Merck to pay $668 million to settle drug-trial disclosure suits

The anti-cholesterol drug Vytorin fared less well against cardiovascular disease.
The anti-cholesterol drug Vytorin fared less well against cardiovascular disease. (JB REED / Bloomberg News)
Posted: February 16, 2013

Merck & Co. said Thursday that it would pay $668 million to settle two class-action lawsuits by investors who accused the company of not properly disclosing the failure of a cholesterol drug to meet its target in a key clinical trial.

Merck's announcement followed a disclosure by Teva Pharmaceuticals Ltd. to the Securities and Exchange Commission on Tuesday that after it had already set aside $670 million to cover potential damages in a patent-infringement lawsuit brought by Pfizer Inc., the "ultimate resolution of this matter could result in a loss of up to $1.4 billion" more - a potential total of about $2.1 billion.

Merck, based in Whitehouse Station, N.J., has a big operation in West Point, Montgomery County.

In 2009, Merck bought Schering-Plough Pharmaceuticals. Before that, the companies worked as partners on Vytorin, a tablet that combines two drugs - Merck's Zocor (simvastatin) and Schering's Zetia (ezetimibe) - with the intent of lowering bad cholesterol. Vytorin had $1.7 billion in sales in 2012. But to allay some concerns in 2005 and prove that Vytorin also decreased the thickness of the carotid artery wall - thus reducing the risk of cardiovascular disease - Merck and Schering began a study of patients that compared the effect of the combination drug to simvastatin alone.

The disappointing results of the study, called Enhance, were released in 2008, after which investors sued, alleging that Merck knew of the results in 2006.

Dan Berger, a Haverford College graduate and a lawyer with Grant & Eisenhofer in New York, represented one of the plaintiffs, the Dutch pension fund Stichting Pensioenfonds ABP. Pension funds for the City of Detroit and the Jacksonville, Fla., police and fire departments were also plaintiffs.

"Our client and other major pension funds depend on companies like Merck and Schering to be honest and forthright about drugs they are producing," Berger said.

The case was scheduled for trial March 4 in federal court in Newark, N.J.

Merck admitted no wrongdoing as part of the settlement and said its fourth-quarter and full-year 2012 earnings per share were reduced.

"This agreement avoids the uncertainties of a jury trial and will resolve all of the remaining litigation in connection with the Enhance study," Merck's general counsel, Bruce Kuhlik, said in a statement. "We believe it is in the best interests of the company and its shareholders to put this matter behind us and to continue our focus on scientific innovations that improve health worldwide."

In the Teva case, the Israel-based company, with its Americas headquarters in North Wales, started selling a generic version of Pfizer's Protonix heartburn medication in 2007.

Teva hoped to prove Pfizer's patent invalid. But a federal jury in Newark ruled otherwise in 2010. Teva plans to appeal but cannot do so until after the damages phase of the District Court trial, which begins June 13.

Pfizer's patent did not expire until July 2010, and a pediatric extension ran until January 2011. Teva's sales of its version were about $1.1 billion before January 2011.

Pfizer, which has a large operation in Collegeville, estimates its damages at $2.1 billion, but it also wants Teva to pay for losses incurred because another generic company, Sun Pharmaceuticals, also entered the market thinking it could follow Teva's path.

Contact David Sell at 215-854-4506 or dsell@ He blogs at and is on Twitter @phillypharma.


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