IN FRAUDULENTLY REPRESENTING AND OTHERWISE CONCEALING THE DIMINISHED EFFICACY OF ITS MUMPS VACCINE, MERCK HAS VIOLATED ITS MULTIPLE DUTIES UNDER THE U.S. VACCINE REGULATORY REGIME
102. There are three principal components to the government regulation and purchase of vaccines in this country. The CDC is responsible for the government's purchase of vaccines and for educating the public on, among other things, the safety and efficacy of vaccines and the importance of immunization. The FDA is responsible for overseeing the licensing and approval of vaccines, their manufacture and distribution, and how they are represented to health care professionals and the public through vaccine labeling. The National Vaccine Program, of the Department of Health and Human Services, is responsible for generally overseeing the U.S. vaccine program, including coordinating with the various agencies involved in the program and manufacturers like Merck, and ensuring that vaccines are safe and effective and in sufficient supply.
103. A critical underpinning of this overlapping vaccine regulatory framework is that each agency involved has accurate and up-to-date information on the safety and efficacy of the various vaccines licensed for use in this country. This information is particularly important for the CDC which purchases the vaccines pursuant to a contract with Merck. Not only does it decide which vaccines the government will purchase. It also creates the schedule of recommended vaccinations that determines those vaccines that children in public school are required to take. Furthermore, as codified in the National Childhood Vaccine Injury Act, the CDC has the duty to warn the public about the safety and efficacy of the vaccines. Notably, this is a duty that Merck was instrumental in establishing.
104. Merck thus has ongoing and independent duties to disclose to these agencies all material information relating to the safety and efficacy of its mumps vaccine. However, in misrepresenting a falsely inflated efficacy rate for its mumps vaccine and concealing what Merck knew about the significantly diminished efficacy of the vaccine, Merck has breached these multiple duties.
A. Merck's Duties to the CDC
1. Merck's Duty to Disclose Diminished Efficacy.
105. Merck has both a contractual and statutory duty to provide the CDC with accurate information regarding the safety and efficacy of its mumps vaccine. This duty is triggered by Merck's contractual and statutory delegation to the CDC of Merck's duty to warn the public about the vaccine's safety and efficacy. Without this delegation, Merck would be responsible -- as any drug manufacturer would -- for providing adequate information to consumers relating to the risks and benefits of the vaccine.
106. Merck and the CDC first agreed to this delegation back in the 1970's, at Merck's suggestion. It provided a way to assure that the CDC could purchase Merck's vaccines without Merck being subjected to personal injury claims for failing to warn individual vaccinees or their parents about the safety and efficacy of vaccines administered through government vaccination programs. As a result of the parties' negotiation, the CDC assumed the duty to warn with respect to all Merck vaccines it purchases. In exchange Merck agreed to provided the CDC with all of the information the CDC needs to adequately carry out the duty to warn.
107. This means that Merck has an ongoing duty to provide the CDC with accurate information on the efficacy of its mumps vaccine, including apprising the CDC of any problems Merck discovers, or in the exercise of reasonable care should have discovered, associated with the vaccine's stated efficacy. In the absence of any direct communications by Merck to the CDC relating to the vaccine's efficacy, the CDC principally relies on Merck's vaccine package insert for this information.
108. Merck benefits greatly from this arrangement as it protects Merck from liability for personal injury claims based on any failure to provide consumers with adequate warnings about the vaccine. All of the Merck-CDC purchase contracts (dating back from the late 1970s) contain language, originally drafted by Merck's counsel, providing that the CDC agrees to "take all appropriate steps to provide meaningful warnings [to consumers] relating to the risks and benefits of vaccination."
109. This delegation is now codified under the National Childhood Vaccine Injury Act which, among other things, requires the CDC to develop and disseminate vaccine information materials which provide: "(1) a concise description of the benefits of the vaccine ... and (4) such other relevant information as may be determined by the Secretary [of Health and Human Services]." 42 USC § 300aa-26(c). Merck-CDC purchase contracts still contain the delegation of the duty to warn, but now also cite to this provision as the relevant authority. The CDC also cites to this provision in the Vaccine Information Statements it publishes apprising vaccinees and their parents or guardians of the purpose, risks and benefits of a particular vaccine.
