ACC Outcome to Deepen Merck, Schering-Plough's Vytorin and Zetia Troubles

ENHANCE Disappoints

Just when it seems that things could not get any worse for Merck and Schering-Plough's cholesterol JV after the delayed presentation of partial ENHANCE results in January, the ACC meeting has dealt a new blow to the drug-makers. The final ENHANCE results were due to be presented at the meeting, offering—as we expected—a glimmer of hope that Vytorin was effective in reducing artery plaque build-up. This was not the case, as the drug seemed to perform no better than its off-patent component, the statin Zocor (simvastatin), at reducing plaque build-up in the final analysis. Plaque reduction in the 720-patient study was not achieved for the study groups: those receiving Vytorin has 0.01-mm thicker arteries compared with baseline, while those on Zocor had 0.006-mm thicker arteries compared with baseline.

Dr. John Kastelein, the outside medical expert who presented the ENHANCE results, has argued that the results may indicate that the patients participating the trial already had very thin arteries following years of treatment with statins and, despite having the hereditary familial hypercholesterolemia disease, had their cholesterol largely under control at the start of the study. Critics, however, have pointed out that for the 19% of patients in ENHANCE who had no had prior treatment with statins, there was no significant improvement in artery plaque build-up either.

ACC Panel Deals Unexpected Blow to JV Partners

The ACC panel of experts who were due to debate the ENHANCE results decided to issue a unanimous statement rather than debate the results. Harlan Krumholz, speaking on behalf of the whole panel, advised the thousands of cardiologists at the ACC meeting to prescribe Vytorin and Zetia when other options have been exhausted. In particular, he advised doctors to use statins in patients that can tolerate higher doses rather than opting for Vytorin and Zetia, whose long-term safety have been studied without so much depth.

Outlook and Implications

The unanimous panel recommendation urging doctors to use the two drugs as a last resort has added insult to injury for Merck and Schering-Plough. It could also have some very material implications for the companies. Their share prices have already declined by 25% following January's revelation of partial ENHANCE results. Prescription data for the weeks following that results release showed a marked decline in prescribing of the two drugs in the United States. The impact on sales of the drugs will become apparent once Merck and Schering-Plough publish their respective first-quarter 2008 results. Global Insight expects the sales decline to be even more marked in the second quarter. The extent to which the impact will be felt will depend on how many cardiologists choose to follow the ACC expert panel recommendation. The fact that it is a unanimous opinion expressed at a very public forum with maximum exposure of cardiologists to the message certainly increases the risk of a sharp decline in prescribing. Sales of the two drugs could also be adversely affected by a decline in direct-to-consumer (DTC) advertising of these products. Merck and Schering-Plough are certainly expected to scale back DTC promotion of the drugs, while investing more heavily in promotion to medical practitioners. Another study presented at the ACC, as reported by the Associated Press, has indicated that in the United States, where DTC advertising is allowed, sales of Vytorin and Zetia were four times higher than in Canada, which has similar disease trends and no DTC advertising.

A final factor—and in our view a very significant one—that would affect Vytorin and Zetia revenues in the United States post-ACC is related to the extent to which these drugs have been needlessly prescribed. Anecdotal evidence suggests that, in some cases, doctors wishing to lower a patient's cholesterol without exposing them to the risk of unpleasant side effects such as muscle pain or flushing that are seen with other cholesterol-reducing drugs would prescribe Zetia or Vytorin at the start of treatment. Such an approach goes against ACC and American Heart Association (AHA) guidelines, which recommend that ezetimibe should be used only in patients whose cholesterol level cannot be lowered sufficiently with statins. In view of the current ACC outcome and the ENHANCE results, we expect most physicians in the United States to fall back on the ACC and AHA guidelines and avoid using ezetimibe (both in Zetia and as a component of Vytorin) as a first line of treatment.