BNET Pharma

For the past few years, a coterie of biotech executives, desperate patients and ideologues have waged a low-level but steady campaign to convince the country that the Food and Drug Administration is condemning sick Americans to death by denying them potentially life-saving cancer drugs and other treatments. For all three, it’s a no-brainer: Biotechs want their drugs approved faster, under laxer standards; terminal patients believe that newer drugs might offer them hope of survival, however slim; and economic conservatives believe the FDA is a blight on the free market.

For instance, see just about any WSJ op-ed piece by Richard Miller, CEO of the small biotech Pharmacyclics, who frequently argues that FDA requirements that drugs prove themselves in rigorous clinical trials has slowed medical progress. (Miller doesn’t tend to mention quite as frequently that the FDA rejected his company’s brain-cancer drug Xcytrin last year because it didn’t seem to work.)

Of course, such arguments also serve as cover for unscrupulous drugmakers — usually biotechs — who try to game the FDA-approval process with dressed-up data and heartbreaking pleas from terminally ill patients. So far, however, that’s generally been a losing strategy.

Last year, for instance, the biotech Dendreon sought approval for a prostate-cancer vaccine based on two tiny trials whose statistics the company had already shamelessly tortured. When the FDA instead required more data, necessitating a delay of several years, cancer patients erupted in fury, conspiracy theories coalesced into a frivolous lawsuit and free-market conservatives worked themselves into a lather denouncing the FDA. All to no avail, as it turned out.

One of the main obstacles to such efforts has been Richard Pazdur, head of the FDA office that oversees cancer drugs and a hardcore believer in the need for strong medical evidence of a drug’s safety and effectiveness. (As such, he’s also Public Enemy No. 1 for much of the biotech industry.) Pazdur recently sat down for a brief interview with BusinessWeek, during which he offered some rare insight into FDA’s perspective on why many cancer drugs fail and the games biotech companies frequently play to hide the shortcomings of their experimental drugs:

The FDA is often criticized for being too conservative when it comes to cancer drug reviews, particularly by biotech companies. But these companies also lack regulatory experience. How would you apportion the blame, if any?

One of the things we have seen is a reluctance, sometimes, of smaller companies to make really critical decisions regarding their drugs, whether to curtail the development of a drug. Large companies, because they have a portfolio of drugs, generally if a drug fails to meet specified goals they’ll look to abandon that drug—i.e., cut their losses. Whereas as a smaller company, if you only have one drug, then sometimes that is not an option.

The big pharmaceutical companies don’t want to waste their time with the FDA. They want to have a long-term relationship with the FDA. They certainly don’t want to have to plea to the FDA that the drug should be used and marketed, even though it doesn’t work, on an emotional basis.

There is considerable discussion in the drug industry about looking at how a drug performs in subgroups of trial participants, even if it has failed to meet its goal in the larger trial. What is your view of this approach?

One of the problems we’ve had is people coming to us after a drug fails because they’ve invested millions and millions of dollars into a drug; and then it’s, “How can we salvage this?” In other words, failing your primary endpoint and then trying to salvage a trial by looking at subgroups of patients. That’s akin to shooting an arrow and having it land on a wall and then drawing a target around it. It’s an attempt to resurrect a trial that has failed.

Final emphasis mine. Pazdur’s pithy formulation here skewers the false assumption at the heart of the “open the floodgates” argument, which is that these drugs might work just fine if only the FDA would get out of the way. Of course, FDA has a legal responsibility to ensure that drugs are safe and effective, and half-measures in that regard — testing whether a drug shrinks tumors, for instance, instad of whether it helps patients live longer — have repeatedly proven inadequate as a measure of a new treatment’s actual potency. With no good data that a drug actually benefits people, the FDA really doesn’t have any choice but to slam on the brakes and ask for more better trials.

All this stuff matters for industry because biotechs can blow through hundreds of millions of dollars developing experimental treatments, money that’s essentially flushed down the toilet if the FDA issues a late-stage rejection. Doing so on the mistaken assumption that marginal drugs can be “talked past” the FDA not only wastes time and tarnishes the reputations of the executives involved, it also works directly against the interests of patients — the very people biotechs are claiming to help — by failing to produce the solid evidence that doctors and insurers need to treat people appropriately.

