Archive for the ‘Merck’ Category
Friday, November 14th, 2008
David Armstrong reports in today’s Wall Street Journal that Change to Win, a member of the Prescription Access Litigation coalition, is launching campaign to challenge CVS Caremark’s [NYSE:CVS] sending of a letter to doctors of specific patients, apparently promoting Merck’s [NYSE:MRK] diabetes drug Januvia. (“Unions Say CVS Pushed Costly Drug to Doctors“)
As the article reports:
A group of labor unions is launching a campaign that accuses CVS Caremark Corp. of violating patient privacy and improperly pushing doctors to prescribe a costly prescription drug.
Change to Win, a group of unions that represents about six million workers, said CVS’s pharmacy benefits management business has been urging doctors via a letter to add Merck & Co. diabetes drug Januvia to specific patients’ treatments. The letter, obtained by the union group, said CVS identified the diabetes patients through a review of prescription-drug claims processed by its Caremark unit.
[on the rise]
A line at the bottom of the letter says Merck paid for the mailing. Neither Merck nor CVS would say how much Merck paid, and the drug maker also declined to say whether the mailing boosted Januvia sales…
Januvia is as much as eight times more expensive than many other diabetes treatments, according to a recent study. Some medical experts say patients may not need the drug and may respond just as well to older, cheaper treatments…
Change to Win says the Januvia letter is an example of CVS putting its interests ahead of the businesses that pay it to manage employee prescription-drug benefits. CVS became a big player in the pharmacy-benefits business when it acquired Caremark, then the nation’s second-largest PBM, for about $27 billion in 2007.
CVS, the nation’s largest retail pharmacy chain, with approximately 6,800 stores across 41 states, acquired Caremark, one the nation’s three largest Pharmacy Benefit Managers (PBMs) in March 2007. Despite concerns that a company comprised of both a pharmacy chain and a PBM (which are supposed to help control health plans’ pharmacy costs) would have untenable conflicts of interest, the Federal Trade Commission (FTC) approved the merger). Change to Win’s campaign suggests that these concerns were not trivial.
We’ll report more on Change to Win’s campaign as we info becomes available…
Tuesday, April 29th, 2008
Sometimes the whole is not greater than the sum of the parts, just more expensive.
Last week, we reported on GlaxoSmithKline’s newly-approved combination drug for migraines, Treximet. (‘GlaxoSmithKline sets out to dupe migraine sufferers with Treximet smoke and mirrors“) Treximet simply combines Imitrex, a migraine medication that is going generic later this year, with naproxen sodium, better known as over-the-counter Aleve.
“Combination pills” have long been a tactic for brand-name drug companies to try to squeeze a little more profit out of drugs that are going generic — in fact, Schering-Plough and Merck are famous for another little joint venture combo drug, Vytorin (Zocor/simvastatin and Zetia/ezetimibe), which has been much in the news lately for its lackluster effectiveness.
Lately it seems like big pharma is just insulting our intelligence, repackaging drugs that have been around for a while into combo pills and trying to pass them off as “innovations” onto an unsuspecting public. That certainly seems to be the case with Schering-Plough’s (NYSE:SGP) and Merck’s (NYSE:MRK) latest proposed joint venture – a combination pill of Singulair and Claritin, two drugs approved for treatment of “allergic rhinitis,” aka allergies (Singulair is also approved to treat asthma). The two companies gleefully report that the FDA has accepted a New Drug Application for the combination.
Claritin has been available over-the-counter for several years, at an average monthly cost of $6-18, according to Consumer Reports Best Buy Drugs. Singulair is prescription-only, with its patent set to expire in 2012. Last year, Merck added new information to Singulair’s label to report new “adverse events” that were noted in people taking Singulair, including depression and suicidality (suicidal thinking and behavior).
Tellingly, the press release doesn’t claim that the combination works better than simply taking Singulair and Claritin together but in separate pills. It says “In clinical trials supporting the NDA, the combination product provided a consistent and clinically relevant effect on congestion that was not demonstrated with the individual components.” Which, as we pointed out in our entry on Treximet, is like saying that a chocolate cake tastes better than the ingredients (flour, eggs, sugar) eaten separately.
Combination drugs like these are intended to serve one purpose: to increase the manufacturers’ market share, particularly in the face of impending generic competition. Schering-Plough has been down a road like this already with Claritin — when Claritin was set to go generic, they introduced Clarinex. Clarinex (desloratidine) is simply a metabolite of Claritin (loratidine) — in a nutshell, Clarinex is what Claritin becomes in your liver. As one blogger put it, “if you’ve taken Claritin, you’ve taken Clarinex.”
