New York sues Merck for defraud case

Merck & Co., Inc., one of the top seven pharmaceutical companies in the world, has been accused, by the city and state of New York, of defrauding Government insurance programs such as Medicaid. It has been allegedly accused of repressing information about risk factors associated with one of its pain medications-Vioxx.

Vioxx was approved by the U.S. FDA in 1999 as a treatment for Arthritis. Vioxx is generically known as rofecoxib. Various studies conducted thereafter found an increased risk of heart attack associated with the use of Vioxx, as compared to Naproxen.

Public announcement of withdrawal from markets was made on September 30, 2004 due to this reason. Although FDA did recommend that Vioxx be put back onto the market, though with a prominent warning about cardiovascular risks on its label.

According to the lawsuit filed in Manhattan’s state Supreme Court and announced by New York state Attorney General Andrew M. Cuomo and New York City Mayor Michael Bloomberg, the state's Medicaid and Elderly Pharmaceutical Insurance Coverage programs have lost around $100 million to Vioxx prescriptions, since the drug began to be sold in 1999.

The complaint has been filed under a new state false-claims act that permits triple damages and civil penalties, Cuomo said. He also stated, "Merck's irresponsible and duplicitous conduct endangered the health of New Yorkers and wasted our tax dollars.”

Medicaid is the U.S. health program for individuals/families belonging to the low income group. Jointly funded by the states &federal government, the program is chiefly managed by the states.

The lawsuit states that, had the associated risk factors been known to the public, patients with pre-existing heart diseases would not have opted for the medicine.

According to the plaintiff, before the drug was withdrawn from the markets in 1999, Merck allegedly “undertook a concerted undertook a concerted and tenacious campaign of false and fraudulent statements to minimize the import and seriousness” of the risks associated with the drug.

Due to this “disinformation campaign”, doctors and health professionals continued giving out prescriptions for the drug. According to Cuomo New York City paid a substantial share of the costs of people who receive Medicaid.

"We are confident that our behavior has been responsible," said Merck spokesman Kent Jarrell. He also added that the company researched and monitored the drug while it was on the market and voluntarily withdrew it when problems were suspected.

Merck has been ordered to pay New York City & state three times their damages, which are to be determined at trial. Merck is also required to pay the state a civil penalty of $12,000 for each false claim and $15,000 to the city for each violation. The number of false claims will be decided at trial.

Mayor Michael Bloomberg said in his statement,” "This is another step in the city's continuing litigation effort to recoup the millions of dollars in overcharges by pharmaceutical companies to the Medicaid program for prescription drugs, and to protect the safety and health of New Yorkers.”

In similar misrepresentation cases concerning the risks associated with Vioxx, Merck has been sued by Alaska, Louisiana, Mississippi, Montana, Texas and Utah.

Merck is currently facing 27,000 lawsuits from people who claim that Vioxx caused heart attacks and strokes. More than 1170 cases have been dismissed, though. Of the cases that have reached a verdict, Merck has won nine and lost five.

Merck was found liable in the death of a man who too Vioxx in 2005. The plaintiff was awarded $20 million in damages.