Drugmaker sues Ky. AG over hiring of private attorneys

Jessica M. Karmasek Aug. 31, 2011, 9:10am


FRANKFORT, Ky. (Legal Newsline) - A subsidiary of Merck & Co. is accusing Kentucky Attorney General Jack Conway of violating its right to due process in a lawsuit filed by Conway in 2009, according to a complaint filed in federal court earlier this month.

In September 2009, Conway filed a lawsuit against Merck & Co. over alleged violations of the state's Consumer Protection Act.

The drugmaker was charged with violating the law by marketing their anti-inflammatory drug Vioxx without revealing all the facts.

The suit, Commonwealth ex rel. Conway v. Merck & Co. Inc., alleged that in May 1999 Merck began an aggressive and deceptive promotional campaign of the drug directed at both consumers and health care professionals, without mentioning warnings of increased risk of cardiovascular events listed as a side effect.

Conway alleged that Merck was aware of the dangers through internal studies that were not disclosed to the FDA or the public.

The lawsuit also accused Merck of engaging in an elaborate scheme to create or publish scholarly articles under fake or ghost authors in order to drum up support for Vioxx.

In 2004, Merck admitted that Vioxx caused serious side effects and pulled the product from the market.

The 2009 lawsuit, originally filed in Franklin County Court, has since been transferred to the U.S. District Court for the Eastern District of Louisiana as part of In re Vioxx Products Liability Litigation.

Now, Merck & Co. Inc. subsidiary Merck Sharp & Dohme Corp. is attacking Conway's hiring of private lawyers to handle the case and their contingency fee agreement.

The company, in its Aug. 16 complaint filed in the U.S. District Court for the Eastern District of Kentucky, argues that Kentucky law authorizes the attorney general to recover civil penalties for certain willful violations but does not empower him "to outsource authority to private lawyers hired pursuant to an ad hoc contingency-fee arrangement."

"Section 367.120 of the Kentucky Revised Statutes makes clear that the purpose of Kentucky's consumer protection program is 'to protect the public interest and the well-being of both the consumer public and the ethical sellers of goods and services.' As the chief law officer of the Commonwealth of Kentucky, and in accordance with relevant provisions of state and federal law, the defendant, Attorney General Conway, has a responsibility to see that justice is done for all, including persons, like Merck, that have been targeted for prosecution," Merck's lawyers wrote.

"In prosecuting actions to recover civil penalties, defendant, Attorney General Conway, is obligated to serve the public interest; in some cases, the public interest may call for limiting the scope of the action or abandoning the action altogether rather than seeking to maximize the amount of civil penalties."

Merck alleges that, in entering into such a contract with private lawyers, Conway has granted them a stake in the outcome of the lawsuit.

The company also alleges that Conway's outside counsel has since assumed the lead role in the prosecution of the suit and has "made or influenced myriad decisions about the prosecution, large and small."

"The contingency-fee arrangement between the defendant and contingency-fee counsel has injected personal financial interest into the prosecution of Commonwealth of Kentucky ex rel. Conway v. Merck & Co., Inc.," Merck's lawyers wrote.

"Indeed, as any lawyer knows, under a contingency-fee arrangement an attorney effectively bets everything on attainment of victory in litigation."

The contingency fee agreement, the company argues, creates a "powerful incentive" for the outside counsel to focus "single-mindedly" on maximizing the amount of civil penalties recovered on behalf of Kentucky from Merck.

"Simply put, the contingency-fee arrangement amounts to a biasing influence, which, among other things, increases substantially the risk of overzealous prosecution. The pernicious consequences of the contingency-fee arrangement are exacerbated by contingency-fee counsel's lack of public accountability," Merck wrote in its eight-page complaint.

"Under these circumstances, contingency-fee counsel's participation in Commonwealth of Kentucky ex rel. Conway v. Merck & Co., Inc. offends the requirement of fundamental fairness embodied in the Due Process Clause of the Fourteenth Amendment."

Merck demands the following:

- That a judgment be entered declaring that Conway has violated Merck's right to due process under the Fourteenth Amendment;

- Conway be enjoined or otherwise restrained from violating Merck's right to due process under the Fourteenth Amendment through an injunction banning further prosecution of the lawsuit and barring private counsel from participating in the lawsuit on Conway's behalf; and

- Merck be awarded costs and reasonable attorneys' fees.

The company also demands a jury trial on the facts raised in its complaint.

Counsel for Merck are Susan J. Pope and Winston E. Miller of Kentucky law firm Frost Brown Todd LLC and John H. Beisner and Jessica Davidson Miller of Washington D.C. firm Skadden, Arps, Slate, Meagher & Flom LLP.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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