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Merck's $950 Million Settlement Sheds More Light on Rogue Pharma Practices


Merck is the latest to settle with the government over illegal marketing strategies, following billions in payouts by GlaxoSmithKline, Pfizer, and Lilly. But has big pharma learned its lesson?

Even after the government warned Merck (MRK) to stop promoting its Vioxx painkiller for unapproved use a decade ago, sales reps continued to illegally push doctors to prescribe the drug for rheumatoid arthritis, US prosecutors say.

The Food and Drug Administration warned in a letter to Merck dated September 17, 2001, that its promotions were minimizing the risks of the drug and making false claims about the treatment. "Your claim is misleading because it suggests that Vioxx is effective for the treatment of rheumatoid arthritis when this has not been demonstrated," the letter read.

Eight days later, according to the complaint, a Merck salesman made a note following a conversation with a doctor that he achieved an "accomplishment" after he "discussed Vioxx excellent efficacy and off-label use" in rheumatoid arthritis. Two months later, another salesman noted a conversation with a doctor client that he would "gain agreement that Vioxx can be used for RA (rheumatoid arthritis)."

The complaint was part of a wider investigation of Merck's promotion and claims about the safety of Vioxx, the blockbuster pain medicine pulled from the market in 2004 after concerns about risk of heart attack and stroke.

Merck agreed to pay $950 million in a settlement with the US after prosecutors charged the company made "inaccurate, unsupported or misleading statements" about the cardiovascular safety of Vioxx. The company also pleaded guilty of illegally promoting its drug for rheumatoid arthritis (a misdemeanor).

Merck has already paid almost $5 billion to settle Vioxx numerous patient lawsuits. Through the saga, Vioxx became a symbol of a botched system that lacked checks and balances to protect patient safety while a big drugmaker recorded billions in sales.

Merck's plea on the illegal promotion of Vioxx casts another light on the rogue nature of drug marketing in the late '90s and the early part of the last decade. And yet, Merck's settlement seems relatively mild compared with some other big payouts by major pharma companies.

Earlier this month, GlaxoSmithKline (GSK) said it reached a preliminary settlement with US prosecutors over the company's promotion of Avandia, a diabetes drug linked to heart attack risk. The FDA restricted use of the drug last year on the safety concerns. Pfizer (PFE) agreed to pay a $2.3 billion settlement in 2009 related to its promotion of the anti-inflammatory drug Bextra for unapproved uses. Bextra was pulled from the market in 2005 due to concerns about heart attack and stroke.

That same year, Eli Lilly (LLY) paid $1.4 billion in a settlement over its promotion of its anti-psychotic drug Zyprexa for unapproved uses in the elderly and other patients.

Each settlement results in prosecutors saying they're sending a strong message to the pharmaceutical industry. And each time the drug companies note how well they cooperated with the feds.

"Merck acted responsibly and in good faith in connection with the conduct at issue," Merck General Counsel Bruce Kuhlik says in a statement.

One of the things that came out of the Lilly and Pfizer settlements from a couple of years ago were the registries of industry payments made to doctors. Pfizer was accused of paying kickbacks to prescribing doctors. (See Pfizer's registry here). Obama's health reform will require other drug and medical device companies to make such disclosures.

While the public records of doctor payments adds some transparency, it remains to be seen whether the industry has reformed its sales practices. Drug companies aren't printing money the way they have in the past. And multibillion-dollar settlements still take a bite out of earnings.

Twitter: @brettchase

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