110. The Act further provides a notable (and logical) exception to the statutory release from liability of a vaccine manufacturer for a failure to warn. It does not apply of the manufacturer engages in "intentional and wrongful withholding of information relating to the safety or efficacy of the vaccine after its approval." Indeed, under such circumstances, the manufacturer can be held liable for punitive damages for any failure to warn. 42 USC § 300aa-23(d)(2)(A) and (B).
111. As the Third Circuit has held, Merck's duty to provide accurate and up-to-date safety and efficacy information to the CDC is unequivocal and ongoing: "The manufacturer's responsibility is continuous, and it must therefore apprise the CDC of any risks it later discovers, or in the exercise of reasonable care, should have discovered." See Mazur v. Merck, 964 F2d 1348, 1365-66 (3rd Cir. 1992).
2. Merck's Additional Contractual Duties to the CDC
112. The Merck-CDC purchase contracts also obligate Merck to comply with various FDA regulations regarding the manufacture and sale of its vaccines. This includes the requirements that Merck only sell vaccines to the CDC that are licensed by the FDA and manufactured in conformance with the FDA's current Good Manufacturing Procedures ("cGMP"). As discussed below, a vaccine that is not manufactured in conformance with the specifications upon which the government's approval is based -- such as diminished efficacy -- fails to comply with cGMP and thus violates the CDC purchase contract. As also described below, a vaccine that is mislabeled, misbranded or adulterated (such as with a package insert that represents an inflated efficacy rate) or falsely certified as compliant with the conditions of purchase, likewise violates the CDC purchase contract.
B. Merck's Duties to the FDA
113. Merck has ongoing duties to the FDA pursuant to the Public Health Service Act, the Food Drug and Cosmetics Act and FDA regulations that control the licensing, labeling and manufacture of vaccines. 21 USC § 301 et seq.; 42 USC § 262 et seq.
1. Merck's Duty to Disclose Diminished Efficacy
114. Vaccine manufacturers have an ongoing duty to report problems with efficacy. 21 CFR § 600.12(b).
115. Vaccine manufacturers also have an ongoing duty to manufacture vaccines in conformance with a cGMP. 21. CFR § 210.2. In order to ensure compliance with cGMP, vaccine manufacturers are required to test for safety, purity, and potency every lot of the vaccine to be sold. 21 CFR § 610. Per the specifications approved by the FDA for Merck's mumps vaccine, this means that the amount of attenuated virus Merck puts in its vaccine result in a minimum 95 percent efficacy. See 21 CFR § 600.3(s) (Potency is defined as the "[a]bility ... to effect a given result"). If a manufacturer learns of a deviation from the specifications (such as diminished efficacy), it has a duty to disclose that information to the FDA, fully investigate it and correct it. 21 CFR § 600.14; 21 USC § 331(c) and 21 CFR § 211.192. A vaccine that does not comply with these standards is considered an adulterated product that cannot legally be sold. 21 USC § 331(a).
116. Vaccine manufacturers also have an ongoing duty to report to the FDA all adverse experience events (such as diminished efficacy). See, 21 CFR § 600.80(j). The law also imposes additional reporting requirements for vaccines, such as Merck's mumps vaccine, used in the pediatric population. It requires vaccine manufacturers to submit annual reports of any post-marketing pediatric studies to, among other things, inform the FDA of whether new studies in the pediatric population have been initiated. These reports must include an analysis of available safety and efficacy data in the pediatric population, and an assessment of data needed to ensure appropriate labeling for the pediatric population. 21 CFR § 601.28.
2. Merck's Duty to Ensure That Its Mumps Vaccine Package Insert Is Neither False Nor Misleading
117. Vaccine manufacturers are at all times responsible for the content of their labeling, including their package insert. They are charged both with crafting adequate and accurate labeling and with ensuring that the information remains adequate and accurate. This includes an ongoing duty to self-monitor and update their labeling -- including all associated package inserts and information sheets -- when new information becomes available that causes the labeling to become inaccurate, false or misleading. 21 CFR § 601.12(f)(2) and 21 CFR § 201.56-57. A vaccine is deemed to be misbranded and mislabeled, and cannot be sold, if its labeling is "false or misleading in any particular." 21 USC §§ 352(a) and 331(a).
