Case against Merck allegedly providing false data on vaccine efficacy allowed to advance

Antitrust, FCA Claims On Merck Mumps Vaccine To Advance
By Dan Packel

Law360, Philadelphia (September 05, 2014, 6:12 PM ET) — Two lawsuits accusing Merck & Co. Inc. of lying about the efficacy of its mumps inoculation in order to keep competitors from bringing their own versions of the vaccine to market will move forward, after a Pennsylvania federal judge ruled in favor of whistleblowers and direct purchasers Thursday.
U.S. District Judge C. Darnell Jones II ruled that the whistleblowers had sufficiently pled that Merck might have provided false statements to the government and that the direct purchasers had shown enough evidence to establish that these falsehoods could have helped the company gain a monopoly. The judge did ax breach of contract and unjust enrichment claims against the pharmaceutical giant.

“We are pleased that the court has upheld our federal antitrust claim in this important case. While Merck has enjoyed an exclusive monopoly on the sale of mumps vaccine in the United States, mumps outbreaks continue to occur because, as we allege in our lawsuit, Merck has misled the public about the vaccine’s efficacy,” Kellie Lerner of Robins Kaplan Miller & Ciresi LLP, representing the direct purchasers, said in a statement. “This decision brings us one step closer to shining a light on Merck’s deceptive business practices so that new and more effective vaccines will ultimately be developed in the future.”

Since 1967, Merck has been the sole pharmaceutical company in the U.S. licensed to produce mumps vaccine, and the company has long represented that the vaccine is 95 percent effective in preventing the disease.
The whistleblowers, two individuals who worked as virologists in a Merck lab performing efficacy tests, claimed that after the company’s tests showed the vaccines slipping below the 95 percent threshold, it changed its methodology and falsified results but kept reporting to the Food and Drug Administration that the drug was 95 percent effective.

They claimed in their lawsuit, unsealed in June 2012, that Merck violated the False Claims Act by billing the Centers for Disease Control and Prevention for the vaccine while they were aware of its diminished efficacy and by falsifying and manipulating data that should have been shared with the government. They claimed that, as a result, the government had spent hundreds of millions of dollars on ineffective medicine.

The whistleblower suit was promptly followed by the putative class action, in which Chatom Primary Care PC alleged that Merck’s behavior resulted in artificially high vaccine prices by effectively barring competitors from manufacturing their own vaccines.

“As with the market for any product, a potential competitor’s decision to enter a market hinges on whether its product can compete with those products already being sold in the market,” the complaint said. “If an existing vaccine is represented as safe and at least 95 percent effective, as Merck has falsely represented its vaccine to be, it would be economically irrational for a potential competitor to bring a new Mumps vaccine to the relevant market.”

The case has been slow to move forward, with oral arguments on the whistleblowers’ claim taking place in the summer of 2013 and briefing having been completed even earlier.

“We’re really happy with the decision and excited to move forward with the case,” said Gordon Schnell, a partner with Constantine Cannon LLP who represents the whistleblowers.

Merck did not immediately respond to a request for comment on Friday.

The whistleblowers are represented by Gordon Schnell of Constantine Cannon LLP, Joel Meredith of Meredith & Narine LLC and Jeffrey Keller of Keller Grover LLP.

Chatom Primary Care PC is represented by Kellie Lerner, Elizabeth Friedman, Hollis Salzman and Bernard Persky of Robins Kaplan Miller & Ciresi LLP; Richard Golomb and Steven Resnick of Golomb & Honik PC; and Stephen Dampier of Dampier Law Firm PC

Merck is represented by Eric Sitarchuk and Lisa Dykstra of Morgan Lewis & Bockius LLP and Dino Sangiamo and Sally Bryan of Venable LLP.

The cases are USA et al. v. Merck & Co., case number 2:10-cv-04374, and Chatom Primary Care PC v. Merck & Co. Inc., case number 2:12-cv-03555, in U.S. District Court for the Eastern District of Pennsylvania.

–Additional reporting by Matt Fair. Editing by Philip Shea.