Tuesday, July 29, 2008

Officials of Suffolk County, New York Allege Schering-Plough Committed "Indictable" Acts Under RICO -- Newly-filed Civil Suit


NOTE: This case, along with a host of others alleging consumer fraud, have now been settled by an agreed order, since approved by Judge Cavanaugh, requiring the payment by New Merck of money damages. This federal case file was thus closed, effective February 23, 2010.

However, the various putative class actions for securities fraud, and ERISA breach of duties cases, as well as the shareholders' derivative cases, and at least two Congressional investigations, and a host of civil governmental inquiries -- both state and federal -- remain open, active and ongoing.

~~~~~~~~~~~~~


[UPDATED -- 07.29.08 4 PM EDT: Ed, over at Pharmalot, has featured this post! Cool!

11 PM EDT: Dr. Peter Rost has also linked, and featured the graphics from this one. Perfect! Thanks!

Later, Still: The Insider, across the pond, at PharmaGossip has linked this one, as well! Geez -- I guess that's a trifecta, of sorts!

07.31.08 AM-- Chris Truelove, at the Pharma Blog Review has run a teaser on this story, at the end of his, this week. Cool.

07.31.08 PM-- Adventures in Autism has captioned her link, to mine the "Merck Mafia(!?)" -- Ouch!]

The county government of Suffolk County, New York has filed a new civil suit against Schering-Plough (and the Joint Venture, and Merck, among others), overnight, in the federal district courts sitting in Newark, New Jersey. It makes some Consumer Protection Act/False Advertising allegations, but it also takes important new strides in alleging RICO pattern activity -- calling Schering's and Merck's conduct here "indictable".

"Now, that's gonna' leave a mark!" Take a look -- click to enlarge -- see the yellow bubble, and the red underlining, here on page 25 of the complaint:



Suffolk County, New York -- a governmental entity, now -- is alleging that Schering has engaged in what it sees as indictable predicate acts, under the RICO statutes.

There are already other RICO putative class action cases pending against Schering-Plough and Merck, but this is quite significant, in my experienced-estimation -- as at a minimum, it represents a new level of gravitas in the ENHANCE litigation malestrom now beseiging Schering-Plough and its executive leadership: a local-governmental agency is now effectively swearing that Schering has committed "RICO-indictable pattern racketeering" -- in (allegedly) concealing the ENHANCE results for almost two years -- while the good people of Suffolk County, New York were forced to pay greatly-inflated prices for a drug that was no more effective than those much cheaper statins.

For those keeping score at home, the suit is captioned Suffolk County, NY v. Merck Schering-Plough, et al., (Case No. 08-3711, Complaint filed July 28, 2008, DCM-MF, U.S. Dist. Ct., NJ).

I'll keep an eye on this one, for the readership. You may count on it.

8 comments:

Anonymous said...

Thanks for stating the obvious. Congress and the SEC are all over this and their investigation will make this seem like a pimple on Fred's hairy Pakistani Ass. This is what Merck deserves for going to bed with gutter rats.

Condor said...

Anonymoust poster -- I don't disagree with you -- but I do think this development is significant, nonetheless.

Until this point -- all we've really known for certain, on the quasi-criminal front is that the US DoJ -- US Attorneys Health-Care Fraud, and Securities Fraud Units out of Newark, New Jersey, were "looking into" the ENHANCE matter.

To have a government official -- even at the county level, in New York, effectively swear in federal court that Schering's conduct is "indictable" -- changes the complexion of the 150-plus suits now pending.

Is Suffolk County broadly hinting that it will draw up some criminal charges, if Schering (and Merck) don't agree to repay the lions' share of the alleged over-charging, in very short order?

I do not know -- but I do think it possible that Page 25 of the complaint, just filed last night -- was the proverbial "shot across the bow"....

Namsté

Condor said...

[Several of Ed's commenters -- at pharmalot -- have their collective "knickers in a twist" that ANY of this could ever be criminal -- at all. . . so, my answers/observations?]

. . . .RICO makes pattern, repeated and concerted efforts (by any two or more persons, or actors) at mail and wire fraud, a felony — RICO defines anyone that shares profits — here Merck and Schering (via the Cholesterol/Vytorin/Zetia Joint Venture), using mail or wire fraud, “co-racketeers”, if you will! Welcome to being wise-guys, wiseguys!

The allegation by the county officials is that the county’s governmental purchasers relied on Schering and Merck to be honest in pricing Vytorin. Vytorin was badly overpriced, given what (they allege) Merck and Schering knew about ENHANCE — having failed the end-point, as early as January 2007, via “functional unblinding”. . . .

So, the good people of Suffolk County, and the rest of the nation, for that matter, overpaid — or more precisely, were OVERCHARGED for Vytorin.

And, overcharging the government — any government entity — is easily to plead-out, as a crime.

Ipso Facto! Presto Change-o!

See the comments on my blog on this.

It is a proverbial “shot across the bow”, in my estimation.

Schering and Merck should come-about, and fly a white flag. Now. Before Capt. Jack Sparrow bears down. JMHO.

Anonymous said...

Ahh,

Now there's a few other drugs from other companies that I think they should look into.

It's really too bad there's not more people like you posting on different companies.

Salmon

Condor said...

Unfortunately, I neglected to mention this earlier, but a very esteemed reader of the blog has (quite rightly) reminded me about the odious nature of one part of the first commenter's remarks, viz:

". . .Fred's hairy Pakistani Ass. . ."

I think the state of the CEO's hind-parts is not really relevant -- just as I think his ancestry (whether accurate, or not so) is not really relevant to the question of whether he is serving as a capable leader of a public company.

In fact, it advances no position to engage in such childish, ad hominem banter.

It detracts from reasoned discourse -- and so, be warned -- in the future, I may summarily delete such comments.

I am generally pretty free-wheeling, but there are limits.

So, be well; and be smart.


-- Condor

Anonymous said...

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Condor said...

This case, along with a host of others alleging consumer fraud, have now been settled by agreed order, and the payment of money damages, and the federal case file closed, effective February 23, 2010.

However, the various putative class actions for securities fraud, and ERISA breach of duties cases, as well as the shareholders' derivative cases, and at least two Congressional investigations, and a host of civil governmental inquiries -- both state and federal -- remain open, active and ongoing.

Namaste

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Anete Swenson