Merck Fights Vioxx Class Action Suit Brought by Insurers

Health insurers and union health plans nationwide should not be allowed to sue Merck & Co. jointly to recover money they paid for Vioxx prescriptions, a lawyer for the drug maker argued this week in opposing a lawsuit potentially worth more than $15 billion (euro11.28 billion).

New Jersey State Superior Court Judge Carol Higbee, who already is overseeing thousands of product liability suits over the withdrawn painkiller, granted class-action status to the consumer fraud lawsuit in July 2005. A state appellate court ruled in March 2006 that the nationwide suit could go forward, triggering the latest appeal by Merck.

A five-judge state Supreme Court panel heard arguments for about an hour Monday, then said it would take the case under advisement. A ruling is not expected for at least a few months.

Merck lawyer John Beisner told the judges that health insurance plans each used different information and made individual decisions about whether their plan would cover Vioxx and which formulary tier and co-payment to assign to the drug.

Beisner also said consumer fraud laws in the home states of each health insurer should apply, rather than imposing New Jersey law on other states.

“It would be a radical departure from how the Consumer Fraud Act has been interpreted previously” to let the class-action suit continue, Beisner said, noting the plaintiffs are big insurance companies and other health plans, not individual consumers.

Whitehouse Station, New Jersey-based Merck pulled Vioxx, once its No. 2 drug with about $2.5 billion in annual sales, from the market in September 2004 after its own research showed Vioxx doubled the risk of heart attacks and strokes.

The International Union of Operating Engineers Local 68 Welfare Fund, a West Caldwell, New Jersey-based union of skilled building maintenance workers, sued in October 2003. Its lawyer, Christopher Seeger, who last week won a $47.5 million (euro35.71 million) judgment against Merck in a Vioxx product liability case, said the union’s Vioxx expenditures likely were less than $200,000.

Seeger told the judges that Merck concealed information about the risks of Vioxx from the health plans, which could instead have chosen from about 30 alternatives — some much cheaper — or restricted access to Vioxx. He said New Jersey’s consumer fraud law should govern a nationwide class-action lawsuit because every decision about what information Merck disclosed and how it advertised Vioxx directly to the public was made at its New Jersey headquarters.

“It’s perfect for a class action,” he told the judges. “If we really want to deter bad conduct, as is alleged in this case, the way to do it is to protect every purchaser of the product.”

Seeger told reporters afterward that 80 percent to 90 percent of Vioxx prescriptions were paid for by insurers, and that if the class action goes forward and the plaintiffs win, Merck would have to pay three times as much.

“If you win, it’s automatically trebled” under the state consumer fraud law, he said.

Vioxx generated sales exceeding $11 billion while on sale from May 1999 through September 2004, according to Merck regulatory filings and other information.

Beisner said afterward that any eventual damages should be based on the difference between the cost of Vioxx purchases and what health plans would have paid for alternative drugs _ not the full amount paid for Vioxx. Purchases by government health plans also would be excluded from any damages.

Merck faces roughly 28,000 lawsuits plus 265 potential class-action suits that have not been approved by a court.

The only other class action certified, covering residents of the province of Quebec in Canada, was approved in November. Merck is opposing that as well, and the two parties are in the midst of pretrial discovery and motions. That case is not likely to go to trial until mid-2008, Michael Peerless, one of the lead plaintiff attorneys, said Monday.

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