Mass. grand jury begins case against Merk’s Vioxx marketing. Source: Karda Legal Nurse Consulting

Merck today has reached civil settlements for $649 million with federal and state authorities to resolve longstanding investigations related to fraudulent drug pricing and illegal kickbacks, as well as marketing practices for Vioxx and Zocor.

Just last week, a federal grand jury began a probe into Merck’s sales and marketing practices for Vioxx, the painkiller that was found to have associations with cardiovascular risks that was pulled from the market in 2004. The U.S. Massachusetts District Attorney was investigating whether the company promoted Vioxx to healthcare professionals for off-label uses.

In the settlement, prosecutors claimed that Merck was hiding the discounts it gave to hospitals for the cholesterol drug Zocor and Vioxx by reporting higher prices to the government. From 1997 to 2001, Merck also gave money and perks to doctors and other healthcare professionals to entice them to prescribe Merck drugs, according to the suit.

The settlement was partly based on a whistleblower lawsuit brought by former Merck employee, H. Dean Steinke, who claimed that the pharmaceutical firm violated the Medicaid Rebate Statute in connection with its marketing of Zocor and Vioxx, according the Associated Press.

Under the settlement, the federal government will receive more than $360 million, and forty-nine states and the District of Columbia will get over $290 million.

Merck also said it agreed to pay $250 million, plus interest, to settle a matter pending in the Eastern District of Louisiana, and another $399 million, plus interest, to settle a matter pending in Pennsylvania, which includes a related Nevada action.

Attorney General Michael Mukasey called the settlement one of the largest healthcare fraud settlements ever achieved by the Justice Department.

The company has also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.

Merck announced in December 2007 that it would take a $670 million charge in the fourth quarter of 2007 in anticipation of these two settlements.

The Whitehouse Station, N.J.-based pharmaceutical company said the settlements do not constitute an admission of any liability or wrongdoing.