The Wall Street Journal-20080117-The Morning Brief- New Suspicions For Big Pharma- Online edition
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The Morning Brief: New Suspicions For Big Pharma; Online edition
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Just as the pharmaceutical industry seemed on the verge of moving past a series of scandals that battered its reputation earlier in the decade, a skein of new revelations could again taint the drug makers in patients' eyes and renew pressure for tighter regulation.
In the latest potential hit to the industry, researchers in this week's New England Journal of Medicine say they were suspicious about the choices being made on which drug studies to publish in peer-review journals and decided to pour through the raw reviews given to the Food and Drug Administration. They found that among 74 trials testing the effectiveness of 12 antidepressant drugs, only 31% were published. And a systematic review of these selections shows a link between the studies' outcome and whether and where they were published. Nearly all studies with positive outcomes were published, while most with negative or questionable outcomes were either not published or published in a way that conveyed a positive outcome, the researchers say.
"We cannot determine whether the bias observed resulted from a failure to submit manuscripts on the part of authors and sponsors, from decisions by journal editors and reviewers not to publish, or both," the researchers say. But Dr. Jeffrey M. Drazen, editor in chief of the New England Journal, explains to the New York Times why the study is so alarming for doctors and patients. "When you prescribe drugs, you want to make sure you're working with best data possible; you wouldn't buy a stock if you only knew a third of the truth about it," he says. Moreover, patients who agree to be guinea pigs "take some risk to be in the trial, and then the drug company hides the data?" he asks. "That kind of thing gets us pretty passionate about this issue." Lead researcher and psychiatrist Erick Turner points out to The Wall Street Journal that doctors unaware of the unpublished studies can make inappropriate prescribing decisions for their patients.
Antidepressant sales in the U.S. come to about $21 billion a year, the Journal says, citing IMS Health, and the drug makers were quick to defend their blockbuster products. While Wyeth and Pfizer declined to comment on the NEJM study, they expressed a commitment to disclose all trial results -- if not necessarily in the medical journals where doctors are looking. GlaxoSmithKline said it has posted the results of more than 3,000 drug trials on its Web site, and Schering-Plough and Eli Lilly said all their study results are published, though sometimes as part of larger medical articles rather than pieces on an individual drug, the Journal reports.
The NEJM study comes just two months after Merck announced a settlement that potentially includes thousands of plaintiffs who claimed to suffer cardiovascular problems as a result of taking one- time blockbuster painkiller Vioxx -- which Merck pulled from the market in 2004 amid a run of disturbing news about drugs that were harming patients despite their FDA approvals. Under pressure from Congress and public opinion, the agency tightened its controls on clinical-trial data before and after approval, and the pharmaceutical firms promised to release more data to the public. The new NEJM study raises new questions about whether profit concerns continue to override patients', and comes on the heels of yet another finding that renewed doubts about the industry's publishing veracity.
Congress is now looking into whether Schering-Plough and Merck improperly delayed publishing the results of studies that unfavorably compared cholesterol medications Vytorin and Zetia -- Schering's most profitable drugs, which the two companies jointly sell -- to cheaper generic alternatives, as the Journal reports. Moreover, researchers studying the drugs had even considered changing their study's principal goals in what would have been a violation of scientific protocol. Worry about generic competition -- Big Pharma's perpetual nemesis -- is apparently responsible for the industry's other nascent scandal, which began to unfold yesterday in Europe. European Commission regulators raided the offices of Pfizer, GlaxoSmithKline, AstraZeneca and Sanofi-Aventis, among others, in search of evidence that they conspired to keep generic competition off the market after the patents of their own drugs expired. As the Financial Times notes, European antitrust authorities are focusing on whether the companies abused their patent rights to fight off lower-cost competition, and whether they even made a deal with one manufacturer of generics in a way that excluded others.
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A Slowing Economy
Some of the latest government data suggest U.S. economic growth continues to slow but that the credit crunch may still be hurting Wall Street more than Main Street. The Federal Reserve's periodic Beige Book compilation of reports from the 12 Fed districts around the country -- one of policy makers' key means of taking the country's economic pulse -- suggests economic activity increased at a modest pace from mid-November through December and more slowly than during the previous period. Retails sales and holiday shopping were subdued, the Fed said -- adding confirmation to what retailers and the Commerce Department have already reported -- but some districts reported strong exports and increased demand for industries that compete against imports. That could be a sign of how the weak dollar is helping them compete against foreign rivals. Most reports of tourism spending were positive, and news from service industries outside of the financial businesses remained generally encouraging.
