Merck will take a $604 mil. charge in the fourth quarter to establish a reserve for its defense of Vioxx litigation, an amount roughly equivalent to Singulair quarterly sales.

The reserve has been established solely for the purpose of covering legal bills and does not cover potential liability relating to the litigation itself.

"This reserve is based on certain assumptions and is the minimum amount that the company believes at this time it can reasonably estimate will be spent over a multi-year period," Merck said in its fourth quarter press release Jan. 25.

"The company has not established any reserves for any potential liability relating to the Vioxx litigation," Merck added.

A reserve has not yet been established for potential Vioxx liability because under generally accepted accounting principles it can be done only once the liability is probable and can be estimated.

With no court trials underway, Merck said it is too soon to begin to quantify the potential legal damages, if any, so consequently it cannot establish the product liability reserve.

Additional clarity on Merck's liability may come from an FDA advisory committee meeting on the safety of COX-2s to be held Feb. 16-18 (¹ [A#00670030003]).

With the current charge, Merck's legal defense reserve for Vioxx litigation totals $675 mil., slightly less than fourth quarter Singulair sales of $731 mil. From another perspective, the $604 mil. charge exceeds Singulair's gross profits for the quarter, based on Merck's total gross margin of 77.6%.

Merck outlined a portion of its legal strategy for Vioxx during its annual business review in December.

The company will oppose plaintiffs' efforts to certify cases as class actions, but has requested moving all the state-based proceedings to federal court and consolidating the pretrial process to a single judge (² Also see "Vioxx DTC Ads Consistent With “Learned Intermediary” Defense, Merck Says" - Pink Sheet, 20 December, 2004., p. 24).

As the company prepares to "vigorously" defend Vioxx in court, Merck will likely be up against publicity from non-Merck sponsored studies that link the COX-2 inhibitor with excess cardiovascular events.

Perhaps one of the most publicized studies is the FDA/ Kaiser Permanente retrospective study led by Office of Drug Safety Associate Director for Science David Graham.

The study was originally presented at the International Conference on Pharmacoepidemiology & Therapeutic Risk Management in Bordeaux, France Aug. 25 (³ Also see "COX-2 Retrospective Study Prompts Review By FDA, Kaiser On Merck’s Vioxx" - Pink Sheet, 30 August, 2004., p. 6). Initial results from the study were included as part of a memo from Graham to Office of Drug Safety Acting Director Paul Seligman in September (⁴ Also see "Celebrex Long-Term Safety Monitoring Results Reassure FDA" - Pink Sheet, 8 November, 2004., p. 14).

A revised version of the study - "Risk of Acute Myocardial Infarction and Sudden Cardiac Death in Patients Treated With COX-2s and NSAIDs - was published on The Lancet website Jan. 25.

The results show a slight decline in the relative risk for Vioxx from the data detailed in the memo to Seligman.

The September memo was "preliminary, and has been a source of controversy within the FDA," the study states. The study "has been revised from that previously posted to correctly apply enrollment criteria for cases and controls."

Under the revised results, Vioxx had a 1.23 relative risk at the low dose (25 mg or less) and showed a three-fold increase in risk at the higher doses (>25 mg) compared to "remote" non-steroidal anti-inflammatory drug use. (Remote NSAID use was defined as treatment ending 60 days or more prior to the study.)

Preliminary data included in the September memo suggested that Vioxx had a 1.29 relative risk at the lower dose and a 3.15-fold increase in risk at the higher dose compared to remote NSAID use.

Patients taking Pfizer's Celebrex (celecoxib) had a relative risk of 0.84 compared to remote NSAID use.

The study did not detect an effect for Vioxx based on duration of use. "Because of limited power, we were unable to fully address whether the cardiovascular risk associated with rofecoxib varied by duration of use," the study states.

"An entirely plausible explanation for these results is insufficient statistical power before 18 months of study time," the study states. "Inadequate sample size and low power of tests of interaction make it unlikely that true differences could be found when assessing the subgroup of events occurring early in the study."