C. Merck's Duties to the National Vaccine Program
118. Merck also has duties under the National Childhood Vaccine Injury Act which created the National Vaccine Program and the Vaccine Injury Compensation Program. The two programs together were intended to create a simple, easy to administer system for vaccine injury compensation (which Merck wanted) and a more stable, competitive market for childhood vaccines which would lead to vaccine improvements (which the government wanted). The manufacturers were deemed stakeholders and enlisted to collaborate and cooperate with the government to improve the country's vaccination program. In exchange, under the Injury Compensation Program, Merck and other manufacturers obtained protection from liability for personal injury claims.
119. The Act also created a new system for manufacturers to report all "adverse events" related to vaccines reinforcing the reporting requirements otherwise triggered by the Public Health Service Act and the Food Drug and Cosmetics Act, described above. These adverse event reports are made on the Vaccine Adverse Event Reporting System and are supposed to encompass any problems associated with a vaccine including those associated with safety and efficacy. 42 USC § 300aa-25(b).
D. Merck's Duty to Be Truthful and Forthcoming In Its Dealings With the Government
120. Merck has a duty to be forthcoming and honest with federal officials in all of its dealings with the government. Specifically, under 18 USC § 1001, Merck is prohibited from knowingly and willfully: (1) falsifying, concealing, or covering up a material fact by any trick, scheme, or device; (2) making any materially false, fictitious, or fraudulent statement or representations; or (3) making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in any matter relating to the government.
E. Merck's Breach of These Multiple Duties to the Government
121. Merck breached all of the above duties by falsely representing that the efficacy rate of its mumps vaccine is 95 percent or higher and by taking affirmative steps to conceal the vaccine's diminished efficacy.
122. These duties were triggered as soon as Merck learned that the efficacy of its now forty-five year old mumps vaccine had diminished. Merck learned this no later than 1999 as evidenced by the admission by the head of the Merck team running the Protocol 007 testing, Krah. He even correctly predicted that the diminished efficacy of the vaccine would lead to the reemergence of mumps outbreaks. But rather than disclose this to the CDC, FDA or the appropriate individuals running the National Vaccine Program, as Merck was obligated to do, Merck instead embarked on a campaign of concealment and outright fraud.
123. First, Merck devised a scientifically flawed PRN test which attempted to measure the efficacy of its mumps vaccine based on how the vaccine performed against the less virulent vaccine strain of the virus rather than the wild-type strain that exists in the real world. Even using this scientifically dubious methodology, Merck saw that the seroconversion rate was significantly lower than the 95 percent efficacy rate that Merck was representing on its labeling and otherwise. Merck abandoned this methodology and its unfavorable results and kept them hidden rather than disclose them to the government.
124. Second, Merck devised an even more scientifically flawed PRN test when it "enhanced" its 1999 test with animal antibodies. The new methodology was not selected to provide a more accurate measure of the vaccine's efficacy. To the contrary, the methodology was concocted to measure a high seroconversion rate rather than an accurate one. To ensure that Merck's manipulation remained disguised, it falsified the test data to guarantee the pre-negative to post-positive change needed to achieve seroconversion. Having reached the desired, albeit falsified, efficacy threshold, Merck submitted these fraudulent results to the FDA (and the EMA in Europe), again breaching its multiple duties of open and honest disclosure to the government.
125. Third, Merck took steps to cover up the tracks of its fraudulent testing by destroying evidence of the falsification and lying to the FDA investigator that questioned Merck about the ongoing testing. Merck also attempted to buy the silence and cooperation of the staff involved in the testing by offering them financial incentives to follow the direction of the Merck personnel overseeing the fraudulent testing process. Merck also threatened Relator Krahling on numerous occasions with jail if he reported the fraud to the FDA.
126. Fourth, in 2004 Merck submitted the application for approval for ProQuad, certifying the contents of the application as true even though Merck knew the statements about the effectiveness of the mumps vaccine were, in fact, false. At no time during this application process did Merck disclose to the FDA the problems of which it was aware (or should have been aware) relating to the significantly diminished efficacy of its mumps vaccine. Accordingly, in 2005, the FDA approved Merck's application for ProQuad.