Thankfully, doctors and patients weren’t really fooled, and sales of Clarinex were never very impressive. I stand corrected! According to this item on Pharmalot, 2007 sales of Clarinex were $799 million! (See “Clarinex Patent Fight Nothing To Sneeze At“)
Today I’m seeking to introduce a term for combination drugs that the world doesn’t need into the pharamceutical vernacular.
“Goober Grape” Drugs
What’s a Goober Grape Drug?
Goober Grape, for the (fortunately) uninitiated, is a appalling combination of peanut butter and jelly in a single jar.
Until Goober Grape came along, millions of parents were forced to endure the mind-numbing routine of spreading peanut butter first, and then jelly. Until this breakthrough miraculously cut that spreading time in half, freeing generations of parents for loftier pursuits.
So henceforth, a “Goober Grape Drug” refers to any combination drug that offers no additional clinical advantage and only the most ridiculously minimal increase in patient convenience. There are certainly conditions in which combination pills are important, in that reducing the number of pills to be taken increases patient compliance, but allergies sure as heck ain’t one of ‘em.
If and when this Claritin/Singulair combination is approved by the FDA, we at Prescription Access Litigation will most likely give it one of our coveted Bitter Pill Awards. Till then, we’ll content ourselves with giving it our first ever designation as a Goober Grape Drug.
Will the FDA approve? Who knows! Probably, since to be approved by the FDA, a drug only has to show that it is better than a placebo (aka a sugar pill aka nothing at all). And since Singulair and Claritin have already each separately cleared that hurdle, a combination of them likely will as well. Hopefully, if it is approved, doctors, patients and insurers will give it the cold shoulder. But, to paraphrase an old saying, “No one ever went broke trying to overestimate the willingness of the American health care system to pay for drugs of questionable value.”
Update: Apparently, the FDA issued a “non-approvable” letter for this combination yesterday. (See Schering-Plough’s press release on the letter). A “non-approvable,” despite what it sounds like, does not mean that the FDA has conclusively rejected a new drug. Rather, it means the application is not approvable in its current form. Drug companies frequently amend or add to their applications upon receiving such a letter, and at times later get approval.
Readers, we invite your nominations/suggestions of other Goober Grape Drugs — please post in the comments.
Friday, February 29th, 2008
The brand-name pharmaceutical industry constantly pushes the myth that its expensive blockbusters are breakthrough treatments that greatly increase people’s health and well-being, and thus are worth the high price-tag. That myth has more holes than a slice of swiss cheese, yet they keep pushing it on the American public like it’s one of their drugs.
As Dr. Marcia Angell, former editor of the New England Journal of Medicine and author of “The Truth About the Drug Companies” (see an interview with Dr. Angell in PAL’s newsletter here) famously said, “Important new drugs do not need much promotion. Me-too drugs do.” So drugs which offer little breakthrough in treatment need to be (over)hyped.
For years, the drug industry has touted antidepressants (particularly SSRIs - Selective Serontin Reuptake Inhibitors — Prozac, Paxil, Wellbutrin, Zoloft, Celexa, Lexapro, etc. as one of its major successes. Yet, this week, a major meta-analysis (a study that reviews the full range of studies and articles on a particular drug) was published in the open-access medical journal PLoS (Public Library of Science) Medicine. That article concluded that, for the majority of patients, SSRI antidepressants are barely better than a placebo.
It’s likely that patients in the U.S. (and their health plans, and government health care programs like Medicare, Medicaid, the Veterans Administration, the military health care plan Tri-Care, etc) have spent tens of billions of dollars on antidepressants in the past decade, despite the fact that for many of them, it was likely a waste of money, exposed them to the risk of side effects, and may have resulted in their not availing themselves of other non-pharmaceutical options for treating their depression.
The billions that the industry spent on marketing these drugs, both to consumers and to doctors, led millions to believe that relief was just a pill away (We gave the makers of Paxil, one of these antidepressants, one of our Bitter Pill Awards in 2005, the Cure for the Human Condition Award: For Hawking Pills to Treat the Trials of Everyday Life).
Drugs for depression are just one of numerous groups of drugs for which the benefits are overhyped and people for whom an expensive drug is unnecessary or overkill are convinced to take it in lieu of something cheaper, that’s been around longer and whose risks and benefits are more well known.
