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Records Show Merck Unit Favored Its Parents' DrugsBy
MILT FREUDENHEIM A federal judge in New York unsealed internal records of Merck & Company yesterday that detailed favorable treatment that Medco Health Solutions, a Merck unit, gave to some of the company's most important drugs. The records were unsealed by Judge Charles L. Brieant of Federal District Court in White Plains in connection with a group of long-running class-action lawsuits against Merck and Medco. Merck agreed last month to pay $42.5 million to settle the suits, but lawyers for some of the plaintiffs have asked the judge to reject the settlement, which they contend is too lenient. Merck has said it does not admit any liability in agreeing to the settlement. The lawyers, who represent operators and members of health plans, have accused Medco of violating fiduciary duties to customers by failing to disclose the extent of Medco's ties to Merck and other manufacturers. Medco, which had about $30 billion in sales and 65 million members last year, is one of the largest of a handful of pharmacy benefit management companies, which negotiate with drug manufacturers to obtain discounts and rebates on behalf of employers and health plans. Others include AdvancePCS, Express Scripts and Caremark Rx. According to the documents, which spell out average prices and market share for dozens of drugs from 1995 to 1999, Medco bolstered sales of Zocor, for example, an expensive, Merck cholesterol-lowering treatment. In spite of a high price, Zocor had 31 percent of all Medco sales of similar cholesterol-lowering drugs in December 1999, the records said, compared with about 25 percent of national sales as compiled by IMS Health, a health care data company. At that time, the posted wholesale price of Zocor was $116.22 for a 30-day supply in retail pharmacies, compared with $82.22 for Lipitor, made by Warner-Lambert (now part of Pfizer), and $90.55 for Pravachol, made by Bristol-Myers Squibb. The price of a three-month supply of Zocor by mail order was $276.17, compared with $212.82 for Zocor and $239.69 for Pravachol. Anita Kawatra, a spokeswoman for Medco, said Medco was "doing what every pharmacy benefit management company does," adding that "the whole point of existence for any P.B.M. is to negotiate better deals for clients" by selecting one or two preferred drugs in each therapeutic class. Medco's market share computation indicates that its Zocor sales grew mainly at the expense of Pravachol and similar drugs made by Novartis and Zeneca. Lipitor held onto about 46 percent of Medco's sales for such drugs. That was about the same share Lipitor had nationally. The Medco records substantiate disclosures that Merck made last year in an unsuccessful attempt to spin off Medco as an independent company. Merck said in Securities and Exchange filings that the share of Merck drugs sold through Medco was 37 percent higher than the share for non-Merck drugs. The prospectus for the sale of Medco stock said that Medco would have to pay penalties to Merck if it was unable to continue selling a larger share of Merck drugs than the national market share of those products. Merck withdrew the spinoff plan last summer as stock market prices declined broadly. The Medco records that were unsealed yesterday were only a fraction of thousands of documents that Merck had produced under questioning by plaintiffs' lawyers. Four news organizations — The New York Times, The Wall Street Journal, The St. Petersburg Times in Florida and Reuters — asked Judge Brieant to unseal all the documents. The judge rejected those requests. James Tallon, a defense lawyer, said in a letter to the judge last month that only a short list of documents should be unsealed.
Copyright
© 2002 Global Action on Aging
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