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Healthy Skepticism Library item: 12118

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.


Publication type: news

Merck & Co accepts USD 670m Medicaid charge 2007 Dec 5

Full text:

US-based Merck & Co has accepted a USD 670m charge to settle legal disputes with a number of US states over alleged overcharging for the provision of some of its drugs to Medicaid.

Vioxx (rofecoxib) litigation costs and the Medicaid charge are forecast to trigger a USD 3.6bn reduction in Merck & Co’s net earnings for FY07. The impact of the same items in 2008, however, is expected to result in a positive contribution to net earnings of USD 1.5bn.

Merck & Co’s FY07 and FY08 forecasts reveal that most of the serious long-term litigation threats to the company are nearing resolution and their impact has been included.

Generics competition will undermine Merck & Co’s top-line growth at a time that immediate litigation threats are finally put aside. However, the company says it will see sustained growth from cervical cancer vaccine Gardasil, diabetes treatment Januvia (sitagliptin) and Asthma drug Singulair (montelukast).

Savings from restructuring are also expected to boost the bottom line. Merck & Co is targeting pre-tax savings of USD 4.5-5bn from 2006 through 2010, of which USD 2bn will be through the implementation of a manufacturing supply strategy.

The company will meet its target of cutting 7,000 jobs by the end of 2008. It already axed 6,000 positions by the end of September 2007.

The savings and projected sales growth should enable Merck & Co to return its gross margin, starting in 2008, to levels consistent with those seen prior to the loss of US patent exclusivity for Zocor (simvastatin).


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Far too large a section of the treatment of disease is to-day controlled by the big manufacturing pharmacists, who have enslaved us in a plausible pseudo-science...
The blind faith which some men have in medicines illustrates too often the greatest of all human capacities - the capacity for self deception...
Some one will say, Is this all your science has to tell us? Is this the outcome of decades of good clinical work, of patient study of the disease, of anxious trial in such good faith of so many drugs? Give us back the childlike trust of the fathers in antimony and in the lancet rather than this cold nihilism. Not at all! Let us accept the truth, however unpleasant it may be, and with the death rate staring us in the face, let us not be deceived with vain fancies...
we need a stern, iconoclastic spirit which leads, not to nihilism, but to an active skepticism - not the passive skepticism, born of despair, but the active skepticism born of a knowledge that recognizes its limitations and knows full well that only in this attitude of mind can true progress be made.
- William Osler 1909