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Merck Says It Is Target of Probes

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From Bloomberg News

Merck & Co. said in a regulatory filing Monday that the Securities and Exchange Commission and the Justice Department were looking into how the company handled Vioxx, the blockbuster arthritis drug it pulled off the market Sept. 30 after safety studies showed that it increased the risk of heart attacks.

The Justice Department demanded information about sales and marketing practices related to Vioxx in connection with a federal criminal healthcare investigation, Whitehouse Station, N.J.-based Merck said in the SEC filing.

The SEC is also conducting an informal probe concerning Vioxx, Merck said.

The investigations come on top of the potential legal liability Merck faces in the more than 300 lawsuits that were filed by Oct. 15 on behalf of patients claiming harm from Vioxx, according to an Oct. 21 Merck statement. A Nov. 5 study in the British medical journal Lancet said scientific evidence was sufficient as early as four years ago to suggest that the drug should be withdrawn, and an accompanying commentary said the Food and Drug Administration should have acted.

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“These developments will help define the standards drug companies are expected to meet in addition to the standards the FDA may or may not have,” Jerry Avorn, a Harvard University drug safety expert and the author of “Powerful Medicines: The Benefits, Risks and Costs of Prescription Drugs,” said in a telephone interview.

“The Department of Justice and SEC will be in a sense doing FDA’s work at a time when the FDA has been asleep at the switch in its regulatory function,” Avorn said.

It has been reported that the FDA will evaluate how it addresses drug safety issues and will complete drafting regulations about how pharmaceutical companies should detect and address such problems. In addition, government advisors at the U.S. Institute of Medicine will study how regulators address safety, especially for drugs already on the market.

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Vioxx was found in a company-sponsored trial to double patients’ risk of heart attacks and strokes after 18 months of use. The painkiller may have contributed to 27,785 heart attacks and deaths from 1999 through 2003 because of its effects on the cardiovascular system, FDA researcher David Graham said in a report Nov. 2.

Vioxx sales accounted for $2.5 billion, or 11%, of Merck’s sales last year. Anita Larsen, a Merck spokeswoman, didn’t immediately return calls for comment on the U.S. investigations.

Shares of Merck, the second-biggest U.S. drug maker, rose 36 cents to $26.57 on the New York Stock Exchange. The shares have dropped 41% since Sept. 29, the day before Chief Executive Raymond Gilmartin announced the Vioxx recall.

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Standard & Poor’s Ratings Services has said it may downgrade Merck’s triple-A rating on corporate credit and senior unsecured debt because of “increasing concern about the magnitude of possible litigation.”

Merck said Oct. 21 that it had about $630 million in product liability insurance and hadn’t established reserves for Vioxx litigation.

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