Express Scripts, a big “pharmacy benefit management,” or PBM, provider, yesterday agreed to pay $9.5 million in order to settle looming state lawsuits centered on allegations that it monkeyed with patient prescriptions in order to reap bigger rebates from drugmakers.

The payment, of course, is a mere slap on the wrist to Express, which claims to handle prescriptions for 50 million Americans and which earned $568 million last year on revenues of $18.3 billion. PBMs like Express are the middlemen of the pharmaceutical industry — they buy drugs in bulk and supply them to pharmacies and to patients via home delivery. Along the way, they carry out a variety of studies on drug cost-effectiveness intended, they say, to help pharmacies and health plans offer the best prescription-drug plans for the lowest cost. Sometimes PBMs  encourage patients to switch to comparable drugs — usually to generic versions, but sometimes to other brand names — as part of their efforts to keep costs low.

As it turns out, though, Express and its fellow PBMs may have also taken advantage of their privileged position in the supply chain to fatten their own wallets.  The states charged that Express and fellow PBMs Medco Health Solutions and CVS Caremark had illicitly switched patients from one brand-name cholesterol drug to another in order to make more money — specifically by boosting their market share of particular drugs, which in turn earned them higher rebates. From Dow Jones:

The agreement states that Express Scripts “engaged in deceptive business practices by encouraging doctors to switch patients to different brand name prescription drugs and representing that the patients and/or health plans would save money,” according to the Vermont attorney general’s office.

The question was market share; the higher the PBM’s market share of sales of a certain drug, the bigger the rebate it would get from the drug’s maker….

Of course, no one has acknowledged any wrongdoing, and all three companies entered into “voluntary” agreements with the 29 states involved (plus D.C.) that prohibit them from a variety of activities:

The agreement prohibits Express Scripts from asking for a switch to a higher-priced drug, asking for a switch when the patent on the original drug is to expire, or asking for a switch if a patient already has been shifted from a similar drug in the past two years.

All of which is fine so far as it goes. Still, as if we needed one, this situation is yet another example of the corrosive effects that screwy financial incentives are having on the healthcare system. Drugmakers are obviously interested in currying favor with PBMs, who in turn are understandably interested in scooping up the best rebates possible without obviously compromising patient safety. Like everyone else in the system, PBMs claim to be looking out for patients — but when patient interests come into conflict with their bottom lines, guess which gives way.

So these voluntary agreements may settle things down for now, but they’re not going to do anything in the long run to address the ongoing tension between what companies like PBMs get paid to do and the role they’re ostensibly playing in the healthcare system.

Forbes’ Matthew Herper and Michael Maiello have just jumped on a subject we alluded to — perhaps too obliquely — a few weeks back in discussing the eye-popping $30 million Schering-Plough CEO Fred Hassan pulled down in 2007. Not only did Schering post a $1.5 billion loss that year, it also sat on negative clinical-trial results that eventually crushed sales of its cholesterol drugs Vytorin and Zetia when the data finally emerged this past January.

The point Forbes raises is a pretty simple one: Exactly why did Hassan deserve $13 million in cash bonuses in 2006 and 2007, given that outside heart specialists believed data from the trial — dubbed Enhance — was going to be released in Nov. 2006 or March 2007?

From the Forbes report:

Schering justifies the payouts to executives by saying that it needs to retain top leadership talent…. But [Hassan's] legacy is as much at stake as his pocketbook. For three decades he has defined himself as a transformer and re-builder of companies and strong advocate of ethical sales practices. When he came to Schering the company was awash in scandal. He made Schering’s stated mission to “earn trust every day” and presided over a huge surge in the company’s value.

Those gains vanished because of the controversy over the delayed Vytorin study, ENHANCE….

“It would seem to me that given Hassan’s reputation for open-mindedness in terms of compensation, that if there were some doubts about whether he should receive a bonus, he would be more likely than others to voluntarily forfeit it,” says Hodgson. “There are not many CEOs I’d say that about, but he would be one of them.”

