Merck & Co is celebrating a hugely significant victory after a court sided with the firm in dismissing a class action lawsuit over its withdrawn COX-2 inhibitor Vioxx.
The New Jersey Supreme Court reversed an earlier ruling that granted nationwide class-action status to insurance companies and healthcare maintenance organisations in the USA seeking reimbursement for Vioxx (rofecoxib) expenditures to the tune of $9.6 billion. The case had been brought by the International Union of Operating Engineers Local 68 Welfare Fund, which claimed that Merck had concealed information about the safety risks associated with Vioxx, so therefore insurers felt they had been overcharged.
If the case had been granted class-action status by the Supreme Court, Merck could have been facing a mammoth bill. That would have meant that insurers and other payers could also seek reimbursement, wielding significant leverage to force a settlement and given that New Jersey’s Consumer Fraud Act permits triple damages, the drugmaker could have been forced to pay out up to a few dollars short of $29 billion.
This will not happen now, given the verdict, and Ted Mayer, Merck outside counsel, said that “the Supreme Court recognised that a class action was improper because each insurance company and HMO considered different types of information in deciding whether to reimburse patients for Vioxx, and they all went through varied processes with different experts in making those decisions”.
If class-action status had been granted, that would have played havoc with Merck’s strategy of fighting each Vioxx lawsuit one by one. The company noted that the claims of more than 4,620 plaintiff groups have been rejected before being scheduled for trial and another 3,450 such groups have had their bids dismissed without prejudice, meaning they can be filed again. Juries have decided in favour of Merck 10 times and for the plaintiffs on five occasions. There have been two unresolved mistrials and a federal judge recently set aside one of Merck's 10 verdicts.
The reaction from analysts was positive and Jami Rubin at Morgan Stanley said in a research note “we see this news as an enormous victory for Merck as we have always maintained that the consumer fraud class action suits (rather than individual cases) represent the biggest risk to Vioxx liability”.
Less pleased with the decision was Local 68’s lawyer, Christopher Seeger. He said that “although we respectfully disagree with the court's conclusion”, the ruling gives us the green light to pursue these claims” on an individual basis and the ruling “should be viewed as a clarion call to all of the institutions and entities that were harmed by Merck's wrongdoing.” Merck has “chosen to fight these consumer fraud claims in individual battles” and “we stand ready to fight on this battleground”.