TRENTON, N.J. (AP) – Allegations from Congress that drug makers Schering-Plough Corp. and Merck & Co. hid negative research results to boost sales have cast a shadow over the companies’ futures.

“This is the last thing that Schering and Merck need, especially in a political year,” said analyst Steve Brozak of WBB Securities Ltd. “This can become brutal.”

The Senate’s Finance Committee and the House’s Energy and Commerce Committee have been investigating for months how Merck and Schering-Plough handled data comparing Merck’s Zocor against their new cholesterol drug Vytorin – which combines Merck’s Zocor and Schering-Plough’s Zetia.

The Senate committee on Monday released new evidence the companies may have known long ago that research showed Vytorin was no more effective than Zocor but withheld it to pump up sales of Vytorin.
Even the researcher who led a crucial study of the drug accused Vytorin’s makers of withholding negative results to boost sales, the Finance committee said.

The two drug makers once heavily advertised Vytorin and Schering-Plough’s Zetia, which brought their joint venture $5.1 billion in 2007 sales. Since then, their stocks have dipped to 12-year lows, and they’ve been hit with numerous lawsuits.

A letter from the committee’s ranking Republican, Sen. Chuck Grassley of Iowa, states that delaying the results affected medical decisions and put financial burdens on patients and the federal government, which has paid hundreds of millions of dollars for Vytorin since the study ended nearly 2 years ago.

Vytorin costs $100 a month or more, while a generic version of Zocor costs about one-third as much.
Spokespeople for both drug makers said their companies are cooperating fully.

Grassley’s letter comes as shares of Merck and Schering-Plough tanked after top cardiologists urged doctors to go back to older, well-proven treatments for high cholesterol.

The cardiologists spoke at a major heart specialists’ conference after hearing full results Sunday of the Vytorin study, called ENHANCE, that showed it worked no better than an inexpensive generic.

The two New Jersey companies released partial results of the study on Jan. 14 – under pressure from the congressional investigators.

Grassley’s letter cites testy e-mails to Schering-Plough executives from ENHANCE’s lead researcher, Dr. John Kastelein. In one last July, Kastelein states that if it is true the study results wouldn’t be presented at an upcoming medical conference, “our collaboration is over… this starts smelling like extending the publication for no other (than) political reasons.”

Kastelein went further the next day, Grassley wrote.

“You will be seen as a company that tries to hide something and I will be perceived as being in bed with you!” Kastelein said, according to Grassley

Merck spokeswoman Mary Elizabeth Blake said the companies’ executives did not know the ENHANCE study’s results until the beginning of this year – and that difficulties interpreting the complex data caused the delay.
Schering-Plough spokeswoman Rosemarie Yancosek said her company did not deliberately delay the results to boost sales.

The House committee has cited evidence from an Internet site where pharmaceutical sales reps posted comments in March 2007 indicating they knew “the study is a bust.”

Analyst Brozak said normally the companies would be looking like takeover candidates, but “I do not know what company, at what price, would want to acquire these companies, given how little they have in their pipelines … and given how much scrutiny they will receive.”

Merck shares fell $6.56, or 14.7 percent, on Monday to $37.95, and Schering-Plough’s dropped $5.06, or 26 percent, to $14.41.

Standard & Poor’s Ratings Services put long-term ratings for Schering-Plough on credit watch, with negative implications, but left Merck’s ratings unchanged because it has a more diverse line of medicines.

But Natixis Bleichroeder Inc.’s Jon LeCroy wrote: “we think investors are overreacting and note that Schering-Plough still offers tremendous value.”

Merck, based in Whitehouse Station, N.J., is the world’s No. 8 drug maker; much-smaller Schering-Plough is based in Kenilworth, N.J.

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