May 21, 2008
Yesterday, Merck (NYSE: MRK ) put one more chapter of the Vioxx story behind it.
The drugmaker settled its suit with 29 states and the District of Columbia for $58 million. The states' suit against Merck claimed that advertisements for Vioxx caused patients to demand prescriptions before doctors had a chance to assess its safety (but obviously after the FDA had approved the drug).
The charges sound ludicrous to me -- unfortunately, the only way for doctors to figure out whether a drug causes unwanted side effects is for patients to take the drug. But settling the lawsuit was probably better for Merck than fighting it out in court. The settlement wasn't a big surprise; Merck set aside $55 million last quarter in anticipation of it.
As part of the agreement, for the next seven years, Merck will submit all new TV commercials for its drugs to the FDA before they are aired -- something most drugmakers don't have to do. Merck also agreed not to ghostwrite any research articles.
The settlement is pocket change compared to the $4.85 billion Merck's shelling out to resolve claims by patients and their families that Vioxx caused heart attacks and strokes. It's even pretty small compared to Cephalon's (Nasdaq: CEPH ) $425 million settlement over its sales and marketing practices, and to the $1 billion Eli Lilly (NYSE: LLY ) could potentially pay to settle a federal investigation into its marketing practices for its schizophrenia and bipolar disorder treatment Zyprexa.
Now that Merck has most of its Vioxx issues behind it, the drugmaker can get back to more pressing issues -- like joining Schering-Plough (NYSE: SGP ) in answering the seemingly neverending questions from Congress about why it took so long to release the results of the ENHANCE trial. Oh, and maybe it can develop some new drugs, too.
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