Merck & Co. (MRK) has received requests from government investigators for information about the marketing of heart and anti-infective drugs, continuing the heightened government scrutiny of the pharmaceutical industry.
In a separate legal development, Merck also said it has agreed to pay $49.5 million to settle certain class-action lawsuits related to its former painkiller Vioxx, which Merck withdrew from the market in 2004 after it was linked to increased risk for heart attacks and strokes.
The Justice Department has investigated Merck and other major drug makers for possible acts of health-care fraud in recent years, including the alleged promotion of certain drugs for unauthorized uses. This has led to some large settlements, most recently with GlaxoSmithKline PLC's (GSK)* agreement to pay $3 billion to settle multiple investigations related to its drugs.
The U.S. Justice Department issued a subpoena to Merck requesting information about marketing and selling activities for the heart drug Integrilin and antibiotic Avelox, from January 2003 to June 2010, Merck said in a filing with the Securities and Exchange Commission Tuesday. Merck said the subpoena was part of a civil federal health-care investigation, and that the company is cooperating.
Merck, of Whitehouse Station, N.J., inherited Integrilin and Avelox with its 2009 purchase of Schering-Plough for $49.6 billion.
In addition, Merck said the Justice Department has issued a civil investigative demand to Inspire Pharmaceuticals, a company Merck acquired in May for $420 million. The demand is part of an investigation of allegations that Inspire caused the submission of false claims to federal health-care programs for the drug AzaSite by marketing it for uses not approved by the U.S. Food and Drug Administration.
Drug companies are barred from actively promoting "off label" uses for drugs, though doctors have the discretion to prescribe drugs off-label.
AzaSite is an antibiotic approved to treat the eye infection bacterial conjunctivitis. Merck said it's cooperating with the AzaSite-related investigation.
Some of the newer investigations of Merck appear to be focused mainly--but not entirely--on conduct by companies before they were acquired by Merck. Earlier this year, the Justice Department issued a subpoena to Merck as part a criminal investigation of marketing of certain drugs, including the brain-tumor treatment Temodar, which Merck had inherited from Schering-Plough.
However, last year Merck set aside about $950 million to cover the costs of an expected settlement of a government probe of its own marketing and research activities surrounding Vioxx. The settlement hasn't been finalized.
The latest settlement of Vioxx-related lawsuits stems from claims filed in federal courts against Merck and certain current and former officers and directors, under the Employee Retirement Income Security Act, or ERISA.
The lawsuits were filed on behalf of former and current Merck employees participating in Merck retirement plans. They generally allege Merck and the individual defendants breached their fiduciary duties by making false and misleading statements about Vioxx. A portion of the claims had been certified as a class action.
Merck said in its regulatory filing Tuesday it reached an agreement in principle with the plaintiffs in August to pay $49.5 million to settle the cases. The proposed agreement is subject to final court approval.
Merck spokesman Ron Rogers said the company is pleased to have reached a proposed resolution of the Vioxx Erisa lawsuits. He said the company and the individual defendants continue to deny any wrongdoing.
Merck has previously resolved various elements of the Vioxx litigation, including the payment of $4.85 billion to settle product-liability claims that the drug caused heart attacks and strokes, and that Merck failed to properly warn of these risks.
Merck shares fell 81 cents to $33.66 in recent trading.
Source: The Wall Street Journal
NOVEMBER 9, 2011, 2:51 P.M. ET
By Peter Loftus, Dow Jones Newswires
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