KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Merck To Lay Off 15 Percent Of Workers, Close Plants, Research Facilities

The New York Times: Drugmaker Merck announced it is closing eight research centers and eight manufacturing plants and laying off 15,000 people from its worldwide operations during the next two years because of its merger with Schering-Plough. "The restructuring is expected to save $2.7 billion to $3.1 billion in 2012, the company said. Meanwhile, the pretax cost of the initial phase of the cost-cutting program is expected to range from $3.5 billion to $4.3 billion, much of it in severance packages for employees." The two companies make many popular drugs such as brand name drugs to treat osteoporosis [Fosamax], allergies and asthma [Singulair] and a vaccine for HPV [Gardasil].

"In the first half of this year, drug makers announced that they planned to cut about 35,000 jobs, according to a report published last week by Challenger, Gray & Christmas. Last year, drug makers said that they planned to cut 51,549 jobs, the report said" (Singer, 7/8).

The Wall Street Journal: "The site closings are part of Merck's ongoing efforts to integrate Schering's operations following the $49.6 billion deal closing in November. They also illustrate attempts by major pharmaceutical companies to control costs as they grapple with drug patent expirations and low research productivity. Pfizer Inc. announced layoffs and site closures as a result of its $68 billion acquisition of Wyeth last year." Merck pledged to save more than $3.5 billion annually by 2012 as result of the deal (Loftus, 7/9).

The Wall Street Journal, in a separate story: In other drugmaker news, Johnson & Johnson has begun disclosing payments it makes to doctors for the first time, "becoming the latest drug maker to try to improve transparency surrounding its marketing practices." The company's pharmaceutical divisions "began posting the names of doctors and the amounts they received from J&J on several company websites on June 30, said spokesman Mark Wolfe. The data cover payments made during the first three months of 2010. Like other drug makers, J&J, of New Brunswick, N.J., pays doctors and health-care professionals to serve as consultants for research, safety surveillance and other matters, and to speak to other doctors about uses of its products." The practice of paying doctors has come under fire from some that say the payments can create conflicts of interest in drug research and medical practice. "The new health-care overhaul law requires makers of prescription drugs and medical devices to report physician-payment data to the government, which the U.S. Department of Health and Human Services will make available on a public website. The annual reporting is to begin in 2013" (Loftus, 7/9). This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.