Vioxx Pain Could Spread to Medco

Merck's (MRK Quote) withdrawn painkiller, Vioxx, could soon leave pharmacy benefit manager (PBM) Medco (MHS Quote) with its own headaches.

Government officials have already accused Medco -- a former Merck subsidiary that was spun off to shareholders in August of 2003 -- of improperly favoring Merck brands like Vioxx and Zocor, a cholesterol treatment. They claim that Medco often switched patients from cheaper and potentially more appropriate drugs to Merck brands that generated lucrative rebates for the PBM. And they clearly suggest that Medco may have placed customers at risk in the process.

"The primary reason Medco Health switches drugs is to enhance its revenue regardless of health plan costs -- or of any potential adverse or life-threatening clinical outcomes to patients associated with the switch," states a pending federal lawsuit against the company.

Medco has denied the government's allegations. Moreover, prosecutors have never singled out Vioxx as a potentially unsafe drug. They filed their whistleblower complaint well before Merck decided this fall to pull Vioxx, following a study showing that the drug increased the risk of heart attacks and strokes in some patients.

Still, concerns about Vioxx have been floating around for years. And Medco was still part of Merck for much of that time.

"Did Medco know what Merck knew?" asks Mark Kleiman, a California lawyer who is monitoring the federal case against Medco. "I don't know. ... [But] there is a lot of evidence that Merck and Medco worked hand in glove."

For its part, Merck claims that it withdrew Vioxx as soon as it realized its dangers. Meanwhile, Medco notes that it was hardly alone in distributing the popular painkiller.

"Vioxx was a medicine that was on the preferred formularies of literally scores of PBMs and health care companies," says Medco spokeswoman Ann Smith. "Medco dispenses [Food and Drug Administration]-approved medications prescribed by physicians -- and we are very accurate and efficient at what we do."

Smith's comments came on the same day that the FDA fielded harsh criticism from one of its own. David Graham, a veteran executive at the agency, warned Thursday about the agency's lax handling of the pharmaceutical industry -- and of Vioxx risks in particular -- during a special Senate hearing.

"I would argue the FDA, as currently configured, is incapable of protecting America against another Vioxx," he stated. "We are virtually defenseless."

Merck's stock slid 19 cents to $28.88 on Thursday, while Medco fell 49 cents to $38.47.