Pharmaceutical Update

Manufacturer Wins Trial by State Attorney General over Medicaid Reimbursement

In a significant victory for pharmaceutical defendants faced with an onslaught of recent Medicaid and consumer fraud lawsuits from State Attorneys General, Judge Eldon Fallon of the Eastern District of Louisiana (the federal MDL court for Vioxx claims) has rejected all of the State of Louisiana’s claims against Merck Sharp & Dohme Corp., Inc. stemming from Louisiana’s payments for Merck’s prescription drug Vioxx through Louisiana’s Medicaid Program.

In State of Louisiana v. Merck Sharp & Dohme Corp., the State of Louisiana alleged that (1) Vioxx contained redhibitory defects, and that Merck knew, or should have known, of these defects, (2) Merck violated the Louisiana Unfair Trade Practices Act and (3) Merck violated the New Jersey Consumer Fraud Act. Louisiana requested damages and penalties under each of these causes of action, including restitution for all payments made for Vioxx through its Medicaid program.

After extensive discovery, Merck moved for summary judgment on all claims arguing that Louisiana could not prove causation because, under state and federal law, Louisiana was required to reimburse Vioxx prescriptions. Merck further asserted that Louisiana could not prove individualized causation required for the thousands of individual prescribing decisions. The Court granted Merck’s Motion for Summary Judgment as to several claims, but allowed the redhibitory defects claim for restitution of Vioxx Medicaid payments to proceed to trial.

In April, Judge Fallon held an eight-day bench trial on Louisiana’s redhibitory defect claim for which the State of Louisiana sought millions of dollars. On June 29, 2010, Judge Fallon issued his decision finding that Louisiana could not have denied reimbursement for Vioxx under its Medicaid Program and that the State failed to show it could and would have done anything differently had it been presented with different safety or efficacy information about Vioxx. The Court went on to find that Vioxx’s gastrointestinal safety is superior to other NSAIDs and that Louisiana had access to information about the cardiovascular concerns associated with Vioxx. As a result, Judge Fallon dismissed Louisiana’s claims against Merck related to Merck’s sales of Vioxx with prejudice. Travis Sales of Baker Botts L.L.P. and the Goldman Ismail Tomaselli Brennan & Baum LLP firm were co-lead trial counsel.