Embattled Merck & Co. has disclosed that the Securities and Exchange Commission and the U.S. Department of Justice are investigating the company in connection with its withdrawal of the blockbuster arthritis drug Vioxx.
The SEC initiated an informal inquiry while the Justice Department subpoenaed the company for information related to Merck's research, marketing and selling activities of Vioxx, the company said in its quarterly financial filing.
Merck said it is cooperating with both investigations, but it cannot predict the outcomes. Unfavorable results "could have a material adverse effect on the company's financial position, liquidity and results of operations," the company said.
In addition, the company is defending itself against numerous shareholder and class-action lawsuits related to Vioxx. Merck said it has product liability insurance to cover personal injury lawsuits of up to approximately $630 million after deductibles and co-insurance. It also believes it has at least $190 million in directors and officers insurance for Vioxx lawsuits, but it cannot say if the insurance is adequate to cover its defense costs.
Merck voluntarily pulled Vioxx from the market in September after a study soundly confirmed concerns that it increased the risk of heart attack and stroke for longtime users of the anti-inflammatory drug.