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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
Ranking: 144
Merck & Co., Inc.
Merck & Co., Inc., founded in 1891, is a global pharmaceutical company that develops, manufactures and markets vaccines and medicines and also publishes health information as a not-for-profit service. Merck has 60,000 employees worldwide and sales of $22.6 billion in 2006. Its largest-selling product is Singulair, a prescription asthma medication, which achieved sales of $3.6 billion in 2006. Other big sellers include hypertension fighters Cozaar and Hyzaar and anti-cholesterol drugs Vytorin, Zetia, and Zocor.
Federal Contract $: $1331.0m
Total Number of Instances: 17
Total Misconduct dollar amount: $6843.2m
- Annual Report
- Ethics Page
- Lobbying Information
- Political Activity
- Press Page
- SEC 10K
- Website
- Contracting Information
Instances of Misconduct
1. Inflated Drug Prices (Massachusetts Lawsuit)
Merck and its generic drug subsidiary, Warrick Pharmaceuticals Corporation, agreed to pay Massachusetts $24 million to settle a False Claims Act lawsuit brought by the Attorney General accusing Merck and 12 other companies of knowingly reporting inflated prices to industry price reporting services between 1995 and 2003. The lawsuit alleged that Merck (f/k/a Schering-Plough Corporation), its wholly-owned subsidiary, Schering Corporation, and Warrick reported false and inflated prices for three albuterol products, a drug used to treat asthma and other respiratory diseases. In September 2010, a federal jury awarded the Commonwealth $4.6 million in damages; following post-verdict motions, the judge awarded a total of $18 million (treble damages plus civil penalties and pre-judgment interest). Both sides settled in lieu of pursuing appeals of the trial court award.... more»
2. Hawaii Average Wholesale Price Litigation
The state of Hawaii settled with dozens of pharmaceutical companies, including Merck, Pfizer, GlaxoSmithKline and Novartis, which were accused of gouging Hawaii's Medicaid program for more than a decade by fraudulently inflating their prescription drug prices. The total amount of the settlements was $82.7 million. The companies did not admit any liability or wrongdoing.... more»
3. Abarca, et al. v. Merck (Hexavalent Chromium Contamination)
Residents of Merced County, California alleged that former Merck unit Baltimore Aircoil Company (BAC) exposed the population to hexavalent chromium when it ran a wood-treating facility in the area between 1969 and 1994. In March 2011, a federal jury determined that BAC’s operations at the facility resulted in contamination of the air and certain water sources. Later phases of the trial will determine the liability of each defendant and whether plaintiffs are entitled to damages.... more»
4. Humeston v. Merck & Co., Inc. (Vioxx Litigation)
Frederick Humeston, a postal worker from Boise, Idaho, alleged he suffered a heart attack in 2001, at age 56, as a result of his use of the prescription pain medication Vioxx, which is manufactured by Merck. His heart attack occurred several months before Merck issued a stronger warning about the drugs's cardiovascular risks. (Merck pulled Vioxx from the market in September 2004 after its own research showed the drug increased the risk of heart attack and stroke.) At an earlier trial, the jury ruled in favor of Merck, but Humeston later won a new trial, which resulted in a jury awarding him and his wife $20 million in compensatory damages and $27.5 million in punitive damages.... more»
5. Barnett v. Merck (Vioxx Litigation)
Gerald Barnett claimed he suffered a heart attack as a result of his use of the prescription pain medication Vioxx, which is manufactured by Merck. (Merck pulled Vioxx from the market in September 2004 after its own research showed the drug increased the risk of heart attack and stroke.) A Louisiana federal jury found in favor of Barnett and awarded him $50 million in actual damages and $1 million in punitive damages.... more»
6. McDarby v. Merck (Vioxx Litigation)
John McDarby claimed he suffered a heart attack as a result of his use of the prescription pain medication Vioxx, which is manufactured by Merck. (Merck pulled Vioxx from the market in September 2004 after its own research showed the drug increased the risk of heart attack and stroke.) A New Jersey state court jury found in favor of McDarby and awarded $4.5 million in compensatory damages and $9 million in punitive damages plus $1.8 million in costs and attorneys' fees. The jury did not not award any damages to co-plaintiff Thomas Cona, who also blamed Vioxx for his heart attack, although they did find that Merck had committed consumer fraud against him by not publicizing Vioxx's potential risks and assessed $2.4 million in costs and attorneys' fees. On appeal, in May 2008, the Superior Court of New Jersey Appellate Division reversed all damages, fees and costs except McDarby's compensatory damages award.... more»
7. Environmental Violations at Pennsylvania Pharmaceutical Plants
Merck agreed to pay a $1.5 million civil penalty to settle alleged violations of the Clean Air Act and Clean Water Act at its pharmaceutical manufacturing facilities in Riverside and West Point, Pennsylvania. Inspections of the facilities in 2006 found that Merck failed to take necessary preventative measures and follow reporting requirements.... more»
8. Nationwide Vioxx Joint Civil-Criminal Settlement (Civil)
Merck, Sharp & Dohme (MSD) [the U.S. operating company for the pharmaceutical business formerly conducted by Merck & Co.] agreed to pay $950 million to resolve criminal and civil claims related to its promotion and marketing of the painkiller Vioxx. MSD agreed to plead guilty to a one-count information charging a single misdemeanor violation of the Food Drug and Cosmetic Act (FDCA) and pay a $321,636,000 criminal fine. MSD also entered into a civil settlement agreement to pay $628,364,000 to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety. The criminal plea related to the misbranding of Vioxx between May 1999 and April 2002 by promoting the drug for treating rheumatoid arthritis before that use was approved by the Food and Drug Administration (FDA). The civil settlement covered a broader range of allegations, including making inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug and making false statements to state Medicaid agencies about the cardiovascular safety of Vioxx.... more»
