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Exclusive: Merck wants to test Zilmax on 240,000 cattle but beef industry resists

By P.J. Huffstutter and Tom Polansek

CHICAGO (Reuters) - Merck & Co Inc wants to feed its controversial feed additive Zilmax to 240,000 U.S. cattle to prove it is safe. But there is a problem: giant meat processors like Cargill Inc don't want to touch animals fed with the drug.

Merck plans to conduct the biggest ever test of its kind in an effort to reintroduce the weight-adding drug into the United States and Canada after suspending sales last August. A test herd of this size is currently worth up to $500 million.

Feedlot owners, however, are reluctant to participate in the study until they get a guarantee that slaughterhouses will be willing to buy the Zilmax-fed animals.

Snags with the study, whose size was confirmed to Reuters by Merck, have not been previously reported.

"I'd be happy to sign up, just as soon as Merck tells me who is going to pay me after they're done," said a feedlot owner in Texas. "It's been a horrible time, with the drought. I can't afford to give away a steer, let alone hundreds."

Cargill Inc and Tyson Foods Inc, two of the world's largest beef processors, told Reuters their stance on Zilmax had not changed since last autumn, when they stopped accepting cattle fed the drug following reports it may cause lameness. Together the two companies control 37 percent of the daily U.S. beef processing capacity.

Reuters reported in December that Tyson stopped taking Zilmax-fed livestock after more than two dozen animals that had been fed the drug arrived at one of its slaughterhouses with missing hooves.

The beef processors said their ban would remain until Merck had scientifically proven that Zilmax was safe for animals. They also want certainty that key export markets in Asia and elsewhere will accept such beef products.

Merck has said it is confident in the "safety and performance" of Zilmax. The U.S. Food and Drug Administration has deemed the drug safe for both animals and humans.

A source with National Beef Packing Company said the company was not accepting Zilmax-fed cattle. JBS USA Holdings Inc, another major beef processor, did not return calls and emails for comment.

Merck in December said the evaluations would start in the first quarter. But company spokeswoman Pamela Eisele declined to say this week where the 240,000 cattle would come from in the United States, whether the tests had started, or whether Merck had signed up any packing plants, ranchers or feedlots - which house and fatten up the cattle before they are slaughtered.

Eisele said the company's current plan was to sign up at least 50 U.S. feedlots, out of more than 73,000 nationwide, to participate in field tests over several months. Merck hopes to enroll five to 15 feedlots for each slaughterhouse that agrees to process the cattle, she added.

Anne Burkholder, who runs a 3,000-head feed yard in Cozad, Nebraska, is eager to hear results.

"We need to have a large study, where we can really look at mobility and well-being issues we're seeing in the present," said Burkholder, who switched to another feed additive after Merck suspended Zilmax sales.

She said she never had any problems with Zilmax.

QUESTIONS ABOUT STUDY

The attempt to launch a large-scale study underscores Merck's determination to put zilpaterol-based Zilmax, once the largest-selling growth drug for cattle, back on the lucrative agriculture drug market.

The scale is unprecedented for a randomized, controlled study of cattle, and the logistics involved with tracking so many cattle "boggle the mind," said Morgan Scott, an epidemiology professor at Kansas State University.

Merck said it believed the field evaluations will "support the results of previous studies and the safety of the product."

A principal investigator hired by Merck, who is an epidemiologist and veterinarian, will oversee the study and analyze data, Eisele said.

Merck has declined to name the investigator, or any of the scientists or other academic experts involved in the study, but said it would release the results once the study was completed.

Some livestock researchers have questioned why Merck has declined to say who is leading the research effort. Others have criticized the company for promoting the study's outcome before data are collected or analyzed.

"It would suggest that they've already decided the results," Scott said.

Christopher Reinhardt, a feedlot extension specialist at Kansas State University, said meat packers and feedlots will make certain results are objectively reported. Merck has "a vested interest in the outcome but their partners don't, so there is sort of a check and balance in place," he said.

Animal science experts said large-scale field studies - if done well - can offer valuable insight into drug interactions and impacts in the real world after the initial laboratory vetting required for federal regulatory approval.

With Zilmax off the market since last August, rival pharmaceutical firms have grabbed market share. Many U.S. feedlots have switched to ractopamine-based Optaflexx, made by Merck rival Eli Lily & Co.'s Elanco Animal Health unit.

(Reporting by P.J. Huffstutter and Tom Polansek. Editing by David Greising and Ross Colvin)

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