Schering denies the study could have been ready in 2006, when Hassan received $9 million of the cash bonuses, and argues that Forbes’ analysis of the potential hits to Schering’s earnings, revenues and market cap are therefore based on “false premises.”

Schering may have a point about the $9 million from 2006, as even the academic who oversaw Enhance doubts the study would have been ready that year. Still, that leaves $4 million in 2007 bonus in question.

In an unusual step, however, one Schering official has lashed out publicly at the Forbes story. Susan Ellen Wolf, the company’s VP for corporate governance, left obviously canned comments at the magazine’s Web site and several blogs that discussed the piece, decrying its “innuendo” as “unfair” and singing Hassan’s praises as “a CEO who has taken a series of some of the biggest challenges in the world of business.”

In the off chance that Wolf chooses to grace us with her presence here, I’d like to ask if she could reply to two questions Ed Silverman raised over at Pharmalot that, to the best of my knowledge, she hasn’t yet addressed. To wit:

 The guys at Forbes wrote that Kastelein believes that, if he had full control of the study, the results could have been released in March 2007, although you only mention 2006. Can you please clarify?

Also, I’m curious to know why the May 1 options grant wasn’t priced higher. This topic was already addressed on Pharmalot but you didn’t respond to it then and you whizzed right by it in your reply this morning. Can you address that now? Here’s the link to our previous post…

http://www.pharmalot.com/2008/05/fred-hassan-in-graceland-lots-of-cheap-options/

That second question involves a May 1 grant of 836,000 options to Hassan at a price of $18.85 — a surprisingly low strike price given that Schering has publicly complained that its share price has been artificially depressed by the fuss over the Enhance trial. In fact, those options are already in the money, so where’s the incentive here?

The rise of the modern pharmaceutical industry is closely intertwined with the advent of “direct-to-consumer” advertising — those ubiquitous TV and magazine ads for antidepressants, sleep aids, erectile-dysfunction drugs and a whole slew of other treatments.

In fact, it’s hard to imagine how the industry could ever have grown to its current size without them, given the major role such ads have played in motivating anxious patients to demand new prescriptions from their doctors. (Or, if you believe the industry, the role they’ve played in providing consumers with information they otherwise wouldn’t have come across.) DTC ads are almost uniquely American — the only other country that even allows them is New Zealand — and while their effectiveness is hard to measure directly, it’s clear that pharma thinks they work, since drugmakers dumped roughly $3.5 billion into DTC last year.

But the freewheeling days of pharma’s DTC ads may be drawing to a close. Measures intended to give the Food and Drug Administration new powers to regulate drug ads dropped out of a major FDA-reform bill last year, but Congress is again making noises about curbing drugmakers’ freedom to run ads that tout benefits of their drugs while minimizing their possible dangers. Last Thursday, for instance, Rep. Bart Stupak, a Michigan Democrat who heads a key congressional oversight panel, fired this shot across the bow of the industry at a hearing focused on DTC abuses:

“It appears that we need to enforce significant restrictions on DTC (direct-to-consumer) ads to protect American consumers from manipulative commercials designed to mislead and deceive for the profit of pharmaceutical companies,” said Stupak, head of the U.S. House of Representatives Energy and Commerce investigative panel.

[...]

“Pharmaceutical companies should consider it a privilege to be allowed to air DTC ads in this country,” he said. “We should make sure that pharmaceuticals companies conduct themselves responsibly.”

The FDA is looking at its own potential reforms, especially the possibility of requiring drugmakers to prominently display a toll-free number at which consumers could report side effects in TV ads (they’re already required in print). Not that the agency is exactly moving at warp speed. At an FDA advisory-panel meeting last Friday, the assembled experts discussed ways to design a study that might determine the best way to add such a number to TV ads:

FDA spokeswoman Rita Chappelle said the agency would look at the panel’s recommendations and incorporate them into the design of a study to determine the best way to include a toll-free number in TV ads. After the study is done, the next step would be to issue regulations and get Congressional approval before they could take effect, she said.

“It could take some time,” Chappelle said. “It could take a couple of years.”

Chappelle noted that because television is a different medium from print, the best way to put a toll-free number on television ads needs to be studied. Among the factors that require consideration are the best place to put the number and how long it should stay on the screen, she said.

