A few day ago, Schering-Plough ceo Fred Hassan appeared on CNBC's Mad Money, where he spoke with Jim Cramer, the hyperactive host, about the controversy surrounding Vytorin. In particular, Cramer asked questions about the famous Enhance trial, which found the cholesterol pill wasn't any better at reducing arterial plague in the carotid artery compared with Zocor, and even found a statistically insignificant buildup.
Congress is investigating, you may recall, whether Schering-Plough and Merck, its marketing partner, handled the release of the clinical-trial data properly, given a two-year delay; a brief change in the primary endpoint without consulting the lead investigator, and huge stock sales by some Schering-Plough execs. In its defense, Schering-Plough issued an unusual timeline. To clarify, Cramer throws Fred a few softballs. But as BrandweekNRX pointed out, Fred appears to duck. This is from the transcript, or you can watch....
Cramer: There is a notion among you that...are basically trying to hide the bad stuff, that wasn't the case here, was it? Fred: Well, we've heard about the anonymous bloggers, who were saying something, this is on a sales force type web site. It is very hard to do much with anonymous blogs. We're gonna work on this.
Cramer: But you didn't know, you didn't know anything did you? Fred: The data was blinded until December 31 of last year and I found out at 8 am on the 10th of January.
Cramer: Why is everyone so sure you found out six months before that? I mean why would congressmen write that, why don't they, whats the matter, is it the truth doesn't fit the thesis? Fred: They will have to go through their own inquiry. It's hard to do much with anonymous blogs.
Fred patters on about anonymous postings at CafePharma, but does he really answer the key question - when did you first know about the results? Peter Rost, the former industry exec and whistleblower who blogs at Brandweek and is a litigation consultant, spoke with an unnamed SEC attorney, who had this to say:
"Looking at the SP 8-K filing on January 25, 2008, the question that comes to mind is whether the disclosure regarding when the executives were informed of the Enhance results is misleading. For example, "Q: When was the Schering-Plough CEO informed of the top line results of Enhance? A: Fred Hassan was informed on January 10, 2008 at 8:00 a.m. by Tom Koestler, the head of Schering-Plough Research Institute..."
"One assumes that this event did in fact occur. However, if Hassan knew the Enhance results already, the failure to disclose that fact may be materially misleading. The same for the Q&A about the other officers. I have no information on what the officers actually knew, and when, however, I agree with you that it is very odd that Hassan avoids saying that he didn't know the results before Jan. 10."
In other words, was there a material omission? This is the sort of info that Congress, and perhaps others, will be examining.
Hat tip to BrandweekNRX