Manufacturing reports varied -- from upbeat factories in the Kansas City area to the Dallas region's notation of softening activity. The Fed's Industrial Production report, however, was starker, saying U.S. industrial output in December hadn't grown at all from November, when it had been up 0.3%. But that's still better than in October, when industrial production fell by 0.5%. And this report also noted the manufacturing industry in December was operating at just 79.7% of factories' maximum sustainable output, slipping from 79.8% a month earlier and down from 80.5% in December 2006. This doesn't bode well for factory workers, who seemed to bear the brunt of job losses in the last U.S. employment report.
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Bernanke Backs Idea of Stimulus Package
Federal Chairman Ben Bernanke himself will be testifying on Capitol Hill today, and The Wall Street Journal reports he is expected to voice support for some kind of government economic-stimulus package. "In discussions with lawmakers in recent days, Mr. Bernanke has outlined his position that a stimulus plan could be useful if properly structured," the Journal says, citing people he has briefed. "His key message to policy makers: A stimulus package would need to help the economy this year; avoid boosting the federal deficit in the long term; and support economic growth through increased consumer and business spending." Democratic lawmakers tell the New York Times that Mr. Bernanke said he wouldn't be commenting on Republicans' desire to include a permanent extension of President Bush's tax cuts in the stimulus package.
Democratic leaders in Congress have said such inclusion would be a nonstarter, and the Times reports that within the White House, "a powerful group of pragmatists" that includes Treasury Secretary Henry M. Paulson and Chief of Staff Joshua Bolten has "expressed concern that the administration may have to scale back its ambitions for permanent tax cuts to get a package through Congress." Over on the Hill, House and Senate Democrats are trying to jump-start work on the package, Roll Call reports. And while Speaker Nancy Pelosi won't discuss specific House proposals until she meets with Mr. Bush next week, House Majority Leader Steny Hoyer has expressed confidence that a bipartisan package could be signed into law within just 30 days.
Beyond the stimulus-package work, the U.S.'s current economic fix is already bringing all kinds of changes. The Journal reports that "the Bush administration appears to be softening its regulatory grip on Fannie Mae and Freddie Mac, reflecting a growing reliance on the companies to provide money for home mortgages as other investors retreat." Countrywide Financial, the major mortgage lender now struggling to deal with blowback from the subprime-mortgage mess and under political and regulatory pressure to prevent foreclosures, is modifying loan terms to help 81,266 troubled borrowers, the Journal adds. Farther up the financial food chain, "from deal makers on Wall Street and in the City of London to local brokers," the big securities companies are re-examining how financiers get paid at a time when the bond market is wobbling, takeover deals are unraveling and mortgages are souring, the Journal says. And this, Journal columnist David Wessel speculates, could lead to a bursting of a bubble in pay on Wall Street.
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Credit-Crisis Survivor Looks to Expand
With so many hard-hit financial companies becoming cheaper targets, J.P. Morgan is revving up its expansion ambitions, the Wall Street Journal reports. Yesterday, Chief Executive Jamie Dimon said the battered financial landscape "just may make it more likely" that J.P. Morgan will make acquisitions. Mr. Dimon is looking to expand the bank's retail footprint "in high-growth markets like California and the Southeast, even though those places have been hit hard by the housing downturn," the Journal says. J.P. Morgan is considered a potential buyer of regional banks such as Atlanta-based SunTrust and Washington Mutual, the Financial Times notes. But as the Journal points out, Mr. Dimon "might even be tempted to take a hard look at firms such as Morgan Stanley and Bear Stearns, either for specific assets or something even bigger."
J.P. Morgan's emboldened stance comes as it weathered the fourth quarter better than most of its competitors. The bank's earnings fell 34%, but its $1.3 billion in subprime debt-related write-downs pale in comparison Citigroup's $18.1 billion hit and a write-down of $15 billion or more expected from Merrill Lynch this morning, according to the FT. "Unlike Citi and Merrill, J.P. Morgan was never a significant creator of collateralized debt obligations backed by residential mortgages -- a decision that is now paying off for the bank," the FT notes. The Journal adds that investors gave Mr. Dimon's potential acquisition plans a vote of confidence, sending the bank's shares up 5.8% yesterday and vaulting it ahead of Citigroup in market capitalization to the No. 2 spot behind behind Bank of America.
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Also of Note. . .
International Herald Tribune: In a ruling that could set a new precedent for responsibility in maritime pollution, a French court ruled that petro-giant Total was partly liable for a vast tanker spill in 1999 that mired the Brittany coast in fuel oil. In its decision, the court for the first time recognized the existence of ecological damage "resulting from an attack on the environment," clearing the way for communities along the coastline to seek more money in damages from the French oil company over the wreck of the aging and rusting Erika.
Associated Press: The White House has acknowledged recycling its backup computer tapes of e-mail before October 2003, raising the possibility that many electronic messages, including those pertaining to the C.I.A. leak case, have been taped over and are gone forever. The disclosure came minutes before a midnight court-ordered deadline that forced the White House to reveal information it had previously refused to provide.
