By Shannon Pettypiece
Oct. 17 (Bloomberg) -- Merck & Co. is targeting its cervical cancer vaccine Gardasil to women who may not benefit from it after U.S. sales shrank in July and August.
The number of Gardasil vaccinations tumbled more than 33 percent in those two months from the year-earlier period, according to health research firm IMS Health Inc. Merck shifted its marketing to women ages 19 to 26, who have been less likely to get the shots. The product, designed to prevent a sexually transmitted virus that can lead to cancer, previously was aimed primarily at young girls most likely to benefit from it.
Harvard University researchers said in an August study that the $400 vaccine isn't cost-effective in the older age group, a finding that supported the American Cancer Society's recommendations. Merck disagrees and says its vaccine can provide a benefit in that age group. Gardasil sales, which reached $1.5 billion in 2007, are slowing because of questions from proposed users on cost, safety and effectiveness, said Seamus Fernandez, a Leerink Swann & Co. analyst in Boston.
``Gardasil needs to be doing better,'' said Barclays Capital analyst Tony Butler in New York, in a telephone interview. The vaccine ``has become increasingly more important from a profit standpoint because of the concerns over Singulair and Vytorin and Zetia.''
Merck, of Whitehouse Station, New Jersey, is counting on Gardasil to help offset declining sales of cholesterol pills Vytorin and Zetia after a January study found they may work no better at unclogging arteries than a cheaper medicine. Sales of the asthma treatment Singulair, Merck's top-selling drug, have also slowed over safety concerns.
Merck will report third-quarter earnings on Oct. 22. Second- quarter profit rose 5 percent on higher sales of the diabetes pill Januvia. The company since suspended its 2008 earnings forecast because of plunging Vytorin and Zetia sales.
Gardasil's decline in July and August prompted Fernandez, who rates Merck market perform, to chop $2.8 billion from his revenue estimate for the vaccine over the next five years. The August prescriptions fell 40 percent to 68,330 from a year earlier, according to IMS Health, based in Norwalk, Connecticut. July fell 26 percent to 56,872. Both numbers are probably lower than actual sales because vaccine-market figures are more difficult to collect than those for other types of medicine, said Fernandez.
Merck shares rose 31 cents, or 1.1 percent, to $28.50 at 4 p.m. in New York Stock Exchange composite trading. The drugmaker lost 50 percent of its value this year, the worst performance in the 14-member Standard & Poor's 500 Pharmaceutical Index.
Approval in 2006
The U.S. approved Gardasil in 2006 to protect girls and women ages 9 to 26 against four strains of the sexually transmitted human papillomavirus, which cause 70 percent of cervical cancers and 90 percent of genital warts.
Merck has decided to target the oldest in that group because they're least likely to have been vaccinated during Gardasil's initial availability, said Bev Lybrand, the company's senior vice president of vaccines, in a telephone interview.
``We see tremendous opportunity,'' said Lybrand. ``We have a number of programs under way to get after these women.''
Among women ages 19 to 26, about 15 percent have received the shot, according to a September research report by Merrill Lynch & Co. The U.S. Centers for Disease Control and Prevention in Atlanta reported Oct. 9 that a quarter of girls ages 13 to 17 had gotten at least one Gardasil shot.
Researchers at Harvard, in Cambridge, Massachusetts, said in an August study in the New England Journal of Medicine that targeting the older population will cost the U.S. 50 percent more than what's considered cost-effective.
The most effective strategy is to target girls before they become sexually active, the study said, supporting the position of the American Cancer Society, in Atlanta, that the vaccine should be given to girls 18 and younger.
The Harvard study found it would cost $150,000 to buy enough Gardasil to extend the life of one person for one year -- $50,000 more than the $100,000 standard that public health officials typically use to judge whether a product cost-effective.
``The push needs to be with the 11- to 12-year-olds,'' said Debbie Saslow, director of breast and cervical cancer for the American Cancer Society, in a telephone interview. ``It is not going to be as effective in the older women.''
Merck says its internal data show the vaccine is cost- effective for women through at least age 24 because only about 1 percent of these women have been exposed to all four types of the virus the vaccine protects against, Lybrand said.
`Firm in Belief'
``Merck is firm in its belief that its efforts are aligned with the scientific data, health economic models and CDC recommendation that support vaccination of Gardasil in females from 11 to 26,'' the company said in an e-mailed statement. ``Many young women are not exposed to all or some of the HPV types for which Gardasil protects, and can still be protected today from getting cervical cancer in their lifetime.''
Merck's $100 million television and print advertising campaign last year featured young girls who were jumping rope and chanting ``one less.'' The company's new ads show college-aged women at home with pop music in the background. Merck spent $60 million on consumer marketing this year through June, according to Nielsen Monitor Plus.
Reaching College Students
Merck is also advertising on the networking Web site Facebook.com and in college bookstores and coffee shops. The company has been selling $32 cervical-cancer awareness charm bracelets on the Internet. Merck is seeking Food and Drug Administration approval to market Gardasil to women through age 45.
``We are starting to see some encouraging feedback,'' Lybrand said.
Merck also wants to persuade more gynecologists to stock the vaccine, she said. The company last month said it would reimburse doctors for the cost of giving patients the vaccine if a health insurer refuses to pay.
``The business is more complex now than it was 10 years ago, so everyone watches the bottom line,'' said Joseph Sanfilippo, vice chairman of reproductive science at the University of Pittsburgh, in a telephone interview. ``Anything to incentivize the physicians with these kinds of programs will be very well received.''
Women over 18 pay for the vaccine either out of pocket or through private insurance, a barrier for many, doctors said. About 10 percent of private insurance plans don't cover Gardasil and few college health plans help pay, Lybrand said. The U.S. government pays for Gardasil for those 18 and younger who don't have insurance.
Question of Cost
``Merck will point out that there are individual women who haven't been exposed,'' said Saslow of the American Cancer Society. ``I would say there are also women in this age group who can't afford to buy food. If you want to get the vaccine, fine. But think about where you are financially.''
Merck's challenge to increase sales may intensify next year when GlaxoSmithKline Plc, of London, hopes to begin selling in the U.S. a similar vaccine called Cervarix.
Gardasil also faces opposition from nonprofit groups, some of which advocate sexual abstinence before marriage, that say Gardasil may not be safe and gives women false security about sexually transmitted diseases.
The CDC said it has received reports of 21 deaths and almost 10,000 side effects in women following vaccination. None of the deaths could be linked to the vaccine and 94 percent of the side effects were ``non-serious,'' such as soreness around the injection site and headaches, the CDC said.
Cervical cancer killed 3,850 women in the U.S. in 2004, and treating it costs more than $2 billion each year, according to the CDC.
To contact the reporter on this story: Shannon Pettypiece in New York at firstname.lastname@example.org