Merck Unit’s Plea Over Vioxx Investigation Accepted by Judge

A unit of Merck & Co. (MRK), the second- largest U.S. drugmaker, pleaded guilty to a criminal misdemeanor charge as part of a $950 million settlement of a U.S. government probe of its illegal marketing of the painkiller Vioxx.

An official of Merck Sharp & Dohme said today that the company agreed to plead guilty to one count of misbranding Vioxx. U.S. District Judge Patti Saris in Boston accepted the plea as part of the drugmaker’s agreement to pay a $321.6 million criminal fine and $628.3 million to resolve civil claims that it sold Vioxx for unapproved uses and improperly touted its safety.

“I’m certainly going to accept this agreement because I think it’s in the public interest,” Saris said from the bench. “I hope the size of this settlement and the fact that all these cases are being pressed by the federal and state governments -- the 44 states’ attorneys general -- will be a signal that this isn’t acceptable conduct.”

Approved by the Food and Drug Administration in 1999, Vioxx became Merck’s third-largest-selling drug by 2003, generating $2.5 billion in annual sales. The company pulled Vioxx off the market in 2004 after a study found it posed an increased risk of heart attacks and strokes.

‘Full Cooperation’

“The government recognized Merck’s full cooperation with its investigation and by putting this long-standing investigation to rest, we can more fully focus on discovering, developing and providing innovative medicines and vaccines that save and improve lives around the world,” Ron Rogers, a Merck spokesman, said today in an e-mailed statement about the plea.

Merck didn’t admit to any wrongdoing in the civil portion of the settlement, Rogers said.

“The United States will not tolerate unlawful conduct by pharmaceutical companies,” Stuart F. Delery, a U.S. Justice Department lawyer, said in an e-mailed statement. “Those who put profits before patient safety by promoting their products for unapproved uses will be prosecuted and held accountable.”

The company, based in Whitehouse Station, New Jersey, already paid $4.85 billion to settle thousands of patient lawsuits claiming injuries, and another $1.9 billion for legal costs. It set aside $950 million in October 2010 for the criminal settlement that resulted in today’s plea.

Arthritis Use

As part of the plea, the Merck unit acknowledged the drugmaker sold Vioxx for rheumatoid arthritis when it wasn’t approved by the FDA for that use during an almost three-year period starting in May 1999. Regulators gave the drugmaker permission to sell Vioxx for that ailment in April 2002.

Before that approval, the company’s salespeople touted Vioxx to physicians for rheumatoid arthritis, prompting the FDA to send a warning letter in September 2001.

In it, regulators accused Merck officials of misleading doctors by suggesting that “Vioxx is effective for the treatment of rheumatoid arthritis when this has not been demonstrated,” according to the criminal charge.

Merck previously disclosed that federal prosecutors in Boston identified the company in March 2009 as a target of a grand jury investigation. Prosecutors began examining the company’s handling of internal research into Vioxx’s heart- attack and stroke risks and the company’s marketing tactics in selling the drug starting in 2004, Merck said today.

Trial Victories

The company won 11 of 16 Vioxx lawsuits at trial before agreeing in 2007 to create the $4.85 billion settlement fund. The accord called for the company to pay about $4 billion to resolve heart-attack claims and about $850 million to settle stroke suits, according to court filings.

Former Vioxx users who sued in state and federal courts claimed Merck didn’t adequately disclose safety data to the FDA, failed to properly warn doctors and patients of the drug’s risks, and misrepresented the potential harm in marketing materials.

They accused Merck officials of withholding data in 2000 about a clinical trial that found Vioxx caused five times more heart attacks than another painkiller and publishing misleading and inaccurate information about the drug’s health risks.

The civil claims, brought by both state and federal governments, focused on the sale of Vioxx for unapproved uses and misleading statements Merck officials allegedly made about the painkiller’s safety, according to court filings outlining the settlement.

Regulators said Merck employees made “false representations concerning the safety of Vioxx to state Medicaid agencies,” which state officials relied upon in deciding to cover Vioxx prescriptions, according to the court filings. Medicaid is the state-federal health-care funding program.

The settlement also resolves claims filed by 45 state attorneys general over the company’s Vioxx marketing and sales practices. The states will share about $202 million. The federal government will get $426.4 million.

The criminal case is U.S. v. Merck, Sharp & Dohme Corp., 11-CR-10384-PBS, U.S. District Court, District of Massachusetts (Boston.)

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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