Merck pulled Vioxx from the market after data from a polyp study showed increased cardiovascular risk after 18 months of use (⁵ Also see "Merck After Vioxx: No Merger, But No Big Near-Term Launches" - Pink Sheet, 4 October, 2004., p. 3).

Graham has become a focal point in the debate on FDA's oversight of drug safety. During a Senate hearing on Vioxx withdrawal, he maintained that there are unresolved safety issues with five other approved drugs (⁶ Also see "Crestor, Serevent Safety Issues Push Vioxx Out Of Spotlight In Senate Hearing" - Pink Sheet, 22 November, 2004., p. 4).

The safety of the entire COX-2 class is being questioned by Public Citizen. The group is asking FDA to withdraw Pfizer's COX-2 inhibitors Celebrex (celecoxib) and Bextra (valdecoxib) from the market.

The ⁷ citizen petition, filed Jan. 24, reviews data from 14 published and unpublished trials of COX-2s to argue that the class has an inherent risk of thrombogenicity.

Experiments with knock-out mice "found that COX-2 inhibition significantly increased platelet-vessel wall interactions and firm adhesions except when it was offset by concurrent COX-1 inhibition with aspirin. Selective inhibition of COX-2 also accelerated the occlusion of the vessel after the vessel wall was damaged," the petition states.

"The scientific community initially believed that COX-2 was exclusively an induced enzyme that functioned only in pathologic states, the opposite of the constitutively expressed COX-1 which maintains homeostasis," the petition states.

"This concept is what fueled the search for selective COX-2 inhibitors which would theoretically avoid the adverse effects of nonselective NSAIDs."

"Further research, however, has somewhat blurred this distinction as studies found constitutive expression of COX-2 in tissues such as kidney and brain and physiological induction of COX-2 in the ovary, blood vessel lining, and bone....Evidence exists that COX-2 fulfills a necessary role in maintaining renal function and modulating neural responses."

While a drug's effectiveness could outweigh the risks, Public Citizen argues that neither Celebrex nor Bextra has shown improved efficacy over NSAIDs. "Similarly, neither drug has exhibited a decrease in clinically significant upper GI events....Therefore, no unique advantages for either celecoxib or valdecoxib exist," the group says.

Public Citizen announced it was preparing the FDA petition during a press conference to unveil its revamped drug safety website, ⁸ www.worstpills.org (⁹ [A#00670030003], p. 6).

Public Citizen's petition lays out arguments that will likely be presented at the COX-2 inhibitor advisory committee meeting.

Public Citizen notes in the petition that the Vioxx APPROVe study and the Celebrex APC study "were conducted in patients with a level of cardiovascular risk equivalent to that in the general population. Both trials revealed statistically significant increases in cardiovascular events."

"Therefore, even low-risk patients are subject to the increased danger and there is no safe population for use of these drugs."

Furthermore, "changing the package labeling to address this increased cardiovascular risk is not enough," the petition declares.

Public Citizen is also suing FDA to get a copy of the July 2001 "not approvable" letter for Pfizer's COX-2 inhibitor parecoxib (Bextra's prodrug).

The lawsuit, filed in D.C. federal court Jan. 18, seeks release of the letter and other parecoxib-related documents under the Freedom of Information Act and the FD&C Act.

The group filed a FOI request with the agency for the letter and related review documents in October.

If released, the parecoxib review could provide additional negative publicity of the COX-2 class.

Merck also received notice that the federal government is looking into the stock market fallout from the Vioxx withdrawal.

The Securities & Exchange Commission informed Merck on Jan. 27 that it is conducting a formal investigation into the matter. The announcement was not unexpected; SEC told Merck in November it had begun an "informal inquiry" into Vioxx.

Merck Sets $604 Mil. Vioxx Legal Defense Reserve; PR Battles Continue

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