127. Fifth, Merck sought and secured FDA approval to change its MMRII labeling to reflect an almost 40 percent reduction in the minimum potency of the mumps vaccine component. It did this while leaving its false representations of efficacy unchanged. And it did this fully appreciating that if the current, higher potency vaccine had an efficacy rate far lower than the falsely represented 95 percent, there was no way the vaccine would achieve this efficacy with significantly less attenuated virus in each shot. Nevertheless, at no time during the course of obtaining the FDA's approval for the labeling change did Merck disclose to the FDA the problems of which it was aware (or should have been aware) relating to the significantly diminished efficacy of its vaccine. Nor did Merck disclose its knowledge that these problems would be greatly exacerbated if the potency in the dose was reduced.
128. Sixth, Merck continued to conceal what it knew (or should have known) about the diminished efficacy of its mumps vaccine even after the 2006 and 2009 mumps outbreaks. It did so even after the CDC -- with which Merck was supposedly working to determine the cause of the outbreaks -- publicly stated that there was nothing wrong with the vaccine.
129. Seventh, Merck has continued to conceal what it knows (or should know) about the diminished efficacy of its mumps vaccine even though the Immunization Action Coalition -- which Merck funds, and which the CDC also funds, supports and substantively contributes to -- prominently promotes an efficacy rate of 97 percent.
130. And eighth, despite what Merck knows (or should know) about the diminished efficacy of its mumps vaccine, Merck has fraudulently represented on its labeling a significantly inflated efficacy rate. Not only does this violate each of the multiple duties described above and make Merck's mumps vaccine a mislabeled, misbranded and adulterated product. This continuous misrepresentation falsely certifies to the government compliance with the terms of the contract pursuant to which the government buys Merck's vaccine.
131. Merck's broad-based scheme to falsely represent and conceal the diminished efficacy of its mumps vaccine violated the multiple duties it owes the government to report, investigate and attempt to correct any problems associated with the safety and efficacy of its vaccine, including its duty: (i) to the CDC, to provide accurate and up-to-date efficacy information and comply with cGMP requirements and not to sell mislabeled, misbranded or adulterated products; (ii) to the FDA, to provide accurate and up-to-date efficacy information, comply with cGMP requirements, fully and properly investigate, test, and correct any suspected problems with efficacy, and ensure the efficacy information reported on Merck's labeling is neither false nor misleading, (iii) under the National Vaccine Program, to report all "adverse events" related to its vaccines including problems associated with efficacy; and (iv) to the government generally, to be forthcoming and honest in all of Merck's dealings.
IN FRAUDULENTLY REPRESENTING AND OTHERWISE CONCEALING THE DIMINISHED EFFICACY OF ITS MUMPS VACCINE, MERCK HAS ILLEGALLY MONOPOLIZED THE MUMPS VACCINE MARKET
132. As the only company licensed by the government to sell mumps vaccine, Merck has had a monopoly in the U.S. market for mumps vaccine since it obtained its original license in 1967. However, Merck has maintained this monopoly not through its business acumen or its manufacture and sale of the best quality product. Instead, Merck has willfully and illegally maintained its monopoly through its ongoing misrepresentations of the efficacy of its mumps vaccine, and its violations of the multiple duties of disclosure it owes the government. Through this misconduct, Merck has been able to maintain a falsely inflated efficacy rate for its mumps vaccine and exclude competing manufacturers from entering the market.
A. The U.S. Market for Mumps Vaccine
133. The U.S. manufacture and sale of mumps vaccine (including Mumpsvax, MMRII and ProQuad) is a relevant antitrust market in this case. For those seeking immunization for mumps, a mumps vaccine is the only product available to achieve that result. So regardless of the price Merck charges for its mumps vaccine, the extent or frequency of any price increases for the vaccine, or whether Merck incorporates the vaccine into multi-disease vaccines, as it does with MMRII and ProQuad, there are no alternative products to which the government, health care professionals or consumers can turn to obtain this immunization.
134. The U.S. market for mumps vaccine is further defined by the CDC's nationwide schedule of recommended childhood vaccinations, including a vaccination against mumps, and the requirement around the country that all public school students be vaccinated against mumps (among other childhood diseases). If a child is to attend public school -- not to mention any private school, university, summer camp or other educational or recreational institution in this country -- he or she must take a mumps vaccine. There is no choice (but for rare exceptions). There is no alternative. No other products can substitute for this required vaccination.
