State to receive $2.7M from settlement

INDIANAPOLIS - INDIANAPOLIS– The State of Indiana will receive more than $2.7 million in a settlement with drug manufacturer Merck to resolve allegations that the company illegally marketed its painkiller drug Vioxx for an unapproved use and misrepresented the drug’s cardiovascular safety issues.

Merck will pay the state $2,761,370.79 as partial reimbursement for amounts Indiana Medicaid paid to cover prescription drug claims submitted for Vioxx – claims that were determined to be ineligible for Medicaid coverage.

Indiana Attorney General Greg Zoeller’s office operates the Indiana Medicaid Fraud Control Unit, or MFCU. “If through a pharmaceutical company’s illegal scheme Medicaid is made to pay ineligible claims for prescription drugs, then the taxpayers ultimately are the real victims. My office works aggressively to investigate false drug-reimbursement claims, participate in multistate lawsuits against fraudsters and claw back the public’s money,” Zoeller said.

Indiana’s share is part of a larger $628 million civil settlement Merck has agreed to pay 42 states and the federal government to resolve allegations of illegal off-label marketing and false statements about the drug’s safety. Merck also pleaded guilty Tuesday in federal court in Massachusetts to a criminal misdemeanor and agreed to pay a criminal fine of approximately $322 million in connection with that case, brought by the U.S. Department of Justice.

Merck’s drug Vioxx was approved by the U.S. Food and Drug Administration (FDA) for treatment of osteoarthritis and two other conditions in May 1999. A lengthy investigation by the federal government and states found, however, that Merck for three years had illegally marketed Vioxx for treatment of a separate condition – rheumatoid arthritis – not approved by the FDA until April 2002.

In addition to the three years of illegal off-label marketing of the drug for an unapproved use, the investigation found Merck promoted the cardiovascular safety of Vioxx through written statements that were inaccurate, misleading and inconsistent. Vioxx was taken off the market in September 2004 due to safety concerns.

Indiana alleged that Merck’s false and misleading representations in its marketing and advertising materials caused physicians to write prescriptions for Vioxx that they would not have written otherwise, causing Medicaid to pay for prescriptions that should not have been reimbursed. Indiana also alleged that Merck made false representations to the Medicaid program about the safety of Vioxx.

New Jersey-based Merck -- officially known as Merck Sharp & Dohme Corp. -- signed an agreement with the U.S. Department of Heath and Human Service-Office of Inspector General (HHS-OIG) to require close monitoring of the company’s future marketing and sales practices.

The Indiana Attorney General’s Medicaid Fraud Control Unit (MFCU) investigates false claims and ineligible billings to the Medicaid program. Since Zoeller took office in January 2009, Indiana has participated in 16 settlements with pharmaceutical companies to resolve allegations of illegal off-label marketing. Through those settlements, nearly $27 million in Medicaid reimbursements that had been wrongly paid out have been recovered for the Indiana Medicaid program.

Although the Merck settlement was not the result of a whistleblower lawsuit, several other multimillion-dollar settlements with pharmaceutical companies have arisen from lawsuits filed by industry whistleblowers. As part of a public awareness effort called “Blow the Whistle on Fraud,” Zoeller and MFCU attorneys have made presentations to health care workers and pharmaceutical employees and groups across Indiana to educate them about their legal rights under the False Claims Act. Through whistleblower lawsuits, private individuals who file suit to stop fraud against Medicaid can potentially collect a percentage of any damages or settlement a company pays to resolve the case.