But of course –it wouldn’t do for the FDA to act too hastily. (Apparently the idea of conducting such a study in parallel with new rules is alien to the FDA’s bureaucratic — or political — masters.)

Don’t expect industry to accept new restrictions on DTC without a fight, even if its pull with Congress and the administration isn’t what it used to be. Although the latest evidence of how that influence may played out in the past is pretty interesting. Via Gooznews comes a revealing look at how the FDA’s legal office, then headed by a political appointee who now represents Johnson & Johnson in private practice, nixed an effort to yank misleading DTC ads for J&J’s anemia drug Procrit. While it’s not clear that the former official, Dan Troy, played a personal role in the decision, the situation presents some uncomfortable parallels to other cases in which politics has played a role in FDA decisions, such as the agency’s long delay in approving over-the-counter sales of the emergency contraceptive Plan B.

Bonus round: The next DTC battleground may well involve medical devices. Writing in the New England Journal of Medicine, two cardiologists sharply criticize DTC ads for J&J’s Cypher stent as misleading and potentially dangerous. Given that implanting a stent requires an invasive procedure that carries substantial risks, “the notion that television viewers, inspired by such an ad, would go to their physicians and request not only a stent but a specific brand and model of stent is frightening, if not utterly absurd,” the doctors wrote.

Photo by Flickr user Brett L., CC 2.0

Johnson & Johnson might have had better luck had it decided to introduce a line of baby itching powder or Band-Aids guaranteed to make the “ouch” even worse. As it stands, though, its decision last August to sue the Red Cross over use of the instantly recognizable symbol they both share has turned out to be a near-perfect disaster in its own right.

Late last week, a federal judge threw out most of J&J’s lawsuit, which claimed that the Red Cross infringed on J&J’s “red cross” trademark when the organization began licensing the loto to companies making hand sanitizer and first-aid kits. At the time, J&J said it had “no choice” but to file the lawsuit, even though it had shared use of the logo with the Red Cross for more than a century.

Judge Jed Rakoff disagreed, noting that the licensing deals supported the Red Cross’s charitable efforts and that J&J itself had struck a similar deal with the Red Cross in the past:

Judge Rakoff said the doubtfulness of Johnson & Johnson’s claim against the organization was “well illustrated by the ironic fact” that in 1986 the company itself entered into a similar promotional agreement with the Red Cross.

At that time, the company agreed to donate 5 cents to the Red Cross for coupons redeemed to buy company products. The coupons said: “Help Johnson & Johnson support the American Red Cross. For each purchase with the coupon below, Johnson & Johnson will donate 5 cents to the American Red Cross.”

A tiny sliver of the suit involving a J&J claim that the Red Cross interfered with two of its business relationships will continue, but for all intents and purposes, this particular corporate boondoggle is over. At the very least, it’s a useful cautionary tale of what happens when a corporation’s leadership begins sniffing its own fumes and mistaking them for the scent of roses.

Hat tip: Pharmalot

UPDATE: While I’m on the subject of J&J corporate hubris, I thought I’d take a moment to tip my hat to the company’s recently revamped Web site, which is easily the worst I’ve ever seen at a Fortune 500 company. In lieu of links to information that’s actually useful, some marketing genius at the company has organized the entire site into three almost wholly worthless categories — “Our Products,” “Our Caring,” and “Our Company” — the latter two of which lead to nothing but vacuous pap promoting J&J’s saintly self image. Even the “site map” — usually a pretty useful shortcut around the bovine effluvia to which many companies insist on subjecting their visitors — seems to have drunk whatever is passing for the Kool-Aid at J&J’s headquarters.

I spent close to 15 minutes scouring the site for any hint of a media center or an investor-relations section. Oddly enough, the “Our Company” section is big on “Our Positions,” “Our Credo Values,” “Our History” and “Our Management Approach,” but awfully light on anything relevant to “Our Press Releases” or “Our Shareholders.” Congratulations, J&J — you’ve elevated corporate buzzword obscurantism into an art form. It’s as if you had your entire site redecorated by the Church of Scientology.

