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New York State and Others Use False Claims Act to Fight Medicaid Fraud

above-the-bar-logo-no12.jpgThe Department of Justice recently announced a resolution with pharmaceutical giant Merck, Sharp & Dohme (“Merck”) to pay $950 million to settle criminal and civil claims for its illegal promotion and marketing of its painkiller drug, Vioxx. As part of the deal, Merck has also agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services to monitor its conduct.

Using its False Claims Act for the first time, New York State had joined in on bringing charges against Merck back in 2007 for Medicaid fraud. The State had alleged that Merck was risking the lives of thousands by inappropriately pushing Vioxx on physicians and patients. Pursuant to its False Claims Act, the State sought damages for the amount spent on Medicaid and other state health care programs to pay for drugs prescribed under false claims. Merck has settled the lawsuit with New York as well as several other states.

The FDA approved Vioxx in 1999 and by 2003, it had become the third largest selling drug, yielding $2.5 billion in sales. After a study found that it cause an increased risk of heart attacks and strokes, it was taken off the market in 2004.

Merck plead guilty to violating the Food Drug and Cosmetic Act (“FDCA”) for placing Vioxx into interstate commerce and for its illegal promotional activity of Vioxx. The criminal pleas relates to Merck’s off label promotion of Vioxx for treating rheumatoid arthritis (“RA”) from 1999 to 2002, before it was approved by the Food and Drug Administration for that use. According to FDCA provisions, a company must specify the intended uses of a product in its new drug application to the FDA. The FDA only approved Vioxx for three uses in May 1999 and did not approve use of it for RA until April 2002. The government charged that Merck was promoting Vioxx for RA for almost three years and was even issued an FDA warning letter in September 2001.

Once the FDA approves the drug, the pharmaceutical company may not market or promote the drug for “off-label” uses, which refers to any use not specified in its application to the FDA. In other words, a drug company cannot take a drug approved by the FDA for treating migraines and then market it for high blood pressure. It is illegal to market a drug for uses other than those approved by the FDA. If you know of any fraudulent activity being committed against the government at your workplace, call our attorneys to help you determine if you have a qui tam whistleblower lawsuit under the False Claims Act.

The civil settlement pertains to allegations that Merck representatives made inaccurate, unsupported or misleading statements about Vioxx’s cardiovascular safety in order to increase the drug’s sales. This in turn increased the federal government’s payments. The government had also charged that Merck made false statements to state Medicaid agencies regarding Vioxx’s cardiovascular safety, which these agencies relied on and caused them to cover the drug. The settlement provides for the participating Medicare states to get a share of the recovery.

Off-label marketing by pharmaceutical companies and Medicaid fraud costs the government and taxpayers millions of dollars every year. If you have evidence about fraud being committed against the government, you can bring an action on behalf of the government. Depending on whether or not the government takes over your suit, you may be entitled to 15% to 30% of the recovery. Because of the statute’s complexity and strict requirements, call our Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you determine if you have a strong case under the False Claims Act.


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Merck to Pay $950 Million in Vioxx Settlement, Wall Street Journal

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