<B><I>BREAKING NEWS:</b></i> <b>Merck Settles Vioxx Case for $950 Million</b>

Merck & Co., Inc. became the latest healthcare company to strike a major settlement with the Justice Department on Nov. 22, agreeing to pay $950 million to resolve criminal and civil charges stemming from its marketing of the painkiller Vioxx.
 
As part of the settlement, Merck, Sharp & Dohme, the company's U.S. unit, will plead guilty in Boston federal district court to a single misdemeanor count of violating the Food, Drug, and Cosmetic Act and will pay a $321.6 million criminal fine. Merck will also pay nearly $628.3 million to settle civil allegations that it marketed Vioxx for off-label uses and made false statements about the drug's safety. (The criminal information is here, and the settlement agreement is here.)
 
Theodore Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison and Jack Cinquegrana of Choate Hall & Stewart represented Merck. Wells did not respond to a request for comment, and Cinquegrana referred a request for comment to his client.

“We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx,” Merck general counsel Bruce Kuhlik said in a statement. The settlement also resolves claims lodged by 43 states and
the District of Columbia. The states of Alaska, Kentucky, Montana, Mississippi, Oklahoma, Pennsylvania, and Utah are continuing to press related claims, according to Merck.

Merck pulled Vioxx from the market in 2004, and in 2007 it agreed to settle civil suits over the drug's safety for $4.85 billion. In anticipation of the settlement, the company recorded a $950 million charge in October 2010.

“Today's resolution appropriately reflects the severity of Merck's conduct; it is yet another reminder that the United States will not tolerate misconduct by drug companies that bends the rules and puts patient safety at risk,” Massachusetts U.S. Attorney Carmen Ortiz said in a statement.
 
The announcement, which followed a seven-year investigation, marks the latest in a series of massive Justice Department settlements with pharmaceutical companies. In 2009, the Justice Department cut a $1.415 billion deal with Eli Lilly over its marketing of Zyprexa. The same year, Pfizer Inc. agreed to pay $2.3 billion to settle investigations into its marketing of the painkiller Bextra. Both companies agreed to plead guilty to misdemeanor charges as part of the settlements. Earlier this month, GlaxoSmithKline disclosed that it had reached a $3 billion agreement in principle to settle federal government investigations into its drug sales and marketing and its alleged over-billing of Medicaid.

“As this plea agreement and civil settlement make clear, we will not hesitate to pursue those who skirt the proper drug approval process and make misleading statements about the safety and efficacy of their products,” Tony West, assistant attorney general for Justice Department civil division, said in a statement. State and federal officials have also reached string of large settlements recently in cases alleging that drug companies artificially inflated the average wholesale prices they reported for their drugs, allowing pharmacies to receive outsized reimbursements from government insurers.
 
The civil settlement with Merck contains no admission of wrongdoing or liability. As part of Tuesday's deal, Merck also entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which the Justice Department said would strengthen the company's review and oversight procedures.

Nate Raymond is an Senior Writer for the National Law Journal, an ALM affiliate of Medical Malpractice Law & Strategy.

Merck & Co., Inc. became the latest healthcare company to strike a major settlement with the Justice Department on Nov. 22, agreeing to pay $950 million to resolve criminal and civil charges stemming from its marketing of the painkiller Vioxx.
 
As part of the settlement, Merck, Sharp & Dohme, the company's U.S. unit, will plead guilty in Boston federal district court to a single misdemeanor count of violating the Food, Drug, and Cosmetic Act and will pay a $321.6 million criminal fine. Merck will also pay nearly $628.3 million to settle civil allegations that it marketed Vioxx for off-label uses and made false statements about the drug's safety. (The criminal information is here, and the settlement agreement is here.)
 
Theodore Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison and Jack Cinquegrana of Choate Hall & Stewart represented Merck. Wells did not respond to a request for comment, and Cinquegrana referred a request for comment to his client.

“We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx,” Merck general counsel Bruce Kuhlik said in a statement. The settlement also resolves claims lodged by 43 states and
the District of Columbia. The states of Alaska, Kentucky, Montana, Mississippi, Oklahoma, Pennsylvania, and Utah are continuing to press related claims, according to Merck.

Merck pulled Vioxx from the market in 2004, and in 2007 it agreed to settle civil suits over the drug's safety for $4.85 billion. In anticipation of the settlement, the company recorded a $950 million charge in October 2010.

“Today's resolution appropriately reflects the severity of Merck's conduct; it is yet another reminder that the United States will not tolerate misconduct by drug companies that bends the rules and puts patient safety at risk,” Massachusetts U.S. Attorney Carmen Ortiz said in a statement.
 
The announcement, which followed a seven-year investigation, marks the latest in a series of massive Justice Department settlements with pharmaceutical companies. In 2009, the Justice Department cut a $1.415 billion deal with Eli Lilly over its marketing of Zyprexa. The same year, Pfizer Inc. agreed to pay $2.3 billion to settle investigations into its marketing of the painkiller Bextra. Both companies agreed to plead guilty to misdemeanor charges as part of the settlements. Earlier this month, GlaxoSmithKline disclosed that it had reached a $3 billion agreement in principle to settle federal government investigations into its drug sales and marketing and its alleged over-billing of Medicaid.

“As this plea agreement and civil settlement make clear, we will not hesitate to pursue those who skirt the proper drug approval process and make misleading statements about the safety and efficacy of their products,” Tony West, assistant attorney general for Justice Department civil division, said in a statement. State and federal officials have also reached string of large settlements recently in cases alleging that drug companies artificially inflated the average wholesale prices they reported for their drugs, allowing pharmacies to receive outsized reimbursements from government insurers.
 
The civil settlement with Merck contains no admission of wrongdoing or liability. As part of Tuesday's deal, Merck also entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which the Justice Department said would strengthen the company's review and oversight procedures.

Nate Raymond is an Senior Writer for the National Law Journal, an ALM affiliate of Medical Malpractice Law & Strategy.