New York Times: President Bush lavished praise on President Hosni Mubarak of Egypt, emphasizing the country's role in regional security and the Israeli-Palestinian peace process while publicly avoiding mention of the government's actions in jailing or exiling opposition leaders and its severe restrictions on opposition political activities. Ending an eight-day trip through the Middle East in which he highlighted democratic change as the foundation for peace and security throughout the region, Mr. Bush strikingly avoided direct criticism of Mr. Mubarak, an autocratic leader in power since late 1981.
Los Angeles Times: Declaring them "essential to national security," President Bush exempted the Navy's upcoming training missions in Southern California waters from environmental laws that prompted court-ordered restrictions on using sonar linked to injuries of whales and dolphins. The administrative maneuvers by the White House, released as the president was traveling in the Middle East, are designed to override a federal court order that restricts the Navy from using mid-frequency active sonar within 12 miles of the coast and would make ships shut down the powerful submarine-detection device when marine mammals come within 2,200 yards.
USA Today: A lobbyist and former Republican congressman from Michigan was paid $50,000 to lobby for a charity that funneled money to al Qaeda, Osama bin Laden and an Afghan warlord, according to an indictment made public Wednesday. Mark Deli Siljander, who served in Congress from 1981 to 1987 and was later appointed by President Reagan to the United Nations, was charged in an indictment with money laundering, conspiracy and lying to the FBI.
Financial Times: UBS, one of the biggest casualties of the U.S. subprime crisis, faces an additional blow to its profitability after a decision to wind down its traditional Switzerland-based private banking business for rich American clients. The move by the world's biggest wealth manager follows a reassessment of the risks and rewards from an activity that has drawn increasing attention from U.S. regulators concerned about marketing efforts in the U.S. by offshore bankers.
Times of London: Pressure was mounting on Goldman Sachs last night to produce a financing package to push through a sale of Northern Rock and stave off nationalization of the stricken British mortgage lender. Two bidders for Northern Rock -- Virgin Group and Olivant -- have exhausted all options for financing the acquisition of the Rock without government assistance and are waiting for the outcome of Goldman Sachs's negotiations with the government.
Nature: New power stations across Europe could be routinely fitted with carbon-dioxide capture and storage technology within two years under a proposal by the European Commission.
Bloomberg: Former Brocade Communications Systems Chief Executive Officer Gregory Reyes, the first CEO convicted by a jury for manipulating the dating of stock options, was sentenced to 21 months in prison and ordered to pay a $15 million fine.
Wall Street Journal: As Delta Air Lines pursues merger talks with Northwest Airlines and UAL's United Airlines to form the world's largest passenger carrier, a potential linchpin is thousands of miles away in Paris: Air France-KLM. The European airline already is an ally of Delta and Northwest in SkyTeam and could provide strategic or financial backing in a Delta bid for Northwest, the airline most likely to emerge as Delta's preferred partner, according to people familiar with the negotiations.
Detroit News: As Ford Motor works to close a deal to sell its Jaguar and Land Rover brands to India's Tata Motors, engines and engine technology have become a major focus of the negotiations, according to sources familiar with the situation. Questions about power-train sourcing and technology are among five major issues being hashed out between the automakers.
San Jose Mercury News: Software giant Oracle said it is buying BEA Systems for $8.5 billion, ending a courtship that began last fall with BEA's initial rejection of a lower offer for the maker of "middleware."
National Geographic: Egyptian officials want to make it illegal to produce exact replicas or sell images of the Pyramids and other recognizable antiquities in the country, though such regulations are unlikely to be enforced internationally, according to some legal experts. Under the proposed law, manufacturers and retailers worldwide would have to obtain special permission -- and in some cases pay fees -- to Egypt to sell products relating to such prized icons as the Giza Pyramids, the Sphinx, and the mask of Tutankhamun.
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Quote of the Day
"We hear that phone calls are being made. We will not let it go this time," John McCain told reporters, in reference to calls like those made to South Carolina voters from a group calling itself Vietnam Veterans Against McCain, which accuses the Republican presidential candidate, senator and former prisoner of war of selling out fellow POWs to save himself, the New York Times reports. Another group called Common Sense Issues, which supports rival candidate Mike Huckabee, has begun making what it said were a million automated calls to households in South Carolina telling voters that Mr. McCain "has voted to use unborn babies in medical research," the Times adds. (Mr. Huckabee's campaign says it has no ties to the group.) Burned in the 2000 South Carolina primary by one of the most notorious smear campaigns in recent American politics -- which contributed to his loss to President Bush -- Mr. McCain this time seems more determined to fight back aggressively and is deploying a "Truth Squad" in the state with the help of South Carolina's Republican political establishment. ---
David Marcelis contributed to this column.
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