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Justice Department Announces Nearly $1 Billion Civil and Criminal Resolution with Merck Sharp & Dohme Over Promotion of Vioxx®
November 22, 2011

Merck to Pay $950 million for Illegal Marketing

BOSTON - The Justice Department announced today that American pharmaceutical company Merck, Sharp, & Dohme has agreed to pay $950 million to resolve criminal charges and civil claims related to its promotion and marketing of the painkiller Vioxx® (rofecoxib).

Under the terms of the resolution, Merck will plead guilty to a one-count information charging a single violation of the Food Drug and Cosmetic Act, for introducing a misbranded drug, Vioxx®, into interstate commerce, and will pay a $321 million criminal fine. At the same time, Merck is entering into a civil settlement agreement under which it will pay $628 million to resolve additional allegations regarding off-label marketing of Vioxx® and false statements about the drug’s cardiovascular safety. The settlement and plea conclude a long-running investigation of Merck’s promotion of Vioxx®, which was withdrawn from the marketplace in September 2004.

“When a pharmaceutical company ignores FDA rules aimed at keeping our medicines safe and effective, that company undermines the ability of health care 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.”

“Today’s resolution appropriately reflects the severity of Merck’s conduct and is yet another reminder that the government will not tolerate misconduct by drug companies that bend the rules and put patient safety at risk,” said U.S. Attorney Carmen M. Ortiz. “Any marketing activity that ignores the importance of FDA approval, or that makes unsupported safety claims about a drug is unacceptable, and will be pursued vigorously in both the criminal and civil arena.”

“The FDA Office of Criminal Investigations will aggressively pursue pharmaceutical companies that choose to put profits before the public’s health,” said Mark Dragonetti, Special Agent In Charge of the FDA OCI New York Field Office. “We will continue to work with the U.S. Attorney's Office and our law enforcement counterparts to target companies that disregard the safeguards of the drug approval process and promote drugs for uses before they have been proven to be safe and effective.”

Merck’s criminal plea relates to its misbranding of Vioxx® by promoting the drug for use against rheumatoid arthritis, before that use was approved by the FDA. Under the provisions of the Food, Drug and Cosmetic Act, a company is required to specify the intended uses of a product in its new drug application to the FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses.

While Merck sought an additional indication for Vioxx® for use against rheumatoid arthritis, it did not secure FDA approval for this additional indication until April 2002. In the meanwhile, for nearly three years, Merck promoted Vioxx® for rheumatoid arthritis, conduct for which it was admonished in an FDA Warning Letter issued in September 2001. Under the terms of its plea agreement with the United States, Merck will plead guilty to a misdemeanor for its illegal promotional activity, and will pay a $321,636,000 criminal fine.

The parallel civil settlement covers a broader range of illegal conduct by Merck. The settlement resolves allegations that Merck representatives made inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug, resulting in payments by the federal government. It also resolves allegations that Merck made false statements to state Medicaid agencies about the cardiovascular safety of Vioxx®, and that those agencies relied on Merck’s false claims in making payment decisions about the drug. Like the criminal plea, the civil settlement also recovers damages for false claims caused by Merck’s impermissible promotion of Vioxx® for rheumatoid arthritis. Merck has agreed to pay $628,364,000 to the United States, as well as state Medicaid agencies, to settle these claims. Of the total civil settlement, $426,389,000 will be recovered by the United States, and the remaining share of $201,975,000 will be distributed to the participating Medicaid states.

As part of the settlement, Merck has also agreed to enter into an expansive corporate
integrity agreement with the Office of Inspector General of the Department of Health and
Human Services, which will strengthen the system of reviews and oversight procedures imposed on the company. Although Vioxx is no longer in the marketplace, and hence poses no risk of misuse to the public, this ongoing monitoring of Merck’s conduct is aimed at deterring and promptly detecting similar conduct in the future.

“We will continue to work with our law enforcement partners to aggressively investigate and prosecute pharmaceutical companies – no matter how large – when they improperly market their products,” said Daniel R. Levinson, Inspector General of the United States Department of Health and Human Services. “Merck’s comprehensive corporate integrity agreement requires top company officials to complete annual compliance certifications, and obligates Merck to post information about physician payments on its website.”

Today’s criminal plea and nearly billion dollar settlement demonstrates why the Boston Division of the FBI and its law enforcement partners are national leaders in the effort to prevent health care fraud,” said Richard DesLauriers, Special Agent in Charge of the FBI in Boston. “The FBI will continue to use every capability and tool we have at our disposal to investigate pharmaceutical and biotechnology firms and their employees, health care professionals and others who seek to line their pockets at the expense of the health and well-being of their patients.”

Jeffrey G. Hughes, Special Agent in Charge of the U.S. Department of Veteran’s Affairs- OIG, Northeast Field Office said, “Today’s announcement demonstrates the Department of Veterans Affairs Office of Inspector General’s commitment to focus investigative resources on companies that choose to pursue profit over the public’s health. VA OIG applauds the hard work of the Department of Justice and our law enforcement counterparts in bringing about this successful conclusion by aggressively pursuing and prosecuting those who committed fraud against our nation's federal healthcare programs, including VA’s.”

“Federal employees deserve health care providers and suppliers, including drug manufacturers, that meet the highest standards of ethical and professional behavior,” said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. “Today’s settlement reminds the pharmaceutical industry that they must observe those standards and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that places health care consumers at risk.”

The case was handled by Assistant U.S. Attorneys Susan G. Winkler, Jeremy M. Sternberg and Zachary A. Cunha of the U.S. Attorneys Office in the District of Massachusetts, together with Jill P. Furman, Assistant Director, and Trial Attorneys Lauren Bell and James Nelson of the Consumer Protection Branch and Jamie Ann Yavelberg, Assistant Director of the Fraud Section of the Commercial Litigation Branch of the Civil Division of the Department of Justice in Washington.

The investigation was conducted by the Office of Inspector General for the Department of Health and Human Services, the FBI, the Office of Criminal Investigations for the Food and Drug Administration, the Veterans’ Administration’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the National Association of Medicaid Fraud Control Units and the offices of various state Attorneys General.

Exhibit 1

Exhibit 2

Exhibit 3

Exhibit 4

 

 

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