Merck announced Friday it will pay $830 million to settle investor complaints accusing it of committing securities fraud by illegally promoting its anti-inflammatory drug Vioxx for unapproved uses and downplaying its risk of causing heart attacks.

The agreement resolves shareholders’ claims that were combined for multidistrict litigation (MDL) in a New Jersey federal court. Last year, Merck motioned unsuccessfully to have the complaints dismissed, arguing that its statements about the painkiller, which it recalled in 2004 over concerns about the drug’s risk of injury and death, were made with wrongful intent.

The cases combined in the MDL echoed allegations made in a criminal case over its marketing of Vioxx that Merck settled with the U.S. Department of Justice in 2011. Merck paid a $950-million criminal penalty to the U.S., 43 states, and the District of Columbia for allegedly concealing Vioxx risks.

As in the criminal case, shareholders accused Merck of hiding the painkiller’s cardiovascular risks, which were especially bad for patients with rheumatoid arthritis. A comprehensive study designed to gauge the gastrointestinal effects of Vioxx compared to naproxen found that Vioxx patients had fewer gastrointestinal side effects than naproxen patients, but had five times more heart attacks than those in the naproxen group.

Despite those findings, however, Merck scaled back the risks in its marketing of the drug, which investors alleged intentionally or recklessly defrauded them.

Merck ultimately was forced to withdraw the best-selling drug from the market, a move that translated to diminished profits for investors. The company’s handling of Vioxx risks also drew international media attention, further sending stocks tumbling with reports that effectively portrayed the drugmaker as an untrustworthy, profit-hungry corporation.

Investors also accused Merck and many of its executives of other violations, including making misrepresentations to inflate the company’s value and engaging in insider trading.

Merck’s settlement with investors brings the company one step closer to resolving a landslide of litigation brought about by its marketing of Vioxx. In 2007, the company agreed to pay $4.85 billion to settle thousands of products liability lawsuits alleging the painkiller caused injuries and deaths, the largest pharmaceutical settlement in U.S. history. Beasley Allen was part of the litigation team involved in that settlement, led by Beasley Allen lawyer Andy Birchfield, who is now head of our Mass Torts section. In April of 2005, Andy was chosen to co-lead the Plaintiff’s Steering Committee for the federal Vioxx Litigation MDL; and he was lead counsel or co-lead counsel in five Vioxx trials, including one that resulted in a $51 million verdict against Merck.

The drugmaker said in a statement that it denies any wrongdoing and noted it still faces several more individual Vioxx lawsuits accusing it of the same misconduct.


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