B. Merck's Monopolization of the Market for Mumps Vaccine
135. Since it originally obtained government approval for the mumps vaccine in 1967, Merck has had a natural monopoly through its de facto exclusive license to sell the vaccine in this country. This has extended to multi-disease vaccines such as MMR, MMRII and ProQuad. But Merck has been able to maintain its monopoly not through providing the safest, most effective and most cost effective mumps vaccines in the market. Rather, Merck has maintained its monopoly by representing a falsely inflated efficacy rate of 95 percent or higher.
136. There are significant barriers to entry inherent in the manufacture and sale of a new vaccine. The research, development, testing and government approval process is very expensive, time-consuming and risky. Several years and millions of dollars might be spent on developing a vaccine only to find it fail in the final stages of testing, or to have the government refuse to approve it or significantly limit its application or distribution. Vaccine manufacturers will therefore invest in developing a new vaccine only where they se both a need for the vaccine and an opportunity to make a large enough return on the significant capital investment and risk involved.
137. In the case of the U.S. market for mumps vaccine, this inherent barrier to entry is substantially compounded by the falsely inflated efficacy rate of Merck's vaccine. As with the market for any product, a potential competitor's decision to enter a market hinges on whether its product can compete with those products already being sold in the market. If an existing vaccine is represented as safe and at least 95 percent effective, as Merck has falsely represented its vaccine to be, it would be economically irrational for a potential competitor to bring a new mumps vaccine to the market unless it thought it could compete with the safety and efficacy of the existing vaccine. No one would purchase it otherwise -- not the government, nor health care providers, nor consumers.
138. This is especially true for the federal government since its goal in purchasing vaccines is to allocate its resources to reduce and eliminate disease to the fullest extent possible. Using an inferior vaccine would significantly undermine the overarching purpose of the government funded immunization programs. It would specifically interfere with the government's goal, albeit unrealistic in light of Merck's defective vaccine, of eradicating mumps by the end of the decade.
C. Merck Has Maintained Its Monopoly By Foreclosing Competition
139. Through its false representations of the mumps vaccine's efficacy rate, its efforts to conceal the significantly lower efficacy rate that the Protocol 007 testing confirmed, and its repeated violations of the multiple duties of disclosure it owes the government, Merck has foreclosed potential competitors from entering the market with a new mumps vaccine. No manufacturer is going to sink the time, energy and resources into developing the vaccine for sale in the U.S. with the artificially high bar Merck has devised.
140. Entering the market would be particularly risky in the case of the mumps vaccine given the four-decade lock Merck has had on the market.
141. But for Merck's fraud and other misconduct, one or more competing manufacturers would have entered this lucrative market -- with its guaranteed sales of almost 8 million doses a year -- with a competing mumps vaccine. For example, GlaxoSmithKline, a manufacturer of numerous FDA approved vaccines, has an MMR vaccine, Priorix, that is widely sold in Europe, Canada, Australia and other markets. Priorix is not licensed or sold in the U.S.
142. By continuing to misrepresent an artificially high efficacy rate, and engaging in all the misconduct to conceal the diminished efficacy of its vaccine, Merck has foreclosed GlaxoSmithKline and any other manufacturer from entering the U.S. market for mumps vaccine. So long as Merck continues to engage in this misconduct, these manufacturers will continue to be excluded from the U.S. market and Merck will retain its unchallenged monopoly with a vaccine that does not provide adequate immunization.
D. Merck's Harm to Competition and the Government
143. Merck's misconduct has harmed competition by foreclosing other manufacturers from entering the U.S. market for mumps vaccine. Without such competition, Merck has been able to maintain its monopoly in this market even though it is manufacturing and selling a sub-par vaccine. In the absence of this foreclosure, other manufacturers would have entered the market with a higher quality and/or cheaper vaccine. This competition, or the threat of such competition, would have forced Merck to respond by either selling its existing vaccine at a lower price or developing a better vaccine.
