Merck & Co alters safety monitoring and pays lawyer fees to end US Vioxx suits
This article was originally published in Scrip
Merck & Co has agreed to pay up $12.5 million in plaintiffs' legal fees to settle shareholder "derivative" suits in US state and federal courts that allege breach of financial duties by senior executives over the withdrawn painkiller Vioxx (rofecoxib).
As part of the settlement, which is pending final court approval by a New Jersey state judge, the company has also agreed to make a number of changes related to monitoring and corporate governance, including the establishment of two committees to address product safety. It had already hired in December a chief medical officer, Dr Michael Rosenblatt (formerly dean of the Tufts University School of Medicine) – an appointment that satisfies one of the terms of the settlement.
In a shareholder derivative action, the suing shareholder claims to be acting on the company's behalf rather than just shareholders. This type of suit often arises where there is alleged fraud, mismanagement, self-dealing or dishonesty that is being ignored by company officers. Merck is settling in order to put the matter behind it, and it did not admit liability or wrongful conduct.
The proposed settlement was outlined in a February 9th regulatory filing. Merck still faces a separate, and much larger, damages suit filed by shareholders, which is pending before the US Supreme Court. In oral arguments last November, Merck challenged the suit, which stems from allegations that the company misrepresented the cardiovascular safety of Vioxx to the public and investors (scripnews.com, November 25th, 2009).
Merck has agreed to a number of corporate governance changes for a period of not less than four years, according to the regulatory filing. This includes registering and submitting clinical trial results to a public registry, required under federal law, with this compliance overseen annually by an independent third party. The company will also create two committees to address safety issues within the company: one to promptly address risks that could affect the company, its products or customers, and another to implement procedures to monitor the safety of any drug marketed or studied by the company and establish and publicise internally procedures by which employees can raise concerns about drug safety.
This second committee – the newly established product safety committee – will have the responsibility for drafting and implementing written procedures to monitor the safety of any drug marketed or studied by the company. This committee "shall include the head of global regulatory strategy and product safety, the head of clinical risk management and safety surveillance, the European qualified person for pharmacovigilance, vice-president and the assistant general counsel, regulatory, and such other members as the company appoints from time to time", the filing said.
The chief medical officer would serve on the two new committees, as well as have an "executive voice" on product safety issues who is independent of Merck Research Laboratories, the filing said. That person would also have the following duties: establish and maintain relationships with public policy makers on medical and drug safety issues; assist and have meaningful input in establishing procedures to address product safety issues; oversee the process for review and submission of promotion labelling, advertising and related materials such that those materials will be accurate, truthful and consistent with labelling; and serve as Merck's "medical ambassador". When Merck announced the appointment of Dr Rosenblatt as chief medical officer, it said he would report directly to CEO Richard Clark and serve on the executive committee, and will also oversee the company's Global Center for Scientific Affairs.
"Merck employees shall be able to direct inquiries regarding drug or patient safety issues to the chief medical officer, and such ability shall be communicated to Merck's employees through the company's intranet," the filing stated. "This shall be in addition to any other avenues through which Merck employees may raise issues or concerns to appropriate personnel."
outstanding Vioxx issues
Merck withdrew Vioxx in 2004 after its own research showed it was associated with an increased risk of CV events, and it later agreed to pay $4.85 billion to settle a certain number of personal injury claims in which the claimant suffered a myocardial infarction, sudden cardiac death or ischaemic stroke. Other actions are still outstanding. Merck disclosed last year that the US Attorney's Office in Boston was conducting a grand jury investigation over "activities in connection with Vioxx" (scripnews.com, March 26th, 2009). On the positive side, Merck was able to have dismissed a Texas suit seeking to recover Medicaid-related Vioxx expenses (scripnews.com, November 24th, 2009). The case is the first of 13 similar suits by state attorneys general, and Merck says it will vigorously defend itself.