Merck to pay $950 million settlement to conclude Vioxx chapter

Merck (NYSE:MRK) has agreed to fork over $950 million to settle the long-running Vioxx cases in which it marketed the drug to treat rheumatoid arthritis, despite the U.S. Food and Drug Administration not approving the drug for this use until April 2002, and failing to warn about cardiovascular issues associated with its use.

The Whitehouse Station, New Jersey company announced it had set aside this money in a 2010 financial statement.

The math breaks down like this, according to the U.S. Justice Department:

1. Pleading guilty to illegal promotional activity — for introducing a misbranded drug into interstate commerce, a misdemeanor: $321.6 million criminal fine.


2. A civil settlement agreement to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety: $628.2 million.

a. $426.3 million will go to the federal government

b. $201.9 million, will be distributed to participating Medicaid states.

“When a pharmaceutical company ignores FDA rules aimed at keeping our medicines safe and effective, that company undermines the ability of healthcare providers to make the best medical decisions on behalf of their patients,” said Tony West, assistant attorney general for the Civil Division of the Department of Justice.  “As this plea agreement and civil settlement make clear, we will not hesitate to pursue those who skirt the proper drug approval process and make misleading statements about the safety and efficacy of their products.”

The settlement and plea ends a long-running investigation of Whitehouse station, New Jersey-based Merck’s promotion of Vioxx, which was withdrawn from the marketplace in September 2004.

Because Merck will pay approximately two-thirds of the reserved charge to resolve civil allegations related to Vioxx, the civil settlement agreements signed with the U.S. and individually with 43 states and the District of Columbia, they have released Merck from civil liability related tied to the governments’ allegations over the sale and marketing of Vioxx in the U.S.

Seven states are continuing to battle the drug company over Vioxx.

In a statement, Bruce N. Kuhlik, executive vice president and general counsel of Merck, said: “We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx.”

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