In case you’re curious, links to both the press and investor sites turn out to be available in an easily overlooked navigation bar atop J&J’s main-banner menu — at least, easily overlooked by me — as well as buried in the fine, five-point type at the bottom of many pages.

Short of planting a mole, there are few better ways to look into an industry’s id than by reading its trade press. And according to those who track pharma most closely — at times almost sycophantically — one of the industry’s major preoccupations these days is… meetings.

Not just any meetings, though. Apparently drug-company get-togethers — which can range from sales training and “fire-up” gatherings to strategy planning sessions to clinical-trial review meetings –have no shortage of special needs, which of course requires special treatment by resorts and their support staffs. Two recent articles  in Pharmaceutical Executive describe the emergence of conference staffs who pride themselves on being “pharma fluent” and how Puerto Rico has emerged as a major destination for pharma forums.

“Pharma fluency,” as defined here, includes:

• Extensive training of everyone from managers to caterers on such matters as “the difference between an internal and external meeting, the history of the pharmaceutical industry, the structure and divisions of pharmaceutical companies, the unique terms and vocabulary of the industry, the trends in meeting consolidation, and the differences between pharmaceutical companies and other healthcare and biotech companies”
• Knowledge of the regulations that affect pharma companies, the most important being — get this — “the PhRMA Code of Interactions with Healthcare Professionals”
• Understanding drugmakers’ almost paranoid need for secrecy, which includes providing locking conference rooms, stocking them with shredders for on-the-spot document destruction, and returning any “materials” inadvertently left behind to the meeting sponsor
• Awareness of when resorts can bill the expenses of doctors to a pharma sponsor, and when they have to be billed separately (sorry, sports fans, the articles don’t go into much more detail than that)

Puerto Rico, meanwhile, is apparently a hot drugmaker destination these days not because it’s a lush tropical paradise, but because it’s a global pharmaceutical manufacturing hub with pharma-savvy conference resorts to match. Or, as PharmExec puts it:

It’s an island where 16 of the 20 top-selling pharmaceuticals are manufactured; where $30 billion worth of pharmaceutical products are shipped globally each year; where in four years more than $4 billion has been invested in biotechnology by such companies as Abbott, Lilly, and Amgen; where a $3 billion Knowledge Corridor, a flagship project that includes the new Puerto Rican Cancer Center, is in development.

So the weather, the beaches and a profusion of luxury resorts have nothing to do with it. Good to know.

It’s impossible to know how seriously to take any of this stuff, of course. But it’s hard to read these pieces without wondering what the industry would look like if it devoted half as much effort to producing novel medicines and ensuring they’re sold only to people who need them as it seems to spend ensuring there’s plenty of hand-holding available whenever its officials get together — strictly for business, of course.

Photo by Flickr user Mannequin-, CC 2.0

Welcome back from the weekend. Here’s a quick roundup of stories you may have overlooked over the past week:

1. Merck said it would cut 1,200 jobs following the FDA’s rejection of one cholesterol drug and a scandal that’s cuts sales of its combination drug Vytorin, which it sells with Schering-Plough. That’s on top of 8,100 jobs it planned to eliminate in a Dec. 2005 restructuring.
2. Embattled Amgen CEO Kevin Sharer told shareholders he’s felt “real economic pain” during the company’s recent travails, in which the FDA and Medicare have beaten up on the company’s core anemia drugs after they were linked to cancer and heart problems. Sharer still earned almost $13.2 million in compensation last year, although that represented a cut of almost 29 percent from his previous year’s paycheck.
3. A private biotech called Novalar Pharmaceuticals won approval for the first drug intended to reverse the effects of dental anesthesia, the NYT reports. The drug doesn’t counteract numbness directly, but does increase blood flow and thus “clears” the anesthetic from patients’ bodies faster. The drug may seem like a needless luxury, but Novalar insists it could be useful for children, who might bite their lips or tongue while numb, or in the cosmetic-dentistry market.
4. Bristol-Myers Squibb sold off a wound-care unit to a private-equity partnership, then said it wants to spin off 10 percent to 20 percent of its baby-formula business in an IPO. Observers are divided as to whether BMS is slimming down to make itself a more attractive acquisition target, or to regain its fighting weight in order to start buying other companies itself.
5. The FDA won’t require new clinical trials for a copycat version of Sanofi-Aventis‘ blood thinner Lovenox, although the generic-version backers –Novartis unit Sandoz and Momenta — still have o provide additional laboratory and animal tests.
6. Congress is once again making noises about banning, or at least dramatically scaling back direct-to-consumer (DTC) advertising for new drugs. Lawmakers probed the issue at a House subcommittee hearing last Thursday. New Zealand is the only other industrialized country that allows such ads, which studies have shown play a measureable role in swaying doctors to prescribe brand-name drugs.
7. New drug-industry user fees paid to the FDA will mostly subsidize FDA’s expansion of its own drug-monitoring and inspection system, according to the agency’s draft drug-safety plan.

