PHILADELPHIA A sales manager who "just couldn't abide" by the way Merck wanted him to market the drugs Vioxx and Zocor to doctors took the lonely step of filing a whistle-blower suit against his employer.
Seven years later, Merck & Co. will pay $671 million to settle complaints it overcharged government health programs and gave doctors improper inducements to prescribe its drugs.
And whistle-blower H. Dean Steinke, the Michigan sales manager whose lawsuit led to about $400 million of the recovery, gets a $68 million reward.
"He did it because he really, truly thought that Merck was doing the wrong thing and he just couldn't abide by it, even though he was putting his career on hold,'" said Steinke's lawyer, Steven Cohen of Chicago. His small firm, which specializes in such cases, will receive an undisclosed share of the award.
Steinke, who through his lawyer declined an interview, had climbed the sales ladder at Merck for about 12 years and was a district sales manager when he filed the lawsuit. He made the move only after his internal complaints were ignored, Cohen said.
Steinke believed that Merck, as it introduced the much-anticipated painkiller Vioxx and tried to ward off competition for Zocor, an anti-cholesterol drug, had crossed the line when it came to inducements to physicians.
The government investigated his sealed lawsuit, which also alleged that Merck overcharged government health plans, under the Federal False Claims Act.
Prosecutors ultimately alleged that Merck paid physicians, hospitals and others excess fees to run supposed educational programs, from lunches to speaking engagements to visiting professorships, in hopes they would favor their products.
Prosecutors also accused Merck of giving doctors and hospitals steep volume-based discounts on Vioxx, Zocor and Pepcid, in the hope that patients would come to rely on them. The company failed to offer Medicare and other government agencies the same price, as required by law, they said.
"It's heroin-dealer economics. Your first shot of dope is free and then it's more expensive," said Pat Burns, a spokesman for the whistle-blower group Taxpayers Against Fraud.
As part of the agreement, Merck denied any wrongdoing.
Steinke left Merck a month after he filed his lawsuit in December 2000 and went to work for a small pharmaceutical company that shared his values, Cohen said. He made repeated trips to Philadelphia to help government investigators.
"The whistle-blower is stuck in a very lonely and isolated circumstance while the government's investigation is proceeding," Cohen said.
His award includes $44.7 million from federal agencies roughly 20 percent of the government's recovery and about $23.5 million from various states, Cohen said.
The remainder of the settlement announced Wednesday stems from a lawsuit filed by a New Orleans doctor, William St. John LaCorte. His award had not yet been determined.
Cohen described Steinke, who is married with no children, as a reserved man from "good Midwestern stock."
He recently left his drug-company job.