“Statin” drugs for reducing high cholesterol are another group of drugs that have been massively overhyped, and that also have been in the news a great deal lately. Last month, the results of a study of Schering-Plough and Merck’s combination-cholesterol drug Vytorin, the ENHANCE study, were released, showing that it offered no benefit over simvastatin (Zocor), a statin that last year went generic. Vytorin is a combination of Zocor and Zetia, which is also sold by itself. Vytorin and Zetia together have more than $5 billion in sales.
Statin drugs have also been in the news because of the revelation that Dr. Robert Jarvik, Pfizer’s boat-rowing pitchman for Lipitor, is not a licensed physician, cannot write a prescription for Lipitor or any drug for that matter, and is not even a rower (a stunt double was used in the Lipitor ads). We’ve blogged about Jarvik-gate here on several occasions, including proposing some other famous “doctors” who aren’t licensed physicians that Pharma ought consider using as paid flaks — including Dr. Teeth from the Muppets, Basketball legend Dr. J, Dr. Nick Riviera from the Simpsons, and New Orleans musical legend Dr. John).
Of course, the real Lipitor story is not Dr. Robert Jarvik and his rowing and prescribing credentials. At best, he’s a bit player in this drama. The real story is how incredibly overhyped Lipitor is. Pfizer boasts it’s the “most powerful” statin as though that means that everyone with high cholesterol should be on it. But for many (perhaps most) people with high cholesterol, using Lipitor is like using a chainsaw to cut paper instead of scissors: that is, unnecessary overkill. Members of the PAL coalition filed a lawsuit against Pfizer in 2005, alleging that Lipitor had been overhyped and promoted to patients for whom it offered no benefit, and we gave them and AstraZeneca, the makers of Crestor, a Bitter Pill Award in 2006: The “Got Cholesterol?” Award: For Overpromoting Expensive Brand-Name Statins.
But even that’s not the real story — there are larger questions about statins. For instance, does lowering your cholesterol translate into a lower risk of heart attack or heart deaths on January 17 was Do Cholesterol Drugs Do Any Good? Research suggests that, except among high-risk heart patients, the benefits of statins such as Lipitor are overstated.
Here are a few choice excerpts:
[Statins] are the best-selling medicines in history, used by more than 13 million Americans and an additional 12 million patients around the world, producing $27.8 billion in sales in 2006. Half of that went to Pfizer for its leading statin…
The second crucial point is hiding in plain sight in Pfizer’s own Lipitor newspaper ad. The dramatic 36% figure has an asterisk. Read the smaller type. It says: “That means in a large clinical study, 3% of patients taking a sugar pill or placebo had a heart attack compared to 2% of patients taking Lipitor.”
Now do some simple math. The numbers in that sentence mean that for every 100 people in the trial, which lasted 3 1/3 years, three people on placebos and two people on Lipitor had heart attacks. The difference credited to the drug? One fewer heart attack per 100 people. So to spare one person a heart attack, 100 people had to take Lipitor for more than three years. The other 99 got no measurable benefit. Or to put it in terms of a little-known but useful statistic, the number needed to treat (or NNT) for one person to benefit is 100.
Compare that with, say, today’s standard antibiotic therapy to eradicate ulcer-causing H. pylori stomach bacteria. The NNT is 1.1. Give the drugs to 11 people, and 10 will be cured.
A low NNT is the sort of effective response many patients expect from the drugs they take. When Wright and others explain to patients without prior heart disease that only 1 in 100 is likely to benefit from taking statins for years, most are astonished. Many, like Winn, choose to opt out…
NNTs are the “dirty little secret” of the world of prescription drugs. And a perfect illustration of how hyping drugs through advertising to consumers and marketing to doctors (through the 100,000 salespeople employed by drug companies, self-serving biased clinical trials and corporate-influenced “continuing medical education”) doesn’t benefit patients. As the article says,
The truth about drugs’ effectiveness wouldn’t be as worrisome if consumers and doctors had an accurate picture of the state of knowledge and could make rational decisions about treatments. Studies by Darlington Hospital’s Trewby, UBC’s Wright, and others, however, show that patients expect far more than what the drugs actually deliver…
The whole statin story is a classic case of good drugs pushed too far, argues Dr. Howard Brody, professor of family medicine at the University of Texas Medical Branch at Galveston. The drug business is, after all, a business. Companies are supposed to boost sales and returns to shareholders. The problem they face, though, is that many drugs are most effective in relatively small subgroups of sufferers. With statins, these are the patients who already have heart disease. But that’s not a blockbuster market. So companies have every incentive to market their drugs as being essential for wider groups of people, for whom the benefits are, by definition, smaller.
