Panel Kills Merck's Hope of OTC Status

Looks like the third time won't be the charm for Merck's (NYSE: MRK  ) MEVACOR. Yesterday an FDA advisory panel voted 10-2 that the drug not be given over-the-counter (OTC) status.

Merck has been trying for seven years to get the FDA to move the cholesterol-lowering drug to a more convenient place for customers. Its failed bids in 2000 and in 2005 were essentially because the FDA was worried that customers wouldn't make the right choice about whether they should be taking the drug and caused Johnson & Johnson (NYSE: JNJ  ) to back out of its marketing partnership with Merck.

Merck ran studies to try and show that consumers really are smart enough to know if they should be taking the drug, but the FDA and its advisory panel were still worried about a subset of mock patients who said they would buy the drug even though it wasn't appropriate for them.

The OTC status could have been a boon to Merck and its recently announced marketing partner GlaxoSmithKline (NYSE: GSK  ) . MEVACOR has long since been overtaken by newer statins, including Pfizer's (NYSE: PFE  ) Lipitor, AstraZeneca's (NYSE: AZN  ) Crestor, and Merck's own ZOCOR, but the OTC status could have broadened the market to include patients with milder cholesterol issues who aren't currently on medication. Even though MEVACOR is off-patent, the duo would still get three years of marketing exclusivity before generic competitors could market it OTC.

While the advisory panel vote isn't binding, when combined with the negative FDA summary that FDA reviewers presented to the panel, it seems unlikely that the agency will make the status change. The decision certainly won't give Merck a heart attack; it still has its cholesterol drugs from its partnership with Schering-Plough (NYSE: SGP  ) , as well as a pipeline that contains a few cholesterol drugs.

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