Bloomberg News

Merck Agrees to Settle New York’s, Florida’s Vioxx Claims

November 15, 2011

(Updates with company response in sixth paragraph.)

Nov. 14 (Bloomberg) -- Merck & Co, which paid $4.85 billion to resolve patient lawsuits contending its Vioxx painkiller caused heart attacks, settled claims by New York and Florida alleging the company misled state officials about the drug’s safety, a court filing showed.

Merck agreed to pay an undisclosed sum to the states of Florida, New York and South Carolina to resolve suits alleging the drugmaker failed to adequately warn patients of Vioxx’s risks before halting sales in 2004, Russ Herman, a lawyer for former users of the drug, said in the Nov. 10 filing.

“Payments from Merck to these governmental entities may be imminent,” Herman said in a request to U.S. District Judge Eldon Fallon in New Orleans to set aside some of the settlement funds for legal fees.

Officials of Merck, based in Whitehouse Station, New Jersey, pulled Vioxx off the market in 2004 after researchers linked it to an increased risk of heart attacks and strokes. Former users also criticized the company for downplaying the drug’s health risks and manipulating studies to help promote it.

Merck officials countered that Vioxx wasn’t the cause of users’ heart attacks and the company had properly warned doctors and consumers about its risks. Still, the drugmaker paid $4.85 billion to resolve more than 27,000 suits over the drug.

Ron Rogers, a Merck spokesman, declined in an e-mail today to comment on the settlements. Danny Kanner, a spokesman for New York Attorney General Eric Schneiderman, also declined in an e- mail to comment on his state’s Vioxx accord.

Consolidated Cases

Jennifer Meale, a spokeswoman for Florida Attorney General Pam Bondi, and Mark Plowden, a spokesman for South Carolina Attorney General Alan Wilson, weren’t immediately available for comment on their states’ settlements.

Fallon is overseeing the state’s cases as part of a consolidation of Vioxx litigation filed in federal courts around the U.S. The judge has been pushing to wrap up the so-called multidistrict litigation, which began in 2005.

New York Governor Andrew Cuomo, who was the state’s attorney general in 2007, sued Merck seeking tens of millions of dollars in restitution for money spent on Vioxx prescriptions through state health-care programs.

The following year, Bill McCollum, then-Florida’s attorney general, followed with a similar suit seeking $80 million in reimbursements. McCollum lost a bid for the Republican nomination for governor in the 2010 race.

State officials contended Merck’s misleading statements about Vioxx’s safety and effectiveness duped doctors into writing prescriptions for the drug and state Medicare and Medicaid programs into paying for them.

Health-Care Programs

In the only state case seeking Vioxx reimbursements to go to trial, Fallon ruled in June 2010 that Merck didn’t have to refund money that the state of Louisiana paid for the medication through state health-care programs. The judge heard the case without a jury and denied the state’s bid to recover more than $20 million.

New York’s, Florida’s and South Carolina’s settlements are part of an effort by Fallon to resolve state claims over the drug, lawyers said earlier this year at court hearings in New Orleans.

The judge halted litigation by attorneys general from around the U.S. in November 2010 to launch a “global mediation,” Fallon said at the time.

In June, Patrick Juneau, a special master appointed by Fallon to handle issues in the consolidated Vioxx cases, said talks between the states and the company had bogged down.

“We really have been in quicksand mode,” Juneau told the judge. Fallon asked Juneau to hold a two-day mediation session in July in hopes of breaking the deadlock, according to court filings.

Retirement Funds

The company announced this month that it agreed to pay $49.5 million to settle suits filed on behalf of former and current employees of the drugmaker over losses to their retirement funds tied to the company’s handling of Vioxx.

Merck said in filings with the U.S. Securities and Exchange Commission that it paid the money to resolve allegations that executives violated legal duties by making false and misleading statements about the painkiller.

Merck set aside $950 million to resolve a federal criminal probe into its handling of Vioxx, company officials said in October 2010. The company noted that prosecutors in Boston had identified the company in March 2009 as a target of a grand jury investigation, and that witnesses had been called in the probe.

The case is Vioxx Products Liability Litigation, 2:05-md- 01657, U.S. District Court, Eastern District of Louisiana (New Orleans).

--With assistance from David Voreacos in Newark, New Jersey. Editors: Charles Carter, Mary Romano

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Allen Johnson Jr. in New Orleans at allenmct@gmail.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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