Seven years after Merck withdrew Vioxx amid controversy and outrage, the drugmaker has agreed to pay $950 million to settle criminal and civil charges into the promotion and marketing of the painkiller, which was linked to heart attacks and strokes.
The settlement caps a tumultuous period for Merck, the pharmaceutical industry and the FDA. Although there were earlier episodes in which scandal erupted over promotional efforts and the extent to which safety risks were adequately disclosed - such as the fen-phen diet pills sold by Wyeth and the Rezulin diabetes pill sold by Warner-Lambert - the Vioxx debacle ushered in a new era.
During the intervening years, Vioxx has become synonomous with a growing skepticism that drugmakers can be trusted to put patients ahead of profits. Several other large drugmakers, in fact, have similarly paid large fines - in some cases, much larger - to settle charges that they illegally promoted or hid the risks associated with their drugs. Among them were Pfizer and Eli Lilly.
For Merck, the Vioxx episode unraveled what once was a venerable reputation that was built on emphasizing innovation, seemingly high standards and a devotion to patients. Now, the drugmaker, which subsequently reached a $4.85 billion settlement with patients in the US, has come to be seen as just another marketing machine that vies for shareholder attention.
Like the settlements involving its rivals, there is no indication that any current of former Merck exec will be held accountable, even though the feds have often signaled a desire to single out execs who can be seen as responsible for such illegal activities. In its own statement, the drugmaker says that, as part of its plea agreement, the US "acknowledged that there was no basis for a finding of high-level management participation in the violation" (see here). The Office of Inspector General at the US Department of Health & Human Services has wanted to exclude, or ban, execs from doing business with federal health care programs, such as Medicaid.
An attempt to do so last year involving Forest Laboratories ended in embarrassment when the HHS OIG quietly concluded its effort without any explanation (see here and here). Four former Purdue Pharma execs, who pleaded guilty to a criminal misdemeanor in connection with the misbranding of the OxyContin painkiller, are currently fighting an OIG ban (read here).
The settlement calls for a subsidiary known as Merck, Sharp and Dohme to plead guilty to a misdemeanor for its illegal promotional activity and pay a $321.6 million criminal fine for a single violation of the Food Drug and Cosmetic Act for introducing a misbranded drug into interstate commerce (here is the information sheet and the settlement agreement).
The drugmaker is also entering into a civil settlement agreement under which it will pay $628.4 million to resolve additional allegations of off-label marketing and false statements about Vioxx cardiovascular safety. Of the total civil settlement, $426.4 million will be recovered by the federal government, and the rest will be shared by participating states whose Medicaid programs suffered losses as a result.
Merck’s criminal plea relates to misbranding Vioxx by promoting the drug for treating rheumatoid arthritis before this indication was approved by the FDA. The agency had approved the painkiller in May 1999 for three other indications and issued a September 2001 warning letter for marketing the drug for rheumatoid arthritis. The civil settlement covers a host of other illegal activities, such as allegations that sales reps made inaccurate, unsupported or misleading statements about cardiovascular safety in order to increase sales, which prompted overpayment by Medicaid. Merck also signed a Corporate Integrity Agreement, which requires execs to file annual compliance certifications and post info about payments to docs on its website (you can read the CIA here).
“Today’s resolution appropriately reflects the severity of Merck’s conduct," US Attorney Carmen Ortiz in Boston says in a statement. “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.”
benjamins pic thx to amagill on flickr