Finally, an excellent piece posted today on Alternet examines the statin and cholesterol controversy in detail: The Cholesterol Con — Where Were the Doctors?
Friday, February 8th, 2008
In case anyone had lingering doubts about Merck [NYSE:MRK], the embattled maker of Vioxx is in the news again. This time for agreeing to pay a $671 million to federal and state prosecutors for allegedly overcharging government programs for four drugs — Zocor, Mevacor, Vioxx and Pepcid, and for bribing doctors to prescribe certain drugs. This is one of the largest health care fraud settlements to date.
An Associated Press article reports the details:
Drug companies must report to the government the lowest price for their medicines to ensure that Medicaid programs get the same discounts or rebates on drugs they buy. Prosecutors said Merck was hiding steep discounts – up to 92 percent off the average price – it gave hospitals that used a set amount of Merck products.
From 1997 to 2001, prosecutors said Merck had about 15 different programs used by its sales representatives to give doctors and other health professionals “illegal kickbacks,” disguised as fees for training or consultation, to induce them to prescribe Merck drugs.
The Philadelphia case involved pricing programs for the cholesterol drugs Zocor and Mevacor and the painkiller Vioxx, which Merck pulled from the market in September 2004 because Vioxx doubled the risk of heart attack and stroke. Those programs ran from 1996 through 2006, Rogers said.
The Louisiana case involved pricing for heartburn drug Pepcid, from mid-1996 to April 2001, when it was sold only by prescription.
Merck, of course, denies it did anything wrong:
“What we have here is a disagreement (over) the rules of the Medicaid rebate program,” said Merck spokesman Ronald Rogers. “These civil settlements were the best and most appropriate way to resolve these lengthy investigations.”…
“At the time that these pricing programs were in place, Merck believes that it acted in good faith and complied with the regulations that were in place at the time,” Rogers said.
The settlement announced late yesterday concerns conduct that took place from 1997 to 2001. Thus, we’re talking about things that happened a very long time ago – 7-11 years ago, to be precise. Cases like this are brought under the False Claims Act, which allows “whistleblowers” (known as false claims or qui tam relators) who have information about companies that are defrauding the government to bring a lawsuit on behalf of the government to recover the amounts that were illegally charged. False Claims Act cases are “under seal” for several years while the Justice Department decides whether to “intervene,” that is, whether to enter — and largely take over — the case on behalf of the government. Then the investigation usually takes several more years, and negotiations with the defendants can take yet several more.
So, even when you have a situation like this, in which a drug company has to pay hundreds of millions of dollars, it’s only years after the conduct in question took place. It begs the question of how to make the process move more quickly, so that the fear of federal investigations and penalties can actually have a deterrent effect on drug companies’ behavior.
The Pennsylvania case whistleblower’s attorneys have set up their own website, describing the case and the settlement, drugfraudsettlement.com. Their press release describes what they say is a unique feature of this case:
Aside from the huge settlement, the second largest FCA civil fraud Medicaid recovery, the case marked new ground with a collaborative investigation model that saw the relator and his lawyers work closely with state and federal Government investigators to press the case. This new investigative model, [whistleblower lawyer] Cohen said, “will become the basis for future qui tam whistleblower investigations, especially in an age of shrinking government budgets.”
Merck reportedly will be bound by a Corporate Integrity Agreement as well, although no details of that agreement seem to be yet available. Corporate Integrity Agreements are frequently a feature of False Claims Act settlements, and usually require defendants to agree to set up “compliance programs” to train employees in how to comply with federal law and monitor that they are doing so.
Tuesday, September 18th, 2007
The Attorney General of New York state and Mayor of New York City issued this announcement yesterday, of a lawsuit against Merck (NYSE:MRK):
Attorney General Andrew M. Cuomo and New York City Mayor Michael Bloomberg today filed a joint lawsuit against the maker of Vioxx for misrepresenting the dangers the drug posed to its users. The lawsuit seeks damages and civil penalties in addition to restitution for tens of millions of taxpayer dollars wrongfully spent on Vioxx prescriptions, and marks the first time the State and City have brought a joint action to fight Medicaid fraud.
