Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Alaska: State’s claims over drug maker’s marketing of Vioxx remanded, (Feb 9, 2015)

By Linda O’Brien, J.D., LL.M.

The State of Alaska was entitled to remand of its action against drug manufacturer Merck & Co. for allegedly knowingly engaging in misrepresentations regarding the advertising, selling, and distribution of its brand drug Vioxx to consumers in Alaska, the federal district court in Anchorage has ruled (State of Alaska v. Merck & Co., Inc., February 6, 2015, Burgess, T.).

Pharmaceutical company Merck & Co. began marketing rofecoxib tablets under the brand name Vioxx in 1999, which was approved by the FDA for the treatment of osteoarthritis and management of acute pain in adults. Merck requested that Vioxx be placed on Alaska’s Medicaid program list of drugs subject to reimbursement. After research and clinical trials revealed that the use of Vioxx increased the risk of heart attacks or stroke, Merck withdrew Vioxx from the market.

In 2005, the State of Alaska filed suit against Merck in state court, alleging that the drug maker engaged in unfair methods of competition and deceptive business practices in violation of the Unfair Trade Practices and Consumer Protection Act (UTPA). Specifically, the State asserted that Merck misrepresented in its advertising that Vioxx was safe and effective for consumers, concealed knowledge of the drug’s dangers, and induced the State to authorize expenditures of Medicaid funds for the purchase of Vioxx.

In 2006, the case was removed to federal court and transferred to the multi-district litigation in the Eastern District of Louisiana. In October 2014, the case was returned to the court and the State filed a renewed/supplemental motion for remand.

The court found that the State’s complaint did not give rise to federal jurisdiction. Merck’s argument that the State’s theory of recovery — that it would not have covered Vioxx prescriptions under Medicaid if Merck adequately disclosed the drug’s risks — hinged upon an interpretation of federal law was rejected. The court noted that the State did not contest its obligations to pay for approved drugs under Medicaid, instead the State claimed it was fraudulently induced to cover Vioxx which triggered its obligation to reimburse payments for Vioxx prescriptions. There was no need to analyze the Medicaid statute to determine whether the State was entitled to relief.

Furthermore, the resolution of a federal issue was not necessary in order for the State to prevail on its state law claims, according to the court. The federal Medical law raised in the State’s complaint was not an essential element of the state law claims that Merck violated the UTPA. Even if the State’s claims under the UTPA implicated a necessary federal issue, it was not substantial enough to confer federal jurisdiction. Therefore, the State’s motion for remand was granted.

The case is No. 3:06-cv-00018-TMB.

Attorneys: James Edward Fosler (Fosler Law Group, Inc.) and W. Mark Lanier (The Lanier Firm) for State of Alaska. Brian P. O'Donoghue (Goldman Ismail Tomaselli Breennan & Baum LLP) and Douglas J. Serdahely (Holland & Knight LLP) for Merck & Co., Inc.

Companies: Merck & Co., Inc.

Cases: StateUnfairTradePractices AlaskaNews