updated 7/29/2005 8:43:47 PM ET 2005-07-30T00:43:47

In the latest blow for beleaguered drug maker Merck & Co., a New Jersey judge has ruled health plans that paid for members' Vioxx prescriptions can sue as a class to recover billions of dollars they spent on the recalled painkiller.

Superior Court Judge Carol E. Higbee in Atlantic City late Friday granted a motion filed by a labor union health plan to allow a nationwide class-action lawsuit to proceed under the New Jersey Consumer Fraud Act. Merck, based in Whitehouse Station, N.J., had opposed the motion, which was filed by the International Union of Operating Engineers Local 68 Welfare Fund.

The union had sued Merck in early 2003, arguing that its health plan would not have covered Vioxx prescriptions but for Merck's deception about the risks of the drug, which cost several times as much as older, traditional anti-inflammatory medicines.

Chris Seeger, an attorney for the union, told The Associated Press Friday evening that a very large percentage of Vioxx prescriptions were paid for by third parties, such as health insurers, unions and large employers.

Vioxx, which had peak sales of $2.5 billion annually, was on the market from May 1999 through September 2004, when Merck voluntarily withdrew it because research showed the drug increased risk of heart attack and stroke after 18 months' use.

Besides seeking reimbursement of the billions that third parties paid for patients to take the arthritis and pain drug, Seeger said, the third-party payers would be eligible for triple damages, as provided under the state's consumer fraud act.

"This is very big," he said.

Under the ruling, Seeger and fellow attorneys for the union now will automatically represent all third-party payers across the country _ except for government agencies _ although a procedure will be established for third parties to opt out if they wish.

Merck said in a statement the decision was "not a ruling on the merits," and that the company believes the plaintiffs' claims are unfounded.

"We believe these types of claims cannot be litigated on a class-wide basis," Ted Mayer, outside counsel for Merck, said in a prepared statement. "In deciding whether to reimburse, each third-party payer had different business objectives and, in meeting those objectives, considered and relied on different information, at different times, regarding different patients with different medical histories."

Mayer said Merck acted responsibly regarding Vioxx and will fight this case vigorously.

In her ruling, Higbee wrote, "there are significant factual and legal issues common to all class members to make adjudication through class action fair and efficient. Having each individual class member attempt to litigate their claims (separately) would result in needless duplicative discovery, undue expense to the parties as well as an undue burden on judicial economy."

Higbee also wrote that while the 50 states have differences in their consumer fraud laws, New Jersey has a stronger consumer protection policy than most states.

Meanwhile, the U.S. government also may seek to recover money it spent paying for Vioxx.

On July 13, the Department of Justice filed a statement expressing interest in "discussing global settlement possibilities" in U.S. District Court in the Eastern District of Louisiana on behalf of several government agencies that pay for medical care, such as Medicare, the Department of Defense and the Department of Veterans' Affairs.

A spokesman for the DOJ couldn't comment on the statement Friday.

Mayer said the government notice to the court in New Orleans was a routine step to reserve its right "to recoup any money it may have reimbursed plaintiffs for medical expenses should plaintiffs prevail in their lawsuits. The statement of interest does not assert any claim directly against Merck."

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