Citing concerns about the market fallout from the Vioxx uproar and the safety of drugs, the California Public Employees' Retirement System (CalPERS) is ratcheting up its pressure to solve the issue on its investment and health fronts.

CalPERS has sent letters to several drug companies demanding answers about how they will restore and retain shareowner value.

CalPERS Chief Investment Officer Mark Anson recently sent letters to the chief executives of Merck, Abbott Laboratories, AstraZeneca, Bayer, GlaxoSmithKline, Pfizer, and Roche following Merck's withdrawal of Vioxx from the market after a study showed that the arthritis drug doubled the risk of heart attack and stroke.

The pension fund is also questioning its health partners about the steps they are taking to protect CalPERS members who use prescription drugs.

Jarvio Grevious, Deputy Executive Officer for Benefit Administration, sent letters to Kaiser, Blue Shield of California, and Western Health Advantage -- CalPERS health maintenance organizations (HMOs) -- and to Caremark, the pharmacy benefits administrator for the System's preferred provider plans, PERSCare and PERS Choice.

"We find the accusations that the company had reason to believe that Vioxx may have potential safety concerns as much as a year prior to the removal, yet failed to disclose this information, deeply troubling," said Anson.

In letters to the seven drug companies, Anson asked companies to detail the steps they are taking to examine internal processes to ensure that similar Vioxx situations do not occur. He also challenged them to step up their efforts to keep existing drugs safe and address the conflict inherent in long-term product safety and short-term profitability.

As a long-term shareowner, Anson asked the companies to outline what steps they are taking to restore shareowner value and market confidence in the wake of these events, noting that Merck lost more than a third of its market value since the Vioxx issue surfaced.

CalPERS is also taking issue with Merck's reported severance benefits plan to protect key managers if the company is taken over or liquidated.

"The timing of the plan leaves the impression that your highest priority is protecting the economics of the management team rather than the owner," Anson said. "There are also several specific provisions within the plan that CalPERS finds particularly onerous."

Anson requested a written response to the drug safety issues and "an initial call" to discuss Merck's executive compensation issues.

CalPERS owns the following shares in the companies: Abbott Labs, 7.8 million; AstraZeneca, 5.6 million; Bayer, 2.3 million; GSK, 18.5 million; Merck, 11.2 million; Pfizer, 40.1 million, and Roche, 2.5 million.

In the letters to its health plans, Grevious cited five drugs about which the FDA has expressed safety concerns, besides Merck's Vioxx. They are Accutane, a severe acne treatment; Crestor, an anti-cholesterol drug; Meridia, an obesity treatment; Serevent, an asthma medication; and Bextra, a painkiller.

"Please explain what measures you have taken to ensure that the appropriate precautions have been implemented to protect our members. If any of the drugs in question are part of your formulary, please objectively support why you believe your formulary to be safe," said Grevious.

CalPERS letters can be found in its press room at www.calpers.ca.gov.

CalPERS is the nation's largest public pension fund with assets totaling $177 billion. The System provides retirement and health benefits to more than 1.4 million State and local public employees and their families.