Arthritis Drugs Put a Hurt on Merck and Pfizer

Updated from 11:45 a.m. EDT

Shares of Merck(MRK) and Pfizer(PFE) declined Thursday as criticism continued about the class of arthritis and painkiller drugs known as COX-2 inhibitors.

Shares of Merck, which last week said it was pulling its COX-2 drug Vioxx from the market immediately, fell another 66 cents, or 2.1%, to $31.01. The stock dropped as low as $30.18, a new 52-week low. The stock closed at $45.07 on Sept. 29, the day before the company said it was removing Vioxx from the market because it presented a higher risk of heart problems.

Shares of Pfizer, which issued a detailed account Saturday asserting that its Celebrex and Bextra COX-2 drugs are safe, fell $1.27, or 4.1%, to $29.91. The stock sank as low as $28.60, also a new 52-week low. Analysts had expected Pfizer to capitalize on Merck's Vioxx woes. But Pfizer was trading Thursday just below the level it closed on Sept. 29.

Pfizer was the second most actively stock traded on the NYSE, while Merck ranked third. Some 71.6 million shares of Pfizer changed hands, or 4 times their daily average. Merck trading volume was 40.2 million shares, also about 4 times its daily average.

Trading in Pfizer and Merck helped drag down the Amex Phamaceutical Index to a new 52-week low early Thursday, as all 15 of its components fell.

At one point, the index slipped to 299.65, or 5 points lower than the previous 52-week low. "I think this is an overreaction by investors in the other companies," said Sena Lund, a drug industry analyst at Cathay Financial, an investment research firm. By midafternoon, the index stood at 302.82, down 2.4% for the day.

Merck pulled Vioxx after receiving the results of a long-term study assessing the drug's impact on colon polyps. But during the three years of research, scientists found an "increased relative risk for confirmed cardiovascular events," such as heart attack and stroke, beginning after 18 months of treatment in the patients taking Vioxx compared with those taking a placebo.

Pfizer said Saturday that "the evidence distinguishing the cardiovascular safety of Celebrex has accumulated over the years in multiple completed studies, none of which has shown any increased cardiovascular risk for Celebrex."

The latest stock market action for both stocks appears to be a reaction to two articles published on line ahead of their inclusion in the Oct. 21 edition of the New England Journal of Medicine. In one editorial, Dr. Garret A. FitzGerald urged the Food and Drug Administration to examine all of the COX-2 drugs. FitzGerald is a medical researcher at the Institute for Translational Medicine and Therapeutics at the University of Pennsylvania. "We must remember that the absence of evidence is not the evidence of absence," said FitzGerald, who has received consulting fees and research support from Merck.