144. Merck's misconduct has also harmed the government. It has caused the government to pay Merck hundreds of millions of dollars for a product that is not what Merck represents it to be and not what the government needs it to be. It has also deprived the government of a competitive market for mumps vaccine which would promote the development of new and better vaccines to improve the health of all Americans. And perhaps most importantly, it has significantly undermined the government's efforts to protect the public against a resurgence of mumps. Outbreaks of the disease have increased and threaten to continue and grow larger. And the original target date for eradication of the disease has long since passed.
THE UNITED STATES' PAYMENT OF HUNDREDS OF MILLIONS OF DOLLARS FOR A VACCINE THAT DOES NOT PROVIDE ADEQUATE IMMUNIZATION
145. Over the past decade, Merck's fraudulent scheme to misrepresent the efficacy of its mumps vaccine has cost the U.S. hundreds of millions of dollars through the government's annual purchases of the vaccine under the National Vaccine Program. Had Merck complied with the U.S. antitrust laws and with its multiple duties of disclosure and reported the diminished efficacy of its vaccine -- rather than engage in fraud and concealment -- it would have affected (or certainly had the potential to affect) the government's decision to purchase the vaccine. The government would have had the opportunity to consider numerous options. For MMRII this would include not purchasing the vaccine from Merck, paying less, requiring a labeling change, requiring additional testing, or prioritizing development and approval of a new vaccine (per the mandate of the National Vaccine Program). For ProQuad this would include not licensing the vaccine at all.
146. But Merck did not comply with these duties of disclosure or with the antitrust laws. Instead, it took pains to maintain its fraudulently inflated efficacy rate and its monopoly grip on the market so it could foist on the government a vaccine without sufficient immunizing effect. In other words, over the past decade, through its scheme of fraud and concealment, Merck has sold the government a vaccine that (i) is mislabeled, misbranded, adulterated and falsely certified; and (ii) does not comply with the FDA's labeling, reporting and testing requirements; with the CDC's reporting requirements; with the cGMP standards required by the CDC contract and the FDA; and with the requirements of the National Vaccine Program to report any vaccine failure.
147. The CDC plays the critical role of making the government's vaccine purchasing decisions. It is responsible for entering into the contracts with the manufacturers, deciding which vaccines to purchase, providing information on safety and efficacy to health care providers and the public, and promoting the benefits of widespread immunization. The CDC purchases vaccines in batches of varying size throughout the year for administration to the public. As negotiated, Merck ships its vaccines to the CDC's designated repositories. Merck thereafter submits a claim for payment which the CDC subsequently pays.
148. The CDC annually purchases from Merck anywhere from roughly $60 million to $76 million of its MMRII vaccine. This comes from the following approximate calculation:
4 million (annual number of U.S. births)
x
.95 (childhood vaccination rate)
x
2 (number of doses per vaccinated child)
x
.52 (rate of vaccine spending attributed to CDC)
x
15 to 19.33 (dollar price range of MMRII dose from 2000 to present)
The mumps component of the MMRII vaccine represents about 40 percent of the vaccine's total cost.
149. Since 2000, the CDC has thus paid Merck more than $700 million for its MMRII vaccine to be administered to children. These amounts likely underestimate the CDC's total purchases because they do not account for purchases of ProQuad, which is significantly more expensive than MMRII, Mumpsvax, or purchases of adult doses of Mumpsvax, MMRII and ProQuad, which Merck also sells to the CDC. Over this period, the U.S. has therefore paid more than three-quarters of a billion dollars for a mislabeled, misbranded, adulterated and falsely certified vaccine that does not provide adequate immunization.
CLAIM FOR RELIEF (Merck's Violation of the False Claims Act)
150. Relators reallege and incorporate by reference all of the allegations set forth herein.
151. This is a claim for treble damages and penalties under the False Claims Act, 31 U.S.C. § 3729, et seq., as amended.
152. As set forth above, in violation of 31 U.S.C. § 3729(a)(1), Merck knowingly presented, or caused to be presented, to the United States government, false or fraudulent claims for payment or approval when it billed the government for its purchases of a mumps vaccine that, among other things, (i) was significantly less effective than Merck represented it to be, (ii) did not provide the product the government contracted to purchase, (iii) was mislabeled, misbranded, adulterated and falsely certified and (iv) was exclusively supplied to the government by Merck because of Merck's illegal monopolization of the mumps market.
