This is one of the bigger wins the drugmaker can claim so far. The New Jersey Supreme Court reversed a lower court decision and ruled that Merck doesn’t have to defend a national class-action lawsuit seeking up to $9 billion over claims it misled health insurers about its painkiller.

Background: the International Union of Operating Engineers Local 68 Welfare Fund claims Merck hid Vioxx safety risks and, therefore, was overcharged. With class-action status, insurers and other payers could also seek reimbursement, wielding significant leverage to force a settlement. And under NJ’s Consumer Fraud Act, the drugmaker could be forced to pay three times whatever amount was spent on the painkiller. In other words, an eye-popping final bill of $27 billion. But that won’t happen.

“Certification of a nationwide class is not appropriate because common questions of fact or law do not predominate and a class action is not superior to other available mechanisms,” the court decided, returning the case to a lower court for further proceedings. (Here is the ruling).

The Supreme Court concluded that third-party payors relied on pharmacy-benefits managers to make individual decisions about including Vioxx on formularies, Bloomberg News writes. Those separate considerations meant they couldn’t proceed as a group in seeking damages under New Jersey’s Consumer Fraud Act, the court ruled.

The plaintiffs also sought to prove that Merck engaged in fraud by overcharging for Vioxx, a legal theory not allowed under the Consumer Fraud Act, the court ruled. “The Supreme Court recognized that a class action was improper because each insurance company and HMO considered different types of information in deciding whether to reimburse patients for VIOXX, and they all went through varied processes with different experts in making those decisions,” Ted Mayer of Hughes Hubbard & Reed, outside counsel for Merck, says in a statement.

In his own statement, Chris Seeger, whose firm represents the plaintiffs, says he “respectfully” disagrees with the ruling and stands ready to pursue the litigation. “The decision today should be viewed as a clarion call to all of the institutions and entities that were harmed by Merck’s wrongdoing in the promotion and marketing of Vioxx,” says Seeger.

One advocacy group, the Prescription Access Litigation project, , which is involved in numerous lawsuits concerning drug pricing, lambasted the decision: “While some third-party payors are ‘well-organized institutional entities with considerable resources,’ (as the court described them), many are not. How could one conclude that a small union health and welfare fund with a few hundred members has ‘no disparity in bargaining power’ with a company like Merck?

The bottom line is that for most third-party payors, a class action is the only way they can pursue claims against Merck for its deceptive marketing of Vioxx, a campaign that cost health plans and consumers billions in unnecessary costs, not to mention tens of thousands of heart attacks and deaths. Today’s decision from the New Jersey Supreme Court is an extremely disappointing one. It ignored key facts about the class and how they were affected by the allegations in the case. Unfortunately, this decision will make it that much harder for health plans to hold drug companies accountable for their illegal tactics. With so many drug companies headquartered in New Jersey, this case will have broad impact.”