Merrill Goozner, a former Chicago Tribune reporter turned public-health advocate (he heads up the Integrity in Science Project at the Center for Science in the Public Interest), notes an interesting and almost wholly overlooked Food and Drug Administration decision that may have the effect of subjecting clinical-trial volunteers in poor nations to unwarranted risks. Assuming his take is correct, I have to agree that it’s something of a scandal that the mainstream press, and even leading pharma bloggers, have so far failed to cover the story.

The gist is this: The FDA has formally abandoned a previous requirement that international drug trials must conform to the Helsinki Declaration, a human-rights accord that, among other things, requires clinical trials of new drugs to compare them to the best available existing therapy instead of a placebo — i.e., nothing. It sounds abstruse, but as Merrill writes, it may have a big impact on the risks run by trial participants in the Third World:

[T]o the U.S. Food and Drug Administration and the drug industry, to which it had grown increasingly close over the course of the 1990s, [the Helsinki Declaration] contradicted its longstanding policy of only requiring trials showing that a new drug was “better than nothing,” i.e., better than placebo, to win regulatory approval. If the drug industry were to closely adhere to the Helsinki Declaration, it would always have to run comparison trials if an effective drug were already available.

Rather than accede to international norms, the FDA and the U.S. government in the succeeding years lobbied hard to get the WMA to amend its rules. And it has, several times. For instance, it now allows use of placebo-controlled trials for less serious illnesses. But the basic guidelines protecting human trial subjects’ access to best available therapies remained intact.

Now that the FDA has officially repudiated that standard, however, drugmakers are free to test new drugs against placebo or an inferior “local” standard of care. Worse, Merrill argues that the new rule will push more trials overseas, where the FDA won’t be monitoring them by requiring their registration in a public database.

What will this mean for the concept of “informed consent” in a poor country? Imagine for a moment that you live on $2 a day in, say, Tanzania, and have high blood pressure. Since the disease isn’t life-threatening, you skip buying the available anti-hypertensives being sold in the village pharmacy because you can’t afford it. Now say you learn while visiting the village clinic that an international pharmaceutical company is recruiting patients for a clinical trial testing a new anti-hypertensive drug. If you join the trial, you may only get the placebo. But there’s a 50-50 chance you will get the new drug, which hasn’t been proven yet, but might work.

Are there risks associated with taking this new drug? Well, so far, none that the doctors think are serious enough to cancel the trial, but it says right on the form that something may turn up in the clinical trial in which you are being asked to participate. You sign up. After all, a 50-50 chance of getting a drug, that has a good chance of working (the drug industry wouldn’t be here testing it if it didn’t, right?) is better than no drug at all. And how much risk could it be, anyway?

Is that really non-coerced, informed consent?

Short answer: No, it’s not. And the approach here is bad news for anyone worried about drug safety, ethical research standards, or both.

The Vytorin scandal just got serious. Well, heck, it was already serious. Make this really serious:

Investigation and Inquiries.  Through the date of filing this 10-Q, Schering-Plough, the joint venture and/or its joint venture partner, Merck, have received a number of governmental inquiries and have been the subject of a number of investigations. These include several letters from Congress, including the House Committee on Energy and Commerce, the House Subcommittee on Oversight and Investigations, and the ranking minority member of the Senate Finance Committee, collectively seeking a combination of witness interviews, documents and information on a variety of issues related to the Merck/Schering-Plough cholesterol joint venture’s ENHANCE clinical trial, the companies’ sale and promotion of VYTORIN, as well as sales of stock by the companies’ corporate officers (including one executive of Schering-Plough who was named in one of the letters, Carrie Cox) since April 2006. These also include several subpoenas from state officials, including State Attorneys General, and requests for information from U.S. Attorneys seeking similar information and documents.

