Thursday, November 24, 2011
Raymond Gilmartin
Pharmaceutical manufacturer Merck continues to pay a steep price for its former money-making drug Vioxx, a painkiller that once earned the company more than $2 billion a year.
The latest settlement for Merck originated with the U.S. Department of Justice, which got the company to pay $950 million in fines and penalties to settle multiple civil cases. The drug giant also pled guilty to a criminal charge over the marketing and sales of Vioxx.
Merck pulled Vioxx off the market in 2004 after evidence showed the drug increased the risk of heart problems for patients.
Of the $950 million, $321 million is for admitting guilt to one misdemeanor count of illegally introducing a drug into interstate commerce. The charge stemmed from Merck’s promotion of Vioxx to treat rheumatoid arthritis before the Food and Drug Administration approved it for this purpose in 2002.
Merck also will pay $426 million to the federal government and $202 million to state Medicaid agencies to settle civil claims that its illegal marketing caused doctors to prescribe the pills and bill the government for Vioxx.
No corporate executive was held liable for Merck’s conduct. “It’s just a cost of doing business until a pharmaceutical executive does a perp walk,” Erik Gordon, a pharmaceutical analyst and clinical assistant professor at the Ross School of Business at the University of Michigan, told The New York Times.
The CEO of Merck at the time of the transgressions, Raymond Gilmartin, is currently an adjunct professor at Harvard Business School.
The settlement follows an even larger one in 2007, when Merck agreed to pay $4.85 billion to settle 27,000 lawsuits by individuals who claimed they or their relatives had suffered injury or death after taking the drug.
Merck’s Vioxx-related legal problems are not over yet. It still faces lawsuits from investors who claim the corporation’s actions cost them billions of dollars in stock value after the drug was removed from the market.
-Noel Brinkerhoff
Merck to Pay $950 Million Over Vioxx (by Duff Wilson, New York Times)
U.S. Pharmaceutical Company Merck Sharp & Dohme to Pay Nearly One Billion Dollars Over Promotion of Vioxx® (U.S. Department of Justice)
Merck to Plead Guilty, Pay $950M in U.S. Vioxx Probe (by Jef Feeley and David Voreacos, Bloomberg)
Some Government Contractors are Too Big to be Banned (by Noel Brinkerhoff and David Wallechinsky, AllGov)
Health Care Giants Dominate List of Justice Department Fraud Settlements (by Noel Brinkerhoff, AllGov)
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