Leading policy-makers and scholars explain how market forces, deregulation, and consumer choice can work to improve health care for all Americans.


Forget Vioxx?
Matthew Herper, Forbes, 6-21-06

Herper offers some interesting evidence that suggests that Merck‘s Vioxx woes may not be as devastating as some commentators have supposed.

Merck, based in Whitehouse Station, N.J., is fighting some 11,500 product liability lawsuits related to what was once its second-biggest drug. So far, six cases have gone to court, and Merck has lost three. A mistake by Merck in the description of a key clinical trial means that the company‘s oft-repeated claim that it takes 18 months for Vioxx‘s risk to the heart to emerge was not statistically significant. Merck executives say they stand by the results. Some analysts have estimated Merck‘s liability could approach $50 billion.

But others on Wall Street are actually warming to the embattled drug giant. They point out that Merck is flush with cash and that new medicines like Gardasil, a vaccine for a virus that leads to cervical cancer; Januvia, for diabetes; and gaboxadil, for insomnia; could become billion-dollar sellers. Meanwhile, the patent expirations for cholesterol drug Zocor, this Friday, and osteoporosis pill Fosamax, in two years, are already baked into the stock price.

One big booster of Merck shares is Michael Krensavage, a pharmaceuticals analyst at Raymond James who has covered the industry for a decade. Krensavage is often harshly critical of companies he covers. He was among the first to point to dodgy accounting practices at AAIPharma (other-otc: AAIQ - news - people ) before that company fell into bankruptcy (it has since reemerged). Before Merck pulled Vioxx, he had a "sell" recommendation on the stock. But now he says that fear of Vioxx is keeping investors away from a strong company.

"I just don‘t think the Street gets it," says Krensavage. "The estimates of tens of billions of dollars of liability are just wrong. I think it‘s one of the biggest misperceptions I‘ve seen in pharmaceutical investing."

Project FDA.
home   spotlight   commentary   research   events   news   about   contact   links   archives
Copyright Manhattan Institute for Policy Research
52 Vanderbilt Avenue
New York, NY 10017
(212) 599-7000