New York City and New York State Sue Merck For Vioxx Fraud

In a stunning blow to Merck & Co., Inc. (NYSE:MRK) Mayor Bloomberg of New York City and Attorney General Andrew Cuomo jointly sued the drug maker in the New York Supreme Court today over Merck’s withdrawn drug, Vioxx. Read the entire press release at the end of this entry. The suit is one of several brought by individual states to recover money the states paid on behalf of Medicaid patients. It is very similar to what was done in the historic $200 billion dollar settlement with the tobacco industry. Merck continues to deny it has done anything wrong in connection with it’s worldwide withdrawal of Vioxx on September 30, 2004. Medical experts contend that somewhere between 80,000 and 130,000 heart attacks and deaths were caused by Vioxx. There are about 15,000 suits pending in Atlantic CIty, NJ and another 7,000 or so in the Federal Court in New Orleans. Merck has been found to have violated the New Jersey Consumer Fraud Act in several trials and has been hit with multi-million dollar verdicts in some of the cases it has lost.

Two of the attorneys for many of the plaintiffs in Atlantic City lawsuits, Michael A. Ferrara, Jr. of Cherry Hill, NJ, and Benedict P. Morelli of New York City issued the following statement in connection with Mayor Bloomberg and Attorney General Cuomo’s lawsuit:

“New York Attorney General Andrew Cuomo and New York City Mayor Michael Bloomberg should be applauded for taking such bold and decisive actions against Merck and for protecting the citizens of New York. This reaffirms what the victims and their attorneys have been saying all along – that Vioxx is a dangerous drug, that Merck knew about it and marketed it anyway and that Merck defrauded the FDA, the nation’s doctors and the public. We are glad to see that the State of New York and the City of New York are going to hold them accountable for these actions. It gives a new voice to the people harmed by Merck.
Keep in mind that in four of the five verdicts against Merck in New Jersey, jurors have found Merck guilty of consumer fraud. The state of Alaska has already filed its own lawsuit against Merck, similar to New York’s, which is pending in federal court. The attorneys general of all 50 states should be suing Merck, for the hundreds of millions of dollars in taxpayer funds wrongfully spent via Medicaid on Vioxx. Citizens of every state should be protected by the fraud committed by Merck.”

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CUOMO, BLOOMBERG SUE MAKER OF VIOXX FOR HIDING DRUG’S RISKS

FirstTime State and City Bring Joint Action to Fight Medicaid Fraud

Suit claims Merck & Co. endangered patients, cost Medicaid millions

NEW YORK, NY (September 17, 2007) – Attorney General Andrew M. Cuomo and New York City Mayor Michael Bloomberg today filed a joint lawsuit against the maker of Vioxx for misrepresenting the dangers the drug posed to its users. The lawsuit seeks damages and civil penalties in addition to restitution for tens of millions of taxpayer dollars wrongfully spent on Vioxx prescriptions, and marks the first time the State and City have brought a joint action to fight Medicaid fraud.

The civil suit, filed today in New York State Supreme Court, New York County, accuses Merck & Co., Inc. of deliberately suppressing and concealing information about the seriousness of the cardiovascular risks associated with Vioxx. The suit claims many of those prescriptions would never have been written had doctors been properly informed.

“Today’s suit demonstrates an important new State and City partnership to fight Medicaid fraud, and I am happy to work with Mayor Bloomberg to help hold Merck accountable. Merck’s irresponsible and duplicitous conduct endangered the health of New Yorkers and wasted our tax dollars. As alleged in the complaint, even as evidence was piling up showing just how dangerous this drug was, Merck put profits above all else and put thousands at risk by continuing to push Vioxx inappropriately on doctors and patients,” Cuomo said. “We will hold accountable those who put our families at risk, and we will fight back when New Yorkers are harmed and fleeced.”

“New Yorkers were put at risk, and taxpayers were stuck with the bill and that’s unacceptable,” said Mayor Bloomberg. “This is another step in the City’s continuing litigation effort to recoup the millions of dollars in overcharges by pharmaceutical companies to the Medicaid program for prescription drugs, and to protect the safety and health of New Yorkers. Drug companies are on notice that engaging in this type of behavior just isn’t worth it.”

“Merck was entrusted with the health and well-being of New Yorkers. To betray that trust by hiding the risks of Vioxx from the public is beyond unacceptable. We will hold them accountable for betraying this trust and endangering lives,” said Michael A. Cardozo, Corporation Counsel of the City of New York, whose office will be prosecuting the case together with the Office of the Attorney General.

Between 1999, when Vioxx was introduced, and 2004 when it was pulled from the market, Medicaid and EPIC spent over $100 million on Vioxx prescriptions in New York State. For its residents receiving Medicaid assistance, New York City paid a substantial share of those costs.

Approved to treat the symptoms of osteoarthritis, dysmenorrhea, rheumatoid arthritis, migraine headaches and juvenile rheumatoid arthritis, Vioxx quickly began to demonstrate adverse effects including increased incidence of heart attacks and strokes among its users. In fact, Merck’s own research found that patients who took Vioxx had five times the risk of having a heart attack compared to those taking naproxen, a similar drug. Further, court documents show Merck researchers discussed tailoring clinical trials of Vioxx to minimize negative outcomes. Internal emails proposed allowing test subjects to take aspirin during trials to prevent heart attacks, and suggested “excluding high-risk CV (i.e., cardiovascular) patients” from an initial study. A later independent study corroborated these initial findings, estimating that Vioxx had contributed to 27,785 heart attacks and sudden cardiac deaths among Americans who had taken the drug between 1999 and 2003.

Nevertheless, Merck significantly ramped up its marketing operation in anticipation of Vioxx entering the market. In 1998, Merck added 700 representatives to its national sales force, engaging 3,000 in marketing the drug directly to doctors. According to the suit, these marketers were given explicit instructions on downplaying or distorting data when questioned about Vioxx’s cardiovascular risks.

At the same time, Merck waged an aggressive direct-to-consumer advertising campaign that likewise misrepresented the safety of Vioxx.

As a result, Merck is accused of having caused New York doctors to prescribe Vioxx to patients whose cardiovascular conditions made them especially susceptible to the drug’s negative effects. Had the doctors been adequately informed, the suit alleges, they would not have prescribed Vioxx and thus Medicaid and EPIC would not have paid for its dispensation.

This is the first case to be brought under New York State’s recently-enacted False Claims Act, of which Attorney General Cuomo has long been a proponent. The Act and a similar law in the New York City Administrative Code allow the State and the City to seek treble damages for the amount Merck caused them to expend in the Medicaid and EPIC programs to pay for drugs prescribed under false pretenses, as well as civil penalties. The damages and penalties, which are expected to reach into the tens of millions, will be determined at trial.

For more information on this subject matter, please refer to the section on Defective and Dangerous Products.