data doesn't matter at all. But Schering wants us to believe it does, and so it shares this highly unusual, magical, SEC filing.

'BrandweekNRX is a blog written by Dr. Peter Rost, and kicked over the outhouse over Merck and Schering-Plough’s drugs Vitorin and Zetia.'

Citizen Journalism stirs up such wonderful images of citizens spotlighting things and bring them to our attention, in such a way as to provoke meaningful change. In most cases this meets with a certain disdain on the part of the Main Stream Media, and for the most part is justified.

Passion and Objectivity are oxymorons.

However every once in a while somebody comes along and tips over the outhouse and the smell gets picked up. BrandweekNRX is a blog written by Dr. Peter Rost, and kicked over the outhouse over Merck and Schering-Plough’s drugs Vitorin and Zetia. Not only the problems related to how well they work, pricing but also insider trading and the Congressional Inquiry. This is noteworty as it does demonstrate that you can Get Things Done.

Source: Raving Lunacy

Do ad agencies care when their clients get in trouble?

"Even if DDB [agency responsible for Vytorin consumer ads] had the [Vytorin] study, the ability to understand that trial on the consumer side [of advertising] is almost nil. People at consumer agencies don't have the required backgrounds and, frankly, there isn't a desire to know," said one health-care-agency executive, who asked not to be identified.

Ad Age.

NY State Attorney General piles on to mountain of investigators digging into Vytoringate

New York State Attorney General Andrew Cuomo on Saturday said he has subpoenaed drug companies as part of an investigation into whether they concealed the results of research that found a brand-name drug was no more effective than a cheaper, generic alternative.

Cuomo said his office is investigating whether Merck & Co., Schering-Plough Corp. and a joint venture of the two companies defrauded consumers and investors with their aggressive marketing of the cholesterol-lowering drug Vytorin.

Anyone else who wants to join?