New York State, NYC Sue Merck Over Vioxx

The state and city sued Merck & Co. Inc. (MRK) on Monday, accusing the drugmaker of defrauding Medicaid and other government insurance programs by hiding the risks of heart problems associated with its pain medication Vioxx.

The lawsuit, filed in Manhattan's state Supreme Court, said the state's Medicaid and Elderly Pharmaceutical Insurance Coverage programs have paid more than $100 million for Vioxx prescriptions since the drug went on sale in 1999.

For its residents receiving Medicaid assistance, New York City paid a substantial share of those costs.

The lawsuit says tens of millions of dollars were paid for prescriptions for patients with preexisting heart conditions. Those funds would not have been spent had the risks associated with Vioxx been known, court papers say.

The filing was announced by New York state Attorney General Andrew M. Cuomo and New York City Mayor Michael Bloomberg.

Merck, based in Whitehouse Station, N.J., removed Vioxx from the market in Sept. 30, 2004 because it doubled risk of heart attack and stroke.

Before stopping Vioxx sales, court papers say, Merck "undertook a concerted and tenacious campaign of false and fraudulent statements to minimize the import and seriousness" of the possible association between Vioxx and heart problems.

This "disinformation campaign" continued until a month before Merck ceased sales of the drug, causing New York doctors to continue writing prescriptions for Vioxx that they otherwise would not have written, according to the lawsuit.

Merck spokesman Kent Jarrell said the company researched and monitored the drug while it was on the market and voluntarily withdrew it when problems were suspected.

"We are confident that our behavior has been responsible," Jarrell said, adding that similar lawsuits seeking reimbursement for insurance costs have been filed in "a handful" of other states.

The lawsuit asks that Merck be ordered to pay New York City and the state three times their damages, to be determined at trial. It also asks that Merck be required to pay the state a civil penalty of $12,000 for each false claim, and $15,000 to the city for each such violation. The number of false claims would be determined at trial.

Merck, based in Whitehouse Station, N.J., faces almost 27,000 lawsuits from people claiming Vioxx caused heart attacks and strokes, but more than 1,170 cases have been dismissed. Of cases that have reached verdicts, Merck has won nine and lost five; a new trial was ordered in another case.

Merck shares fell 20 cents to $49.34 in afternoon trading Monday.