One question concerns what New York is seeking restitution for:
As a result, Merck is accused of having caused New York doctors to prescribe Vioxx to patients whose cardiovascular conditions made them especially susceptible to the drug’s negative effects. Had the doctors been adequately informed, the suit alleges, they would not have prescribed Vioxx and thus Medicaid and EPIC would not have paid for its dispensation.
The group of “patients whose cardiovascular conditions made them especially susceptible to the drug’s negative effects” is but a small subset of the patients for whom Vioxx was improperly prescribed. With Vioxx, Merck’s deception caused the entire health care system to pay for prescriptions not only for people who were at risk of heart attacks and thus shouldn’t have taken Vioxx, but also for people who wouldn’t have taken it had they known the risks (regardless of whether they were individually at higher risk) and also for people who simply didn’t need it — that is, the vast majority, for whom over-the-counter Ibuprofen or Naproxen Sodium would have worked just as well.
The press release makes it seem that NY is only seeking to recoup the payments it made for patients who were “especially susceptible” to the side effects. How will New York determine which patients those are? And why are they not seeking to recoup the payments made for the much larger groups of patients who were prescribed Vioxx unnecessarily? The deception allegedly undertaken by Merck was not just about the side effects — but also about the efficacy: Merck made Vioxx seem like a vast improvement over other drugs, when for pain relief it was no better than ibuprofen.
The main question that springs to mind is “What took them so long?” Vioxx was withdrawn from the market at the end of 2004. Here it is, nearly three years later. The filing of this lawsuit comes on the heels of the recent decision of the New Jersey Supreme Court, refusing to allow a class action on behalf of “third party payors” (TPPs) to go forward. Third Party Payors are those entities that pay for drugs and medical care on behalf of individuals — i.e. health plans, union benefit funds, self-insured employers. Government programs like state Medicaid programs are also third party payors, but are almost always excluded from these class actions because only state Attorneys General can bring lawsuits on behalf of their states.
In all likelihood, the timing of this new lawsuit, so soon after the New Jersey Supreme Court Vioxx decision, is coincidental. But it does make one consider the patchwork system in which the different players in the health care system try to get restitution when a drug company rips them off.
When a consumer goes to the pharmacy counter, numerous different entities may pick up part or all of the tab:
- The consumer him or herself (either out of pocket entirely, or a fixed copayment or a percentage co-insurance)
- A private health plan, perhaps through an employer or union, or purchased individually, or a Medicare supplemental plan, or a Medicare drug plan
- A state government program, such as Medicaid, an AIDS Drug Assistance Program, a state program for seniors, or a state employee health plan
- A federal government program, suchs as the VA, Tri-Care (the military health plan), a federal employees health plan, or Medicare Part D
When a drug company (or any health care company, for that matter) deceives the public about the safety or efficacy of its products, each of these “payors” is harmed when it unnecessarily pays or overpays for the drug in question.
Let’s focus for a moment just on the payments that all of these different people and payors made unnecessarily for Vioxx (and not on the untold suffering and medical cost imposed on those who actually had heart attacks, and their families). How do each of the types of payors described above get reimbursed for their payments? Through a fragmentary and overlapping and somewhat illogical system of separate lawsuits, in which the same facts have to be demonstrated again and again (unless, as hopefully will happen, Judges apply the doctrine of “collateral estoppel,” in which Merck would not be able to argue again and again in each suit that they didn’t know about the risks until they withdrew the drug). So, in a situation such as this you have:
- Class action lawsuits on behalf of third party payors and consumers — sometimes in the same lawsuits (as in the consolidated proceedings currently before the U.S. District Court in New Orleans), and sometimes in separate lawsuits (as in New Jersey state court, where a consumer class action was filed separately from the TPP class action which the NJ Supreme Court just ruled on recently).
- Lawsuits brought by state Attorneys General on behalf of their state Medicaid programs, state employee health programs, state prisons, programs for the elderly and disabled, and others. At times, these Attorneys General participate in the class actions described above.
- Lawsuits on behalf of cities and counties, to recoup funds spent on Vioxx for city and county employees
- False Claims Act lawsuits on behalf of federal programs such as Medicare (however, Medicare Part D didn’t go into effect until 2006, long after Vioxx was off the market
In this mix you have private attorneys, state Attorneys General and federal prosecutors. It makes for a rather complicated situation. It also makes for strange bedfellows – in a single class action lawsuit, you can have state Attorney Generals, large for-profit commercial insurers that cover millions of people (e.g. Aetna, Humana, United Healthcare, and some Blue Cross plans), small non-profit health plans, union health and welfare funds, self-insured employers, and millions of individual consumers. A class action is really the only way to seek restitution in these situations, in which virtually none of the people and entities who were harmed would be able to bring a lawsuit on their own. But it does make things tangled.
