Just when Merck & Co. officials (and shareholders) thought the company’s Vioxx-related problems could not get worse; they got worse.
A New Jersey state court has ruled that a massive nationwide class-action may proceed under the New Jersey Consumer Fraud Act. The plaintiffs will be health plans that paid pharmacies or reimbursed their members for Vioxx prescriptions.
The allegation is that the health plans would not have covered Vioxx prescriptions had Merck not withheld data concerning the increased risk of heart-related problems associated with the drug which ultimately led to its being abruptly withdrawn from the market in September 2004.
Moreover, Vioxx cost many times as much as older medications which were shown to be equally effective. Even the original claim that Vioxx (and the other Cox-2 inhibitors) was gentler on the stomach than existing painkillers proved to be of minimal validity. Thus, the health plans could just as easily have required members to take the far less expensive and safer alternative medications.
Under New Jersey law the damages could be in the billions of dollars since the attorneys for the union health plan will automatically represent all third-parties nationwide (except for government agencies) who may have been harmed by Merck’s conduct and treble (triple) damages are possible under the New Jersey Consumer Fraud Act.
Merck has taken the position that the lawsuit is not a proper one for class-action certification since each prescription must be considered separately and because consumer protection laws vary widely from state to state. The company plans a vigorous defense.
Presently, the federal government is discussing a possible settlement of a similar claim against Merck on behalf of a number of agencies. If those talks fall through, however, the government has indicated it, too, may sue Merck for the cost of Vioxx reimbursement to its employees.