Certification of Nationwide Vioxx Class-Action against Merck Affirmed by New Jersey Appellate Court

Although the matter will probably face a further appellate review by the New Jersey Supreme Court, the decision by Superior Court Judge Carol Higbee to certify a nationwide class of non-governmental health plans that paid for Vioxx prescriptions has been affirmed by the Appellate Division in a lengthy opinion. (See PDF of that decision).

The affirmance of Judge Higbee’s order raises the stakes considerably for Merck & Co. since it will now face claims for almost $10 billion in reimbursement in a combined lawsuit that will be easier to prove than a personal injury case and carries with it the punitive sanction of treble (triple) damages.

Under the circumstances, Merck may now be compelled to reconsider its steadfast refusal to settle any case involving its once blockbuster COX-2 inhibitor Vioxx.

The suit that gives rise to the class-action was originally brought by a fund operated by a New Jersey union that supplies its members with health-care benefits.

The International Union of Operating Engineers Local 68 Welfare Fund was then joined by several other groups that offer health-care benefits, including the AARP and the American Federation of State, County and Municipal Employees.

The class would include all non-governmental health plans that paid for members’ Vioxx prescriptions and allege that Merck misrepresented the safety profile of the expensive painkiller, ignoring clear and early warning signs of its risks in order to continue its sale.

The health plans contend that, had they been properly informed of the facts, they would not have included Vioxx on their lists of approved medicines or agreed to reimburse their members for its high cost. Many experts and consumer advocates maintain that in addition to its higher risk for heart-related problems, Vioxx (and the other COX-2 inhibitors, Celebrex and Bextra) were no more effective than far less expensive painkillers already on the market.

In seeking reimbursement for medical plan payments, the plaintiffs will not have to prove Vioxx caused any specific personal injuries or deaths. All that the plans would have to prove is that Merck continued to push the sale of Vioxx after it was aware of the increased cardiovascular risks the drug posed.

In this regard, there is an enormous amount of evidence in terms of internal Merck documents, clinical tests, expert testimony, and damaging proof of altered data that would be difficult for a jury to disregard with respect to the claims involved in the class-action (as opposed to the personal injury actions where medical causation is also required).

Moreover, the damages involved in the class-action are massive. The potential $30 billion downside risk in one single verdict is a sobering reminder to Merck that a financial disaster is looming on the horizon. The company’s case by case approach to defending the 9,000-plus personal injury suits would not be of any benefit in the class-action. The 2005 Class Action Fairness Act into law, which moves most interstate class-actions into federal courts, does not apply here since the Vioxx third-party-payor suit was filed in 2003.

Also lurking on the horizon are some very large state-government actions that are similar to the class action and seek reimbursement (and penalties) for prescription benefits paid for Vioxx through state-run Medicare programs.

Texas alone is seeking $168 million in damages and additional civil penalties. Texas Attorney General, Greg Abbott, believes the state can prove total damages in excess of $250 million including treble (triple) reimbursement of $56 million (or $168 million) for five years of filled VIOXX prescriptions.

It is estimated that 700,000 VIOXX prescriptions were filled through Medicaid during those five years in Texas alone. Abbott sees these prescriptions as part of a willful misrepresentation on Merck’s part as to the safety of the drug. To him, the entire affair represents nothing more than “a prime example of a company’s drive for profit steamrolling its duty to be safe.”

While the Vioxx personal injury and wrongful death lawsuits are far more dramatic, it may be the rather dry health-plan and Medicare reimbursement actions that bring down Merck. One attorney familiar with the litigation told us that, in a way, “the class- and Medicare-actions, if successful, would be similar to bringing down the notorious Al Capone on nothing more than the rather dull charge of income tax evasion.”

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