153. In addition, at least for conduct occurring on or after May 20, 2009, Merck violated 31 U.S.C. § 3729(a)(1)(A) (formally 31 U.S.C. § 3729(a)(1) as amended by the Fraud Enforcement and Recovery Act of 2009) by knowingly presenting or causing to be presented false or fraudulent claims for payment or approval when Merck billed the government for its purchases of a mumps vaccine that, among other things, (i) was significantly less effective than Merck represented it to be, (ii) did not provide the product the government contracted to purchase, (iii) was mislabeled, misbranded, adulterated and falsely certified and (iv) was exclusively supplied to the government by Merck because of Merck's illegal monopolization of the mumps market.
154. As set forth above, in violation of 31 U.S.C. § 3729(a)(2), Merck also knowingly made, used, or caused to be made or used, false records or statements to obtain payment or approval by the government of Merck's false or fraudulent claims for purchases of its mumps vaccine when Merck, among other things: (i) failed to disclose that its mumps vaccine was not as effective as Merck represented, (ii) used improper testing techniques, (iii) manipulated testing methodology, (iv) abandoned undesirable test results, (v) falsified test data, (vi) failed to adequately investigate and report the diminished efficacy of its mumps vaccine, (vii) falsely verified that each manufacturing lot of mumps vaccine would be as effective as identified in the labeling, (viii) falsely certified the accuracy of applications filed with the FDA, (ix) falsely certified compliance with the terms of the CDC purchase contract, (x) engaged in the fraud and concealment described herein for the purpose of illegally monopolizing the U.S. market for mumps vaccine, (xi) mislabeled, misbranded, and falsely certified its mumps vaccine, and (xii) engaged in the other acts described herein to conceal the diminished efficacy in the vaccine the government was purchasing. Merck engaged in all of this misconduct to maintain its monopoly of the U.S. market for mumps vaccines and to secure continued payment by the government of Merck's false or fraudulent claims for its sales of the mumps vaccine.
155. In addition, at least for false or fraudulent claims pending or made on or after June 7, 2008, Merck violated 31 U.S.C. § 3729(a)(1)(B) (formally 31 U.S.C. § 3729(a)(2) as amended by the Fraud Enforcement and Recovery Act of 2009) when Merck knowingly made, used, or caused to be made or used, false records or statements material to its false or fraudulent claims when Merck, among other things: (i) failed to disclose that its mumps vaccine was not as effective as Merck represented, (ii) used improper testing techniques, (iii) manipulated testing methodology, (iv) abandoned undesirable test results, (v) falsified test data, (vi) failed to adequately investigate and report the diminished efficacy of its mumps vaccine, (vii) falsely verified that each manufacturing lot of mumps vaccine would be as effective as identified in the labeling, (viii) falsely certified the accuracy of applications filed with the FDA, (ix) falsely certified compliance with the terms of the CDC purchase contract, (x) engaged in the fraud and concealment described herein for the purpose of illegally monopolizing the U.S. market for mumps vaccine, (xi) mislabeled, misbranded, and falsely certified its mumps vaccine, and (xii) engaged in the other acts described herein to conceal the diminished efficacy of the vaccine the government was purchasing.
156. These false statements, records, and data, and Merck's multiple failures to comply with its various duties of disclosure, investigation, testing and reporting, were material to the government's purchases of and payments for Merck's vaccine, and the CDC's long-standing recommendation to have the public vaccinated with Merck's mumps vaccine. This materiality is reflected in:
• Merck's contractual and statutory duties to disclose to the government all information regarding the safety and efficacy of its mumps vaccine;
• Merck's multiple intentional violations of these duties;
• The CDC's responsibility to ensure that all vaccines manufactured and sold in the U.S. are safe and effective;
• The FDA's responsibility to ensure that all vaccines manufactured and sold in the U.S. are safe and effective;
• The National Vaccine Program's responsibility to ensure that all vaccines manufactured and sold in the U.S. are safe and effective;
• The CDC's responsibility to provide health care professionals and the public with accurate and up-to-date information on the safety and efficacy of vaccines;
• Merck's decision to conduct PRN testing of its mumps vaccine which would be reported to the FDA;
• Merck's abandonment of the 1999 PRN methodology in favor of a methodology that would yield better results;
• Merck's improper use of animal antibodies in its "enhanced" PRN test to artificially boost its seroconversion results;
• Merck's falsification of pre-positive test data to report the results it wanted using the animal antibodies in its testing;
• The CDC's continued belief in the faces of the 2006 outbreak that there was nothing wrong with Merck's vaccine and that it should continue to be used;
• The call by at least one CDC doctor for a new vaccine if the Merck vaccine was not effective in preventing outbreaks;
• The prominent publication of inaccurate mumps efficacy information by the Immunization Action Coalition
• Merck's continuing efforts to improperly maintain its monopoly of the U.S. market for mumps vaccine through its false representation of an inflated efficacy rate; and ultimately
• Merck's own recognition that it would lose its exclusive license to sell mumps vaccine if it did not measure and report at least a 95 percent seroconversion rate in the mumps efficacy testing conducted in Krah's lab under Protocol 007.
