Merck Finally Charges Off The $950 Million Vioxx® Reserve — Booked Back In October 2010

Surprising almost no one, Whitehouse Station this afternoon concluded its plea deal with the federal (and most state) authorities over its prior marketing of the withdrawn Vioxx® pain medication, which was still on the market in late 2004. A new corporate integrity agreement will be signed, and I will link to it, right here, as soon as the associated (and required) SEC Form 8-K is filed on it, by Merck.

Even though widely expected, this is nearly a billion, afterall — from the Merck presser, just out:

. . . .Merck. . . announced it has reached a resolution with federal and state authorities regarding a previously disclosed investigation concerning Vioxx. Merck voluntarily withdrew Vioxx from the market in September 2004. The company previously recorded a charge of $950 million in October 2010 in anticipation of today’s agreements.

Under civil settlement agreements signed with the United States and individually with 43 states and the District of Columbia, Merck will pay approximately two-thirds of the reserved charge to resolve civil allegations related to Vioxx. As a result, the United States and the participating states have released Merck from civil liability related to the governments’ allegations regarding the sale and marketing of Vioxx in the United States. Previously disclosed litigation with seven states remains outstanding.

The civil settlement does not constitute any admission by Merck of any liability or wrongdoing.

“We believe that Merck acted responsibly and in good faith in connection with the conduct at issue in these civil settlement agreements, including activities concerning the safety profile of Vioxx,” said Bruce N. Kuhlik, executive vice president and general counsel of Merck.

Separately, the company agreed to plead guilty to a misdemeanor under the Federal Food, Drug, and Cosmetic Act arising out of the marketing of Vioxx by company representatives to physicians in the United States for the treatment of rheumatoid arthritis before the FDA’s approval of that indication in April 2002. The company will pay a fine of approximately one-third of the reserved amount to the federal government as part of the plea agreement. . . .

Now we wait for the securities, ERISA and derivative settlements related to the ENHANCE debacle. Those should appear in Q4 2011 as well — once Merck’s board approves them. How much more will they cost? We will let you know, but those were largely due to the acts of high executives at legacy Schering-Plough, not Merck.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s