New York is not the first state to sue Merck over Vioxx payments (Texas, for instance, sued Merck back in June 2005). But New York in the past few years has been a leader among states in prosecuting pharmaceutical fraud, under former-New York AG Eliot Spitzer, now Governor of New York). So other states may jump on this bandwagon, in New York’s wake (to mix metaphors).
It will be interesting to see whether Merck’s promise to try every case will hold true for state Attorney Generals, whom corporate defendants are often loath to try to intimidate.
Thursday, September 6th, 2007
In an opinion posted today on the website of the New Jersey Courts system, the New Jersey Supreme Court refused to allow a class action lawsuit to go forward against Merck, the maker of the withdrawn arthritis drug Vioxx. The lawsuit, International Union of Operating Engineers Local 68 Welfare Fund v. Merck was brought on behalf of a nationwide class of “third party payors” (health plans, union health & welfare funds, self-insured employers, and others) and alleged that Merck’s deception and concealment of information about the cardiovascular dangers of Vioxx caused these third party payors (TPPs) to pay for Vioxx when they would not otherwise have paid for it, and to pay inflated prices for it as well.
In July 2005, the Law Division, which was hearing the case, agreed to certify a nationwide class of TPPs that paid for Vioxx. “Class Certification” is the stage at which a Court decides whether to allow a lawsuit to proceed as a class action, on behalf of a large group of individuals or entities. Merck appealed the Law Division’s decision, and the Appellate Division upheld the certification of the class of TPPs. (PAL and several PAL members filed amicus curiae (friend of the court) briefs at both of these stages.) Merck appealed to the New Jersey Supreme Court, which held a hearing on the appeal in March 2007. The Court issued its decision today, and reversed the certification of the class.
The decision is significant because so many pharmaceutical companies are based in New Jersey. Thus, many pharmaceutical lawsuits are brought in New Jersey, under New Jersey’s Consumer Fraud Act. (Although now they are primarily brought in federal court, not state court, due to the Class Action Fairness Act of 2005).
The decision was just posted at 10:00 AM this morning. It is available here. What follows are some preliminary thoughts on and reactions to the decision.
In the 29 page opinion, the Court does not really begin its analysis until page 19. Its decision that a class should not be certified primarily rests on what is known as the “predominance” requirement:
“The central question before us, as in Iliadis, is whether the putative class raises “questions of law or fact common to the members of the class [that] predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” R. 4:32-1(b)(3).” (Decision, p.14)
The Court spends several pages describing how TPPs decide what drugs to include on their list of drugs they will pay, known as “formularies.” It particularly focuses on its conclusion that different TPPs treated Vioxx differently, in terms of coverage, copayments and the like. The Plaintiffs had argued that if Merck had disclosed the negative information about Vioxx, that TPPs would have not covered Vioxx or would have placed greater formulary restrictions on it.
The Court concludes that common questions of law and fact do not predominate, primarily because it rejects the the plaintiffs’ proposed method for calculating “ascertainble loss.” The New Jersey Consumer Fraud Act requires plaintiffs to show:
“(1) unlawful conduct . . . ; (2) an ascertainable loss . . . ; and (3) a causal relationship between the defendants’ unlawful conduct and the plaintiff’s ascertainable loss.” N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003). (Decision, p. 24)
The plaintiffs had argued that the Court should focus on Merck’s marketing of Vioxx. This argument is essentially that Merck’s deceptive marketing of Vioxx misled all TPPs and affected their decisions to cover Vioxx, regardless of what those specific decisions were. In other words, TPPs paid for Vioxx when they would not have otherwise, or would have on a much more limited basis, because of Merck’s deception. The defendants, by contrast, argued that the individual decisions of each TPP in the class were key to the claims, and thus that individual questions predominate over common ones, since TPPs acted in numerous different ways concering Vioxx. The Court concludes “…the commonality of defendant’s behavior is but a small piece of the required proofs. Standing alone, that evidence suggests that the common fact questions surrounding what defendant knew and when it did would not predominate.” (Decision p.26-27)
What is odd about this conclusion is that it seems to contradict something the Court says earlier in its opinion. Many states’ consumer protection act require that plaintiffs show “reliance,” that is, that they actually relied on the alleged deceptive acts of the plaintiff. NJ’s Consumer Fraud Act, does not require reliance:
“Our CFA does not require proof that a consumer has actually relied on a prohibited act in order to recover. In place of the traditional reliance element of fraud and misrepresentation, we have required that plaintiffs demonstrate that they have sustained an ascertainable loss.” (Decision, p.27)
Yet, by saying that each individual class members’ actions and treatment of Vioxx predominates over Merck’s deceptive marketing campaign, the Court seems to be importing a requirement of reliance. It presumes that each class member’s reaction to the revelations concerning Vioxx is relevant to whether or not the CFA is violated. Yet that is, at its core, a question of reliance, and isn’t relevant here. It also ignores the fact that the Merck’s fraudulent marketing was a baseline for all of the admittedly-diverse decisions of different TPPs on how they would cover Vioxx. It is axiomatic that every TPP would have regarded Vioxx differently, and paid for it differently (if at all), had they been told the truth about it.
