Louisiana Ex-Official’s Testimony Today: Merck “Misled” State, On VIOXX® Risks
April 13, 2010

Bloomberg just released a summary of today’s testimony — out of the federal District Court in New Orleans — where Merck’s conduct, in seeking state reimbursement for Vioxx® is now at issue (do go read it all):

. . . .Managers of Louisiana’s state-sponsored health plans would have denied coverage for Vioxx prescriptions if they’d known the drug posed a greater heart-attack risk than rival medicines, David Hood, the former head of the [Louisiana] Department of Health and Hospitals, said today in the trial of the state’s lawsuit against Merck. Louisiana seeks to recover as much as $20 million as a refund for those prescriptions.

“If we had known the risk outweighed the benefit and the drug posed a threat to health, we would have done everything we could” to bar reimbursements of Vioxx prescriptions, Hood told a federal judge in New Orleans. It’s the first of more than a dozen refund cases filed by states over Vioxx to go to trial. . . .

Louisiana officials are seeking more than $11 million in damages, plus expenses and attorneys fees, in their rebate suit over Vioxx prescriptions. The total amount sought is about $20 million, Jim Dugan, one of the state’s lawyers, said in an interview before the trial began. . . .

I’ll keep an eye on this, now. This could be a harbinger of how the other 45 or so states will go. At $20 million a state, that would come in just under $1 billion. New Merck has indicated that it has legal defense cost reserves (an amount to pay legal fees), but essentially nothing for liability reserves — that is, for any payouts awarded here. So these will hit the New Merck P&L in the quarter in which the verdict comes in. Ouch.