9. Nationwide Vioxx Joint Civil-Criminal Settlement (Criminal)
Merck, Sharp & Dohme (MSD) [the U.S. operating company for the pharmaceutical business formerly conducted by Merck & Co.] agreed to pay $950 million to resolve criminal and civil claims related to its promotion and marketing of the painkiller Vioxx. MSD agreed to plead guilty to a one-count information charging a single misdemeanor violation of the Food Drug and Cosmetic Act (FDCA) and pay a $321,636,000 criminal fine. MSD also entered into a civil settlement agreement to pay $628,364,000 to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety. The criminal plea related to the misbranding of Vioxx between May 1999 and April 2002 by promoting the drug for treating rheumatoid arthritis before that use was approved by the Food and Drug Administration (FDA). The civil settlement covered a broader range of allegations, including making inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug and making false statements to state Medicaid agencies about the cardiovascular safety of Vioxx.... more»
10. Defrauding Louisiana’s Medicaid Program
Louisiana recovered $25.2 million from five pharmaceutical companies the state accused of defrauding Louisiana’s Medicaid program: Actavis Group HF, Boehringer Ingelheim GmbH, Dey Pharma LP, GlaxoSmithKline, and Schering-Plough (merged with Merck in 2009). The companies allegedly misreported prescription drug price information, based on Average Whole Prices (AWPs), in order to increase Medicaid reimbursements. Schering-Plough paid the state a total of $5 million.... more»
11. Nominal Pricing Fraud
Merck was accused of violating the Medicaid Rebate Statute in marketing its cholesterol drug Zocor, its prescription pain medication Vioxx, and its anti-heartburn drug Pepcid. Merck allegedly offered hospitals large discounts for all three products if hospitals used them instead of competitors’ brands. The law requires companies to sell drugs to Medicaid at the best price they offer to any customer, but in this instance Merck did not offer similar discounts to Medicaid. Merck was also alleged to have induced physicians to use its products through the payment of illegal kickbacks. In February 2008, Merck agreed to pay more than $650 million to settle the allegations, brought in two separate False Claims Act lawsuits. Merck also entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General.... more»
12. Wissahickon Creek Fish Kills
On June 13, 2006 Merck discharged potassium thiocyanate from its pharmaceutical plant in Montgomery County, Pa., causing extensive fish kills in nearby Wissahickon Creek and the temporary closing of the Philadelphia Water Department's Schuylkill River drinking water intake. In December 2007, Merck settled a federal-state lawsuit over the resulting violations of the federal Clean Water Act and state water pollution control regulations. Merck agreed to pay $10 million to put into place systems that will prevent future discharges, spend approximately $9 million for environmental projects, and pay $1,575,000 in penalties to the United States and the Commonwealth of Pennsylvania.... more»
13. Medco False Claims Act Litigation
Two consolidated qui tam lawsuits filed under the False Claims Act charged Merck's pharmacy benefits management unit Medco Health Solutions (formerly Merck-Medco Managed Care, LLC -- Merck and Medco officially split in August 2003) with cheating federal employees' health plans through various fraudulent practices involving the processing of mail order prescriptions. Medco settled with the government, agreeing to pay $137.5 million plus interest.... more»
14. Medco ERISA Class Action Settlement
Merck agreed to pay $42.5 million to settle class-action lawsuits against its pharmacy benefits management subsidiary, Medco Health Solutions (formerly Merck-Medco Managed Care, LLC -- Merck and Medco officially split in August 2003). Medco, which negotiates with drug companies to obtain discounts for employers and health plans, was accused of improperly pocketing billions in rebates and other fees and, by doing so, violating its fiduciary duties to customers under the federal Employee Retirement Income Security Act (ERISA).... more»
15. Medco Drug Switching Settlement
Merck's former pharmacy benefits management subsidiary, Medco Health Solutions, agreed to pay $29.3 million to settle claims filed by the U.S. Justice Department and the attorneys general of 20 states accusing Medco of violating consumer protection and mail fraud laws by switching patients to more expensive drugs, which allowed Medco to pocket billions in incentive rebates from drug manufacturers. Merck and Medco officially split in August 2003... more»
16. Air Pollution (San Diego, CA)
Merck, as former owner of the Kelco kelp processing plant in San Diego, California, agreed to pay more than $1.8 million in penalties to settle an air pollution case with the U.S. Environmental Protection Agency and the U.S. Department of Justice. The government alleged the facility exceeded air pollution limits for smog-causing volatile organic compound (VOC) air emissions for several years and that Merck, which owned the facility until February 1995, made modifications to the facility without obtaining the necessary permits and failed to install the best available emission controls.... more»
17. Nationwide Vioxx Settlement
In November 2007, Merck & Co. agreed to pay $4.85 billion to end thousands of federal and state personal injury lawsuits claiming injuries and deaths caused by Merck’s prescription pain medication Vioxx. Merck pulled Vioxx from the market in September 2004 after its own research showed the drug increased the risk of heart attack and stroke. Under the agreement, Merck does not admit causation or fault.... more»
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