Just before Halloween, Merck CEO Richard Clark announced the pharmaceutical giant’s Q3 net income dropped 28% and it would cut 7,200 more jobs over 3 years.

“New business models have to be put in place for our industry to survive,” he said at the time.

Merck has now selected its costume for next year. It’s dressing up as a biotech generics manufacturer. That ought to scare people!

Like the folks at Amgen for example. Merck claims that out of the box it intends to come after Aranesp, Amgen’s anemia drug that currently does $3.6 billion in annual sales.

Merck wants to release a version in 2012, and have 5 other biotech generics on the market by 2017.

Merck intends to produce follow-on biologics which are similar to, but not identical to the original compound. They would be manufactured using yeast cells rather than mammalian cells which should enable the company to escape claims of patent infringement.

Merck acquired this capability by purchasing GlycoFi a few years ago.

Analysts had mixed feelings about the idea. Some liked the large market potential and Merck’s ability to fund the enterprise. Others worried that a confused regulatory-approval path for follow-on biologics might cause problems.

And there were questions about Merck’s business model. “What are the real returns on this?” Les Funtleyder of Miller Tabak wondered for the Wall Street Journal. “Are you going to become an early-stage biotech and burn through lots of cash before you get returns?”

Meanwhile Amgen said it supports efforts to regulate follow-on biologics and that it will dress up as a Zocor pill next Halloween.

New York Attorney General Andrew Cuomo has filed a lawsuit against CVS Caremark after an investigation revealed it had since 2006 been selling expired products at 60% of its outlets in the state, according to the Providence Journal.

On the same day, the state announced it had settled similar claims against Rite Aid Corporation for approximately $1.3 million.

The suit will attempt to force Rhode Island-based CVS to pay a $500 fine for each violation, post signs that inform consumers about health risks of expired products, offer refunds for such products and pay a  quality assurance monitor to review the situation monthly.

Earlier this year, California and Pennsylvania lodged similar complaints against CVS, according to the suit.

In 2003, CVS dodged a similar charge by agreeing to cease and desist after an investigation in New York revealed it was selling expired OTC medications.

The “widespread nature of these violations indicates that CVS has not taken seriously its legal obligations or its responsibilities to its consumers vis-à-vis the sale of expired products,” according to the lawsuit.

Michael DeAngelis, a CVS spokesperson expressed disappointment that Cuomo had filed the suit. He indicated CVS had begun working with the AG’s office on the matter.

“We have a specific product-removal policy,” DeAngelis mentioned in an email to the Journal. “Over the last several months we retrained our employees to ensure compliance.”

CVS is the second largest drugstore chain in the US after Walgreen’s and ahead of Rite Aid.

OhMyGov! reports that Senator Michael Enzi (R-WY) may try to slip some favorable health IT language into the fiscal stimulus package Congress hopes to have on the Big O’s desk the day he’s sworn in.

Enzi is—along with 15 other Senators—a co-sponsor of Massachusetts Senator Edward Kennedy’s bill proposing to accelerate national adoption of electronic medical records. That bill, known as the Wired for Health Care Quality Act has languished for 18 months due to cost and privacy concerns.

It now seems inevitable that EMR-friendly legislation will be folded into any national health care reform initiative, which has itself gained momentum in the last month.

That way, the Big O can check his arugula levels on the Blackberry and besides, according to a survey done this October, Americans support a national EMR system and even believe the Feds should set guidelines and standards for it, especially regarding access to medical information by third parties.

Even George W. Bush thinks they’re cool. He issued an order in 2005 the gist of which was that most Americans ought to have access to EMRs by 2014.

The Big O had pledged during the campaign to invest $50 billion in health IT.

The Department of Health and Human Services believes EMRs can reduce medical errors and unnecessary procedures, hasten diagnosis and treatment, improve the use of screening procedures, improve doctor-patient communication and reduce health care costs.

The Centers for Medicare and Medicaid Services has implemented financial incentives to encourage EMR utilization, and the federal government already maintains EMRs at the Veterans Health Administration and the Department of Defense with combined records on 10 million Americans.