On p. 15 of the opinion, the Court lays out its standards for predominance from prior cases:
In Iliadis, supra, we explained the meaning of predominance, referring to the importance of an analysis of “the number, and more important the significance of common questions.” 191 N.J. 108 (citing Carroll, supra, 313 N.J. Super.at 499)…Finally, we noted that “predominance requires, at [a] minimum, a ‘common nucleus of operative facts.’” (Decision, p.15)
The common question of whether Merck deceptively marketed Vioxx is far, far more significant than the “non-common” question of how individual TPPs reacted to that marketing (which arguably, is not relevant at all, because it is a reliance issue.)
The Court then goes on to question the plaintiffs’ proposed method of determining “ascertainable loss:”
“Plaintiff argues that it should be permitted to demonstrate class-wide damages through use of a single expert who would opine about the effect on pricing of the marketing campaign in which defendant engaged. To the extent that that plaintiff intends to rely on a single expert to establish a price effect in place of a demonstration of an ascertainable loss or in place of proof of a causal nexus between defendant’s acts and the claimed damages, however, plaintiff’s proofs would fail. That proof theory would indeed be the equivalent of fraud on the market, a theory we have not extended to CFA claims.” (Decision, p. 29)
There are several problems with this analysis. First, it isn’t much of an analysis — it goes into no detail about why this method would not be adequate. In fact, methods such as this are routinely used in other pharmaceutical class actions. Data concerning insurance coverage for drugs and the amount paid by
third party payors as a group versus individuals making copayments are readily available.
Second, it does not explain why the use of such an expert amounts to a “fraud on the market theory.” It merely states that the plaintiffs’ approach is “fraud on the market” and leaves it at that — no analysis of why this is allegedly so.
Finally, the issue is largely beside the point. It is adequate to show that the members of the class had an ascertainable loss. It is not necessary to show how much that loss was, for purposes of class certification. But that seems to be precisely what the Court is seeking. By concealing vital information about Vioxx’s safety, Merck induced TPPs to cover and pay for Vioxx when they would otherwise not have. The TPPs ascertainable loss is those improper payments. The amount of their ascertainable loss is a question not of liability, but of damages, which was not at issue at this stage of the case.
The last section of the opinion addresses the “superiority” requirement, i.e. that a class action be shown to be superior to other methods of adjudication. The Court’s analysis here ignores key facts. On p.16, the Court says that its superiority analysis:
“demands ‘(1) an informed consideration of alternative available methods of adjudication of each issue, (2) a comparison of the fairness to all whose interests may be involved between such alternative methods and a class action, and (3) a comparison of the efficiency of adjudication of each method.’” …More specifically, in Iliadis, we identified as important to the superiority analysis a consideration of the “class members’ ‘lack of financial wherewithal.’” In such circumstances, we have expressed a concern that, absent a class, the individual class members would not pursue their claims at all, thus demonstrating superiority of the class action mechanism.” (Decision, p.16-17, internal citations omitted)
In its analysis on p.30-32, the Court fundamentally misunderstands the nature of third party payors. It compares this proposed class to a class of individual hourly wage earners in the Iliadis case and concludes that:
“Unlike the individual wage earners there, plaintiff and, by extension, all of the members of the class, allege that they have been damaged in large sums. Unlike those hourly wage earners, plaintiff and the other third-party payors are well-organized institutional entities with considerable resources. Unlike in Iliadis, here we see no disparity in bargaining power and no likelihood that the claims are individually so small that they will not be pursued. In short, we find no ground on which to conclude that this proposed nationwide class meets the test for superiority that we have traditionally required.” (Decision p.31-32)
The question is not whether the class members have been “damaged in large sums,” (and what constitutes large, anyway?) but rather, whether the damages they suffered make an individual lawsuit feasible. Pursuing an individual lawsuit against Merck in this case would be an enormously expensive undertaking. Certainly, large commercial insurers like Aetna, Humana, United Healthcare and even many Blue Cross plans would have the “financial wherewithal” to pursue such cases. But there are tens of thousands of smaller TPPs that would not, including the plaintiff here, IUOE Local 68 Welfare Fund.
