It seems Merck (MRK) wants to settle several pending lawsuits against it before the proposed merger with Schering-Plough Corp. (SGP), which is supposed to be completed by the year-end. Today, the two companies agreed to pay $41.5 million in a lawsuit related to cholesterol drugs (under joint venture) Vytorin and Zetia. Both Merck and Schering have recorded the charges in their second-quarter results.
Vytorin combines Zetia and another statin drug, Zocor (simvastatin), into one pill. The lawsuit is related to the controversial Enhance trial which failed to prove that Vytorin was better compared to Zocor in reducing thickening of arteries, despite a positive impact on cholesterol levels.
In July, both companies agreed to pay $5.4 million to 35 US states to settle the allegation that they did not disclose negative findings from the Enhance study on time. While the study was conducted in early 2006, its results were not declared for the next two years.
Though the results did not prove any worse clinical outcome for Vytorin, the negative impact was primarily related to its price. Vytorin is much more expensive than Zocor alone, at least in its cheap generic form (simvastatin).
Following the announcement of the Enhance trial, sales of Vytorin declined in 2008. Annual revenue fell 14% to $2.4 billion in 2008 compared with $2.8 billion, a year ago.
Apart from the Vytorin settlement, earlier this month, Merck agreed to pay $80 million to settle 190 outstanding claims regarding withdrawal of Vioxx pain drug in another lawsuit. In 2004, Merck withdrew Vioxx from the market after a study showed increased risk of heart attack for long-term users. In 2007, the company agreed to pay $4.85 billion to settle several personal-injury lawsuits from former Vioxx users who claimed that the drug caused heart attacks or strokes.
While the Vytorin lawsuit had been pending for quite some time, the amounts paid so far are far lower compared to the nearly $5 billion Merck paid to settle personal-injury and other litigation surrounding its former pain drug Vioxx.
But many investigations are still pending regarding the Vytorin deal and any unfavorable decision may affect its financials again. Quicker settlement of these issues is necessary especially when Merck is busy closing the merger deal with Schering-Plough.
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