State of New York's Vytorin/Zetia Pricing Claims Remain Unsettled -- As Does Suffolk County's (In The Tony Hamptons). . . .

Schering-Plough and Merck just announced that each has settled a small part of the Vytorin/Zetia ENHANCE claims made by 35 states. As ever, what it does not say is almost more important that what it does.

I (probably) need not remind regular readers here that there are at least three pending federal investigations, and at least two Congressional committees actively probing the matter, from various perspectives.

Many many other suits and actions remain (over 150 of them, at last count) -- on many other theories, but even within this small subset, both the State of New York, and Suffolk County (which county includes the Hamptons), are apparently not parties to today's settlement.

Recall that in July of 2008, Suffolk County made civil RICO claims.

In fact, last Summer, the Ninth Circuit upheld the right of the County of Santa Clara, California to bring such claims, holding essentially that Santa Clara County was, in the words of Congress, a "directly intended third party beneficiary" of the main contract for the drugmakers' various drug products.

Thus, Santa Clara was allowed to sue the drugmakers directly -- and by inference, it is far more probable that Suffolk County, New York will be able to survive the highly-predictable Schering motion to dismiss for failure to state a claim, under federal Rule 12(b)(6).

That case was captioned County of Santa Clara, California v. Astra USA, Inc. et al., ___ F.3d 11761 (Case No. 06-16471, August 27, 2008):

. . . .Applying the federal common law of contracts, we hold that the covered entities are intended direct beneficiaries of these agreements and thus have the right to enforce the agreements’ discount provisions against the Manufacturers and sue them for reimbursement of excess payments. We have jurisdiction under 28 U.S.C. § 1291, and reverse the district court’s dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. . . .

. . . .As intended direct beneficiaries of the PPA, covered entities may enforce the Manufacturers’ ceiling price obligations under the federal common law of contracts. Although the statute mandating the PPA does not create a federal private cause of action, allowing Santa Clara’s contract claim to go forward is consistent with Congress’ intent in enacting the legislative scheme. Because it lies within the conventional competence of the courts, that claim is not within the primary jurisdiction of DHHS.

REVERSED and REMANDED.

Indeed -- today's announcement is a small piece of good news, but only a very small piece.