Vioxx Gains Big Win with N.J. High Court’s Rejection of Class Action

September 7, 2007

New Jersey’s Supreme Court has rejected a class-action lawsuit against Merck & Co. over its withdrawn painkiller Vioxx.

The ruling is a huge legal victory for the drugmaker, which faces nearly 27,000 individual lawsuits from people claiming Vioxx harmed them.

The state’s highest court, reversing two lower-court decisions, ruled that a nationwide class was not appropriate for the lawsuit. The suit had been brought by a union health plan on behalf of all insurance plans that paid for Vioxx prescriptions.

A lawyer for the New Jersey union had said the case could have cost Merck $15 billion (euro10.97 billion) to $18 billion (euro13.17 billion).

Had the class action been allowed to proceed, it also would have been a major setback to the company’s strategy of fighting the thousands of Vioxx lawsuits one by one.

Merck shares rose $1, or 2 percent, to $50.40 in midday trading Thursday.

The Whitehouse Station, New Jersey-based company said it was pleased with Thursday’s ruling.

Merck pulled Vioxx from the market three years ago after research showed it doubled the risk of heart attacks and strokes.

Chris Seeger, lead attorney for the International Union of Operating Engineers Local 68, said that given the ruling, he will now pursue separate claims on behalf of individual unions.

“Merck temporarily dodged a bullet. Merck didn’t totally dodge the bullet,” he said.

Seeger sued the drugmaker on behalf of the union in October 2003, arguing that if Merck had disclosed those risks earlier, prescription plans would have favored other painkillers.

A state judge and then an appeals court approved the class action, but Merck appealed to the New Jersey Supreme Court.

The high court reversed the appellate court’s decision on multiple grounds. It wrote that it would be inappropriate to apply New Jersey’s consumer fraud law to claims by third-party payers around the U.S. and that while Merck ran a uniform marketing campaign for Vioxx, insurance plans made individual decisions about covering the drug.

The judges also wrote that the engineers’ union and the other third-party payers “are well-organized institutional entities with considerable resources,” and that it was unlikely their claims were too small to pursue individually.

Five judges heard oral arguments on a case in March, and all five sided with Merck on the ruling.

“The Supreme Court recognized that a class action was improper because each insurance company and HMO considered different types of information in deciding whether to reimburse patients for Vioxx, and they all went through varied processes with different experts in making those decisions,” said Merck attorney Ted Mayer.


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