Emphasis added to this instructive excerpt from Schering-Plough’s latest 10-Q filing with the Securities and Exchange Commission. Of course, the congressional investigations have been anything but quiet. But the involvement of the Department of Justice, via federal prosecutors in unspecified U.S. Attorneys’ offices, is most definitely a new development. And not one that bodes well for the embattled drugmaker.

As Ed Silverman notes over at Pharmalot,  it’s unclear exactly what the feds are looking into at this point. Potential criminal securities violations might be one possibility, although Schering hasn’t disclosed any civil inquiries from the SEC, which usually (although not always) precede criminal investigations. Delaying release of Vytorin trial data that showed it to be largely ineffective might conceivably count as Medicare fraud, since Vytorin and its cousin drug Zetia were pulling in $5 billion in annual sales last year, much of that no doubt picked up by the Medicare prescription-drug benefit.

And, of course, there’s always the unexplained comments by Schering CEO Fred Hassan during the company’s last conference call, in which he denied the existence of any model that would project how the collapse in Vytorin and Zetia sales might affect Schering — even though the company’s Vytorin partner, Merck, had no trouble doing so itself.

Fans of Internet-detective work may also appreciate the contribution of “Condor,” the pseudonymous author of the Schearlings Got Plowed blog, whose visitor-log sleuthing turned up the apparent interest of Robert Kirsch, an Assistant U.S. Attorney in the Securities and Health Fraud Unit in Newark, N.J., in Schering’s recent activities. To add to the intrigue, Condor noted that he’d embargoed his item on the matter until yesterday afternoon — at the request of the U.S. Attorney’s office.

Oddly enough, Merck so far appears to be in the clear, at least insofar as anyone can tell from its SEC disclosures. More grist for the mystery, so to speak.

For sudden twists of fate, abrupt collapses and the occasional stunning revival, it’s hard to beat the biotech industry. Yesterday, for instance, the all-but-dead biotech VaxGen agreed to sell off its ailing anthrax vaccine to its East Coast rival Emergent BioSolutions –a company that spent much of this decade trying to lobby VaxGen out of existence.

Formerly known as BioPort, Emergent makes the anthrax vaccine currently used by the U.S. military, although that product is slow, inconvenient, and potentially prone to side effects. In 2004, the government awarded VaxGen a sole-source contract to product a new vaccine that would require fewer shots and work faster, agreeing to pay the company $877.5 million for the work. Emergent expressed its displeasure by spending millions on lobbyists to convince Congress to modify or void the VaxGen contract.

As it turned out, VaxGen had plenty of its own problems. Prior to its recreation as an anthrax-vaccine developer, the company was best known for an early AIDS vaccine that utterly failed to work in comprehensive testing earlier this decade. The company’s anthrax vaccine also proved problematic, and when VaxGen missed a 2006 deadline to start human tests, the federal government canceled its contract. VaxGen has been in a death spiral ever since, even yanking a planned merger with the private biotech Raven Biotechnologies because many shareholders preferred liquidation.

Now Emergent has decided that it likes VaxGen’s vaccine after all:

Meanwhile, Emergent’s competitive situation appeared to change in March when Annapolis firm PharmAthene bought the rights to a next-generation anthrax vaccine being developed by British company Avecia Biologics. That made PharmAthene a prime candidate to win an upcoming contract for 25 million doses of anthrax vaccine.

Emergent has newer vaccine candidates in development, but the research isn’t as far along as the VaxGen product. With the government’s request for proposals for the new contract due at the end of this month, the company settled on trying to turn around the vaccine, believing the problems have been fixed or are fixable.

And so Emergent ends up pinning its hopes on a product it once hoped to deep-six. It’s paying VaxGen $2 million for the vaccine, plus another $8 million in milestones if the development pans out. That’s not the most expensive U-turn in the world, but it may well be one of the sharpest.