Vioxx Settlement Is Classic Wall Street Denial: Bury the Losses and Say It Never Happened

from CommonDreams:



Published on Thursday, November 15, 2007 by CommonDreams.org
Vioxx Settlement Is Classic Wall Street Denial: Bury the Losses and Say It Never Happened
by Martha Rosenberg


When it comes to billion dollar mistakes, Pharma and the big Wall Street firms are using the same playbook.

Like Merrill Lynch, Citigroup and Morgan Stanley, Merck wants to write off the cost of the estimated 140,000 people who had heart attacks on Vioxx–55,000 may have died–and move on.

Last week it announced it had reached a capped settlement of $4.85 billion that would allocate roughly $125,000 per plaintiff, less than it costs to treat a heart attack.

Merck’s payout is less than the $10 or $20 billion predicted and, significantly less than Vioxx generated in profits before being withdrawn from the market in 2004.

So it wasn’t a bad trade.

Merck doesn’t want to dwell on the past anymore than the Wall Street firms who lost billions in bad bets last month–and sometimes their CEOs. Especially when the past includes hiding clinical evidence of Vioxx’s dangers from the public so it could sell the popular pain reliever to twenty million people.

And the similarities don’t end there.

Like the abstruse new financial instruments which recently imploded–collateralized debt obligations (CDOs) and structured investment vehicles (SIVs)–few understand how Pharma’s new drugs from COX-2 inhibitors to atypical antipsychotics and SSRIs work either–when they work.

So the new products have to be happy talked by paid analysts, researchers and young Turk salesmen. Hyped by doctors and experts presiding over rigged studies and third party journal articles. And conveniently overlooked by the FDA which, like Moody’s and Standard and Poor’s, is the last to announce what its job is to know.

Just as Wall Street doesn’t portfolio a loan anymore–hello!–when it can be repackaged and sold to hedge funds, Pharma doesn’t treat mental problems as transient or episodic anymore. It up-sells them.

Shy people are sick. Moody people are bipolar. The anxious need antidepressants and the depressed need antipsychotics. Children with slight behavior problems should be on major psychotropic drugs.

But of course to sell next-big-thing/don’t-miss-out products you need urgency.

And nothing takes the one/two punch urgency out of a sales presentation quicker than phrases like “past performance is no guarantee of future performance,” or “sizable losses may occur; please read prospectus.”

Or “black box.” ......(more)

The complete piece is at: http://www.commondreams.org/archive/2007/11/15/5251/