Matthew Herper 04.21.08, 12:00 AM ET
The latest cholesterol mess shows how big pharma just can't seem to face up to bad results.
When questions first emerged about a small study testing their $5 billion cholesterol pills Zetia and Vytorin, Merck (nyse: MRK - news - people ) and Schering-Plough (nyse: SGP - news - people ) pooh-poohed its importance. "I don't know why this would have any impact on mainstream use," Schering Chief Executive Fred Hassan told analysts in January. But newly released results say that these two immensely lucrative drugs don't impede plaque buildup in arteries. The New England Journal of Medicine even published two editorials telling doctors to use them as a last resort (a conclusion Merck and Schering disputed vigorously; the study showed no safety problems).
For the drug industry it looks like another case of putting its head in the sand. Positive results are taken as proof that a medicine works. Catastrophic failures are explained away. Companies split hairs over side effects instead of recognizing them head-on. By doing so, they raise more doubts and contribute to a public image that is bound to hurt them, if not on the prescription pad then in legislative enactments.
--Concerns emerged in 2001 that Merck's painkiller Vioxx was causing heart attacks and strokes. But the company insisted the risk was an illusion caused by comparing Vioxx with naproxen, another pain pill they said protected the heart. Merck yanked Vioxx in 2004 after finding it boosted the risk of heart attacks. If it had admitted the risk early, Vioxx might still be on the market for the small number of patients who really need an anti-inflammatory drug as easy on the stomach as Vioxx was.
--In 2004 a panel convened by the American Diabetes Association said Eli Lilly (nyse: LLY - news - people )'s Zyprexa was more likely to cause diabetes than other, similar schizophrenia drugs. Lilly contested that conclusion as use of the drug in the U.S. began to slump. In 2005 a big government study showed that Zyprexa was marginally more effective than its rivals but also caused more weight gain and raised blood sugar and cholesterol. Lilly stands behind the drug.
--Not owning up to problems can lead to costly failures. Pfizer (nyse: PFE - news - people ) kept pushing forward with its pill torcetrapib, designed to prevent heart attacks, despite the fact the drug raised blood pressure. It turned out the medicine caused heart attacks and deaths, something Pfizer might have prevented by switching to backup molecules it was already testing.
--Sanofi-Aventis (nyse: SNY - news - people ) hyped its experimental rimonabant as a way to combat obesity but downplayed the drug's psychiatric side effect, depression. A Food & Drug Administration advisory panel rejected the medicine outright last year not only because it thought the drug could cause suicides, but also because Sanofi had done a bad job measuring exactly how big the risk was.
Part of the reason for these blind spots is that drugmakers are in a hurry to make as much money as they can off their medicines before patents expire. The patent clock starts ticking when a molecule is made in the lab or a new use for it is discovered. It doesn't stop ticking while a drugmaker does a five-year study to compare the drug, in safety and efficacy, with the alternatives. "Patents don't last forever," says Paul Thompson, chief of cardiology for Hartford Hospital and a consultant to drugmakers. "If prescriptions slow, that's revenue you'll never recapture."
Warning signs of trouble ahead: John McCain has said that drug companies are the bad guys. Hillary Clinton, whose health plan the industry reviled a decade ago, is getting big pharma money, including from Pfizer Chairman Jeffrey Kindler. Maybe someone should tell the shareholders?