The Court had identified on p.16 that an important consideration is “class members’ ‘lack of financial wherewithal.’ In such circumstances, we have expressed a concern that, absent a class, the individual class members would not pursue their claims at all, thus demonstrating superiority of the class action mechanism.” But the Court wrongly concludes that class members here would be able to pursue their claims without a class action. Most of them would not.
While some TPPs are “well-organized institutional entities with considerable resources,” many are not. How could one conclude that a small union health and welfare fund with a few hundred members has “no disparity in bargaining power” with a company like Merck?
The bottom line is that for most TPPs, a class action is the only way they can pursue claims against Merck for its deceptive marketing of Vioxx, a campaign that cost health plans and consumers billions in unnecessary costs, not to mention tens of thousands of heart attacks and deaths.
Today’s decision from the New Jersey Supreme Court is an extremely disappointing one. It ignored key facts about the class and how they were affected by the allegations in the case. Unfortunately, this decision will make it that much harder for health plans to hold drug companies accountable for their illegal tactics. With so many drug companies headquartered in New Jersey, this case will have broad impact.
To read the court’s decision, click here.
Tuesday, August 21st, 2007
The New York Times today published an article by Alex Berenson, “Plaintiffs Find Payday Elusive in Vioxx Cases”. The article gives a good overview of Merck’s legal strategy of refusing to settle any of the cases alleging that Vioxx caused plaintiffs’ heart attacks. Vioxx was Merck’s arthritis drug that was withdrawn from the market in 2004 due to increased risk of heart attacks.
Tens of thousands of lawsuits were filed by patients and their heirs (when the patients had died of heart attacks), accusing Vioxx of having caused their heart attacks and Merck of having hidden the risks of Vioxx despite allegedly knowing about them for several years before the drug was finally withdrawn. Faced with potential legal liability in the billions, Merck decided to refuse to settle any cases, on the notion that early settlements would only encourage more lawsuits to be filed, whereas if Merck won early cases, it would discourage new cases and convince lawyers to withdraw cases that did not seem promising.
Merck’s win-lose record thus far is mixed. It won several cases at trial, but lost several more, with juries awarding millions of dollars to those plaintiffs. Predictably, Merck has appealed each and every one of those judgments, and, as the Times article describes, the net result is that not one Vioxx plaintiff has received a penny to date.
This article underscores the imbalance of power that faces consumers and patients in the Courts when they face large corporations with exponentially greater resources to fight a legal battle. Even consumers with strong and well-documented cases can in the end be deprived of justice by virtue of having to wait years and years as appeals are exhausted:
So far, fewer than 20 Vioxx suits have reached juries, an average of 9 in each of the last two years. At this rate, the backlog of Vioxx cases will take years to work through and many plaintiffs may die before they get their day in court.
The article quotes one plaintiffs’ lawyer:
“Merck’s goal is to manipulate the legal system to deprive justice to tens of thousands of people whose cases can never be heard,” said Mr. Lanier, the lawyer who represented Mrs. Ernst. “Justice delayed is justice denied.”
Merck has also resisted the consolidation of many of the individual lawsuits into a single class action. Such a process is not uncommon in prescription drug cases, particularly when there is a core set of facts that is common to all the plaintiffs. By combining the claims of numerous plaintiffs, class actions help prevent large corporate defendants from employing the types of strategies that Merck has used in Vioxx. The pressure to consider settlement, for example, is much greater in a case with thousands of plaintiffs and combined potential liability of billions, because the stakes of a loss at trial are exponentially higher.
In addition to the more than 45,000 personal injury and products liability lawsuits, there are also individual and class action lawsuits on behalf of consumers, health plans, union benefits funds, and others, not based on heart attacks, but based on the fact that Merck allegedly deceived patients, physicians, and payors about the risks of Vioxx, causing them not only to pay for a drug that might not have otherwise paid for, but to pay a premium price for it. Members of Prescription Access Litigation are involved in several of these class actions, which you can learn more about here.