The Wall Street Journal-20080130-Trouble Brews Over Merck Product- As Closure Nears on Vioxx Claims- Fosamax Meets Challenges- Patent Loss

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Trouble Brews Over Merck Product; As Closure Nears on Vioxx Claims, Fosamax Meets Challenges, Patent Loss

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Merck & Co.'s pending $4.85 billion Vioxx settlement is expected to bring more than three years of litigation to an end. But looming challenges to some top-selling products, including osteoporosis blockbuster Fosamax, threaten to keep the company under a cloud.

The headline headache of late has been Vytorin. For months, critics have assailed how Merck and Schering-Plough Corp. handled disappointing trial results for their anticholesterol drug. A congressional probe has yet to reach full speed, and New York and Connecticut officials have disclosed investigations. Investors will be looking for an update as Merck reports earnings today.

The company's Gardasil cervical-cancer vaccine has drawn scrutiny after a small number of physicians and patients reported serious side effects to federal regulators. While regulators have deemed Gardasil safe, some individual incidents have provided ammunition for those who opposed Merck's push last year for states to mandate the vaccine for schoolgirls. Merck's Gardasil sales totaled $1.4 billion for the first nine months of last year.

But Fosamax presents one of the bigger question marks to Merck's bottom line. A growing number of patients allege the bone- strengthening drug causes a bone-wasting condition called osteonecrosis of the jaw, or ONJ. Meanwhile, researchers and regulators are scrutinizing other potential negative effects, like bone breakdowns elsewhere in the body and severe pain.

Should the legal challenges pass, Fosamax could face others. It loses patent protection in the U.S. next week, which means it soon will bring in a lot less than the roughly $3 billion it rang up in 2006.

Merck has said it stands behind Vytorin's efficacy and safety and dismisses concerns about Gardasil as unfounded. It also defends Fosamax, saying clinical evidence shows no rise in fractures related to the drug and that the label already warns of pain.

Merck has set aside $48 million in Fosamax litigation reserves for about 340 cases filed as of Sept. 30, a significantly lower sum than the billion dollar-plus fund it had set aside for the tens of thousands of Vioxx suits. But the company could face substantial hurdles in court due to the nature of the alleged injuries. Vioxx, a painkiller pulled from the market in 2004, was associated with heart attacks and strokes, which are common and might have been caused by a number of factors. Plaintiffs' lawyers say ONJ is what is known in legal circles as a signature injury, or a type of injury that is easier to link to a drug.

On Monday, a federal judge denied class-action certification for the Fosamax litigation, meaning claims will move forward on an individual basis.

Merck's stock has taken a beating of late. Since releasing the Vytorin study's disappointing results Jan. 14, the shares are down about 20%, and were at $48 yesterday in New York Stock Exchange composite trading.

The Whitehouse Station, N.J., company in December offered a promising earnings forecast for this year of between $3.96 and $4.06 a share, up from an expected $1.45 to $1.51 a share in 2007. Now, says Michael Krensavage, an analyst with Raymond James & Associates, the Vytorin flap "certainly will undermine the company's results in 2008."

On Monday, plaintiffs' lawyer Tim O'Brien, who heads the plaintiffs' steering committee in the ONJ cases, filed the first lawsuit related to a non-jaw injury. The suit, filed in a Camden County, N.J., state court, involves a plaintiff who claims her stress fractures were due to Fosamax toxicity, or an accumulation of the drug in the body. Unlike many drugs that have a short shelf life in the body, Fosamax -- which belongs to a category known as bisphosphonates -- stays in the body for 10 years.

Osteoporosis is a disease characterized by low bone mass and structural deterioration of bone tissue, leading to bone fragility and an increased susceptibility to fractures. Fosamax reduces activity of the cells that cause bone loss and can increase the amount of bone.

Mr. O'Brien's suit filed Monday involves 53-year-old JoAnn Moranski, who claims she took Fosamax for 8 1/2 years for osteoporosis. "I was religious about it," she says. "I didn't miss a day." In 2003, she claims to have begun experiencing debilitating pain in her legs and eventually walked with a cane. A physician told her last year that she had suffered a series of stress fractures, which he attributed to her use of Fosamax, she alleges in her lawsuit.

Paul Strain, a partner at the law firm Venable LLP, who represents Merck, called the suit "an isolated claim," and said clinical evidence didn't find any increased risk of fractures with Fosamax. "We would have found it; we looked for it and it wasn't there."

The Food and Drug Administration, in response to physician reports, on Jan. 7 issued an alert flagging "the possibility of severe and sometimes incapacitating bone, joint, and/or muscle [musculoskeletal] pain in patients taking bisphosphonates."

The alert said that although severe musculoskeletal pain is included in the label's prescribing information for all bisphosphonates, the link may be overlooked by health-care professionals. It said the pain may occur within days, months or years of use.

Merck spokesman Ronald Rogers said such musculoskeletal pain has already been recognized for this class of drugs and that such information already is provided to physicians. He said the company has received reports of bone, muscle and joint pain since Fosamax was introduced in 1995 that are in line with the precautions on the label.

In a recent study involving nearly 88,000 people reported in the Journal of Rheumatology, scientists found that those taking oral bisphosphonate medications have nearly three times the risk of developing osteonecrosis, compared with those not taking them. "The risk is increased for nonspecific osteonecrosis," says Mahyar Etminan, a pharmacoepidemiologist at Centre for Clinical Epidemiology and Evaluation and the University of British Columbia.

Mr. Strain, the attorney representing Merck, said, "What I'm confident about is that the overwhelming majority of surgeons would say that if there is ONJ induced by oral bisphosphonates, it happens extremely rarely."

The first Fosamax cases involving ONJ are expected to be tried next year. Thomas Dodson, an associate professor at Massachusetts General Hospital who has done jaw-repair surgery on bisphosphonates users who went on to develop ONJ, says it is difficult to estimate the frequency of ONJ in Fosamax users. Prevalence estimates range from one in 100,000 to one in 300, he says. Nonbisphosphonate ONJ is estimated to occur in one in 3,800 people.

"The reason it's kind of a major concern is that people have been getting prescribed Fosamax at the drop of a hat," he says. "Even if it's rare, there are so many people taking Fosamax, it's going to be a problem." Dr. Dodson isn't connected to the Fosamax litigation.