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Merck Pays $950 Million in Vioxx Settlement, Settles Criminal and Civil Charges

Pharmaceutical giant Merck will pay $950 million, and has pleaded guilty to a criminal charge regarding the marketing and sales of the painkiller Vioxx, both the company and the Justice Department announced in recent days.

The negotiated settlement includes the resolution of civil cases, and marks the latest in a series of fraud cases brought by federal and state prosecutors against major pharmaceutical companies.

Vioxx was approved by the Food and Drug Administration in 1999, then pulled off the market in 2004 because evidence showed it posed a substantial heart risk. In that amount of time, an estimated 25 million Americans had taken the drug.

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Under the terms of its plea agreement with the U.S. government, Merck will plead guilty to a misdemeanor for its illegal promotional activity and will pay a $321.6-million-dollar criminal fine. It is also entering into a civil settlement agreement under which it will pay about $628.4 million dollars to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety.

In a statement on Tuesday, Merck said it had previously disclosed the seven-year investigation by the U.S. attorney in Massachusetts and had charged $950 million against its earnings in October 2010.

It marks the latest big payout by a drug company to settle health-care fraud allegations.

Other big payouts by major drug companies include GlaxoSmithKline PLC’s recent agreement to pay $3 billion dollars to settle U.S. allegations of improper drug marketing. Pfizer Inc., Eli Lilly & Co. and AstraZeneca PLC also have reached costly settlements in recent years.

Tony West, assistant attorney general for the Civil Division of the Department of Justice, was quoted as having said in a statement, per the xinhuanet.com article, “Merck agrees to pay $950 million in Vioxx settlement”, “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.”

The criminal charges against Merck relate to the company’s misbranding of Vioxx by promoting the drug for treating rheumatoid arthritis, before that use was approved by the Food and Drug Administration (FDA). Under the provisions of the U.S. Food Drug and Cosmetic Act, a company is required to specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses. This includes any use not specified in an application and approved by FDA, unless the company applies to the FDA for approval of the additional use.

The FDA approved Vioxx for three indications in May 1999, but did not approve its use against rheumatoid arthritis until April 2002. In the interim, 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.

However, Merck said Tuesday the settlement does not mean it admits liability or wrongdoing.

Merck General Counsel Bruce Kuhlik was quoted as having said in a statement: “We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx.”

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