In another case, on March 31, 2006, a New Jersey court of appeals upheld a class-action lawsuit against Merck filed by private insurers and HMOs, as third-party payors, under the New Jersey Consumer Fraud Act, to recover losses incurred in purchasing Vioxx for their health plans.
The appellate court ruled that Judge Carol Higbee of New Jersey Supreme Court properly exercised her discretion in certifying a nationwide class. "New Jersey's contacts with this dispute are both extensive and weighty," the appeals court said, noting the fact that Merck was a New Jersey corporation and that most of Vioxx-related research and marketing efforts took place in the state.
"Given the confluence of New Jersey contacts and interest," the court stated, "choosing New Jersey as the site for this nationwide class action is not unconstitutionally 'arbitrary or unfair'".
"This Court," the judge wrote, "sees no reason why the duty to be honest about the safety and usefulness of a drug when marketing it as a product for sale should not extend to the third party payors who actually pay for the purchase of drugs for members."
Chris Seeger, the lead attorney for the union health plan, states that "the decision applies to all non-governmental third-party payors in the country, including health insurers, unions, and large employers, who paid for Vioxx prescriptions for their plan members."
"The decision," he says, "also allows for all such third-party payors in the country to prosecute their allegations of being misled by Merck's misrepresentations and concealments concerning Vioxx in one class action, rather than in a multitude of individual actions."
The plaintiffs contend that had they been properly informed of the facts, they would not have included Vioxx on their lists of approved drugs or reimbursed their members for its high cost. In this type of case, the plaintiffs do not have to prove Vioxx caused any injuries or deaths. All they have to prove is that Merck continued to push the sale of the drug after it knew of the increased risks it posed.
Besides recouping costs of purchasing Vioxx for their plan members, if successful, the third-party payors would be entitled to triple damages under the New Jersey Consumer Fraud Act.
That said, Merck must have a lot confidence in its legal team because it reportedly has not reserved any money for liability. Which means it probably plans on using the same trial strategy that has proven somewhat effective so far.
Search out and destroy the credibility of the expert witnesses who might testify for the plaintiffs.
Several of the most feared witnesses provided a preview of their testimony at a November 18, 2004, hearing before the Senate Finance Committee, where the topic was focused on whether the FDA and Merck had failed to protect the public against Vioxx.
In his opening statement, the chairman of the committee, Senator Charles Grassley (R-Iowa), set the parameters for what he called the biggest drug disaster in US history.
"Merck acknowledged that Vioxx carried with it serious cardiovascular risk," he told the audience, "when it withdrew the drug from the market."
However, he explained, during "today's hearing we will hear about the red flags that were raised about those risks in the years before and the years after Vioxx was approved by the Food & Drug Administration."
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