157. Each representation Merck made to the government asserting that its mumps vaccine was at least 95 percent effective, including through its product package inserts, the reporting of its fabricated test results, and otherwise, as described above, constituted a false statement or record. Likewise, each invoice Merck submitted, or caused to be submitted, to the government for payment for the purchase of the vaccines, constituted a false or fraudulent claim for payment. Relators cannot identify at this time all of the false claims for payment caused by Merck's unlawful conduct because they were submitted at numerous times under various requests between 200 and the present.
158. To the extent that the facts alleged in this Complaint have been previously disclosed to the public or the government in any fashion, Relators are each an "original source" of the information as defined in 31 U.S.C. § 3730(e)(4).
159. The United States government, the public, and the public treasury have been damaged by and continue to be damaged by Merck's fraudulent conduct.
160. In addition, Merck's fraudulent conduct may be in violation of a 2008 Corporate Integrity Agreement that Merck entered into with the Office of Inspector General of the Department of Health and Human Services. Merck entered into this agreement as part of its settlement with the United States to resolve prior unrelated False Claims Act litigation. As part of this agreement, Merck is obligated to promote its "products (including vaccines) that are reimbursed by Federal health care programs" in compliance with the federal program requirements.
PRAYER FOR RELIEF
Wherefore Relators requests the following relief:
A. That Merck cease and desist from violating 31 U.S.C. § 3729, et seq.;
B. That the Court enter judgment against Merck in an amount equal to three times the damages suffered by the United States due to Merck's unlawful conduct;
C. That the Court enter judgment against Merck assessing a civil penalty of no less than $5,500 and no more than $11,000 for each violation of 31 U.S.C. § 3729;
D. That Relators receive the maximum award allowed by 31 U.S.C. § 3730(d);
E. That Relators be awarded all costs of this action, including attorneys' fees, costs, and expenses pursuant to 31 U.S.C. § 3730(d);
F. That the Court award pre and post-judgment interest on any damages awarded to the United States or Relators; and
G. That the United States and Relators be awarded all such other relief that the Court deems just and proper.
JURY DEMAND
Relators hereby demand a trial by jury.
Dated: April 27, 2012
Keller Grover LLP
Jeffrey F. Keller
Kathleen R. Scanlan
1965 Market Streest
San Francisco, CA 94103
Tel: (415) 543-1305
Fax (415) 543-7861
Wasserman, Comden, Casselman & Esensten, L.L.P.
Melissa Harnett
5567 Reseda Blvd., Suite 330
Tarzana, CA 91356
Tel: (818) 705-6800
Fax: (818) 345-0162
Schlam Stone & Dolan LLP
Robert L. Begleiter
26 Broadway, 19th Floor
New York, NY 10004
Tel: (212) 344-5400
Fax: (212) 344-7677
Counsel for Relators
Stephen A. Krahling
Joan A. Wlochowski
Meredith & Associates
Joel C. Meredith
1521 Locust Street, 8th Floor
Philadelphia, PA 19102
Tel: 215-564-5182
Fax: 215-569-0958
Constantine Cannon LLP
Gordon Schnell
Jeffrey I. Shinder
Jason Enzler
Marlene Koury
335 Madison Ave.
New York, NY 10017
Tel: (212) 350-2700
Fax: (212) 350-2701
______________
Notes:
1. Mumps vaccine used herein refers to any of Merck's vaccines containing a mumps component such as MMR, MMRII and ProQuad.