Analysis: Impact of FDA Actions Regarding Painkillers on Big Drug Companies

posted on:
April 7, 2005

author:
Snigdha Prakash

MICHELLE NORRIS, host: Investors in the two companies that make Vioxx, Celebrez and Bextra shrugged off today’s FDA announcement, and on Wall Street, stock in Merck and Pfizer barely budged. NPR’s Snigdha Prakash explains why.

SNIGDHA PRAKASH reporting:

Pain used to be very bug business for Merck and Pfizer. So as the cardiovascular problems of first Vioxx, then Bextra and Celebrex emerged, investors fled the stocks. They were calculating that the companies would lose billions in earning, and that Merck in particular might face billions more in legal damaged to Vioxx users. Today’s announcement from the FDA provided little comfort to those investors.

Take Pfizer first. Just two days ago, Pfizer told analyst that its earnings would fall this year in part because sales of Bextra and Celebrex are a shadow of that they used to be. But the company promised earnings would grow again next year as sales of those drugs went up. Jamie Rubin analyzes drug companies for Morgan Stanley.

Ms. JAMIE RUBEN (Analyst, Morgan Stanley): The fact that the FDA deicded to withdraw Bextra did come as a big surprise. And that is a setback for the company.

PRAKASH: Rubin was projecting that Bextra would bring in a little over half a billion dollard in sales this year. That’s not a lot for a company of Pfizers size that had more than $50 billion in sales last year. But a billion here, a billion there, and pretty soon you’re talking real money. It’s now clear Bextra isn’t going to help Pfizer’s earnings.

And prospects for Celebrex? Rubin says those don’t look too good either.

Ms. RUBIN: Well, we’ve already seen sales drop from 5 to $6 billion to $1. so it’s already dead.

PRAKASH: Doctors might switch their Bextra patients to Celebrex, Rubin says, and that might increase sales some, but it would take direct appeals to the consumer, something like saturated prime-time television advertising, to resurrect Celebrex sales, according to Richard Evans, the pharmaceutical analyst and Sanford Bernstien & Company. He says that won’t happen because the black-box warnings mandated by the FDA today. The company was relying on salesmen armed with new and better marketing materials to persuade doctors to start writing those Celebrex prescriptions again. Evens didn’t buy that two days ago, and nothing the FDA said today changed his mind.

Mr. RICHARD EVANS: (Analyst, Sanford Bernstein & Company): Let’s pretend we’re a doc for a minute, right? There were three COX-2s on the market a year ago—Vioxx, Bextra, Celebrex. Now there’s one—Celebrex. Right? So, you know, you’re going to tell me as a doctor that I want to put my patients on a COX-2, you know, that just got relabeled, just got a black box, just had an advisory committee vote saying that it’s linked to cardiovascular events. Why do I want to do that?

PRAKASH: For Merck, whose sales and stock have suffered the most, the FDA’s announcement is harder to read. It could ne good news. The FDA said it would consider Merck’s application to return to Vioxx to the market if the company makes such an application. Paul Sizemore is a plaintiff’s lawyer with the Montgomery, Alabama, firm of Beasley Allen. He’ll be trying the first Vioxx case against Merck next month.

Mr. PAUL SIZEMORE: (Plaintiff’s Attorney, Beasley Allen): We do have indications from the materials that we’ve received and from folks that we’ve spoken with in this case that Merck fully intends to go forward with at least an attempt to place Vioxx back on the market, albeit with a black-box warning and at the lowest available dosage.

PRAKASH: If Merck succeeds, it’ll be able to tell juries that the FDA approved Vioxx not once, but twice. If it fails, it may not be any worse of than it is today. Snigdha Prakash, NPR News, Washington.

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