Merck Loses Appeal Over Class Action

Merck & Co. suffered a significant legal setback Friday when an appeals court allowed health insurers and others to sue to recover the billions of dollars they spent on the Vioxx pain reliever.

Merck attorney Ted Mayer called the ruling “deeply flawed” and said the company would appeal the decision by three New Jersey appellate judges to the state Supreme Court.

If the nationwide class action goes forward, Merck faces substantial financial risk because under New Jersey’s Consumer Fraud Act, the company, if found liable, would have to pay triple damages to the insurers. The plaintiffs allege that Merck deliberately misrepresented Vioxx’s safety by concealing the pain reliever’s health risks, which violates the fraud act.

The appellate judges unanimously found that New Jersey Superior Court Judge Carol E. Higbee acted properly when she said the state law could be applied to all plaintiffs. They also agreed with her that combining the insurers’ claims was a better method of settling suits than trying them individually.

The judges said a class action would present complex management problems but would be a relatively inexpensive solution for health plans with complaints about Merck.

The original suit was filed by the International Union of Operating Engineers Local 68 Welfare Fund. It said its health plan would not have paid for Vioxx if it had been aware of the dangers.

The ruling allowed health insurers, unions and large employers that absorbed the cost of Vioxx prescriptions for their plan members to sue Merck to recover their money, union attorney Chris Seeger said in a statement.

Merck removed Vioxx from the market in September 2004 after a study indicated that the drug doubled patients’ risk of heart attacks and strokes after 18 months of use. Merck faces more than 9,600 Vioxx-related lawsuits. Nine filed on behalf of insurers await class certification. Only cases involving individual plaintiffs have gone to trial.