Suit demands $168 million in damages for violating Medicaid fraud law to gain profits

AUSTIN - Texas Attorney General Greg Abbott today sued one of the largest drug companies in the nation for misrepresenting the safety of the painkilling prescription drug Vioxx. The company also falsely touted the safety of the drug, knowing it caused a higher risk of heart attack and cardiovascular problems. Despite those potential health hazards, the company still pushed to place Vioxx on the state�s Medicaid list for approved medicines.

Attorney General Abbott alleges Merck & Co. of New Jersey aggressively marketed the drug to the medical community, and in doing so, willfully misrepresented its own studies and the concerns of physicians suggesting the drug may increase the risk of heart problems. The Texas Medicaid program reimbursed pharmacists $56 million for Vioxx prescriptions they filled for patients over a five-year period. The Attorney General is invoking a provision in state law that allows for that amount to be automatically tripled to $168 million, which Merck would have to pay to the state of Texas for acts of fraud.

�This is a prime example of a company�s drive for profit steamrolling its duty to be safe,� Attorney General Abbott said. �Drug companies have an ethical, legal and professional responsibility to conduct meticulous clinical studies to ensure the safety and effectiveness of drugs for human consumption. Yet in this case, Merck took extreme measures to get this drug approved for widespread use, including for Medicaid patients, without the proper respect for good science and the concerns of peers.�

Merck, which began marketing Vioxx in 1999 after brief clinical trials, finally conceded the health concerns and voluntarily withdrew the product in September 2004.

The Attorney General�s lawsuit claims Merck�s costly promotional campaign aimed to convince consumers the drug was not only safe, but that they should demand it from their health care professionals for pain. The company also allegedly tried to intimidate or threaten physicians and researchers who questioned the safety of Vioxx. The company even routinely misrepresented or concealed published evidence, including its own, showing possible harmful effects of the drug.

The Medicaid program reimbursed pharmacists for Vioxx prescriptions at the rate of about $1.94 per 25-milligram pill, the most commonly prescribed dosage. Pharmacists filled more than 700,000 prescriptions under the Medicaid program in these years, accounting for over 29 million pills.

If the facts about Vioxx had been known earlier, the Attorney General contends, physicians and their Medicaid patients would have chosen other nonsteroidal, anti-inflammatory agents like generic naproxen, which costs about $0.33 per daily equivalent dose.

According to the lawsuit, the company�s repeated failure to disclose the adverse effects of Vioxx, while offering it to the state�s Medicaid program as a safe painkiller, directly violates the Texas Medicaid Fraud Prevention Act. The Attorney General requests restitution to the state of Texas, plus interest, for all Medicaid payments made to the company for Vioxx prescriptions, as well as civil penalties of up to $10,000 per violation of this law.

Attorney General Abbott continues in his efforts to crack down on companies that have defrauded the Texas Medicaid program and taxpayers. Distinguishable from the Vioxx case, many of these lawsuits have often relied on insider information and whistleblowers as sources.

In May 2004 the drug giants Schering-Plough and Warrick Pharmaceuticals settled a long-fought Texas whistleblower lawsuit and returned $27 million to the Texas program after the state exposed an unlawful wholesale pricing scheme. Dey Inc. settled a similar case for $18.5 million in June 2003. Earlier this month, ResCare Inc. settled a whisteblower case involving one of its Fort Worth subsidiaries, The Citadel Group Inc., for $2.15 million.

Attorney General Abbott has also joined multi-state efforts and the federal government in the past to recover tens of millions of dollars for the state of Texas.