TRENTON, N.J. - Third-party payors may not create a nationwide class intended to group claims against Merck & Co., the New Jersey Supreme Court unanimously decided Thursday.

The International Union of Operating Engineers Local No. 68 Welfare Fund sought the action, requested in a motion that was originally granted by a Law Division judge in 2005 then affirmed by the state's Appellate Court.

The 5-0 ruling by the justices reversed the decision. The Welfare Fund wanted "to certify a nationwide class of third-party[,] non-government payors who . . . paid any person or entity for the purchase of a prescription anti-inflammatory arthritis and acute pain medication marketed by defendant Merck & Company, Inc. . . . under the brand name Vioxx."

The Welfare Fund acts as a third-party payor, a sponsor of health benefit plans that provide prescription drug coverage for its members. It makes the payments to pharmaceutical companies for its members' prescription medications and claims it was induced into paying a higher price than those charged for similar medications by Merck's fraudulent marketing scheme.

According to a report by The Associated Press, the Welfare Fund was acting on behalf of all the insurance plans responsible for approximately 80 percent of all purchases of Vioxx. The union's attorney, Chris Seeger, said a bundling of the claims would have cost Merck $15-$18 billion, the report added.

Merck is facing approximately 27,000 claims that Vioxx, an anti-inflammatory, caused strokes or heart attacks. Merck has taken it off the market.

The Welfare Fund thought questions of law or fact it raises were common with other members of a possible class. The Court disagreed, citing the rules of class action certification recently addressed in Iliadis v. Wal-Mart Stores, Inc.

"This provision requires that questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that the class action is superior to other available methods for the fair and efficient adjudication of the controversy," the Court wrote in a per curiam opinion.

"In Iliadis, the Court explained the meaning of predominance, referring to the importance of an analysis of the number and, more importantly, the significance of common questions. At a minimum, predominance requires a common nucleus of operative facts. The superiority requirement involves a comparison with alternative procedures and a determination of the fairness and efficiency of each."

The Appellate Division thought the rules applied to the Welfare Fund's request because all members could make claims under the state's Consumer Fraud Act, but the Supreme Court said each third-party payor relied on different Prescription Benefit Managers in deciding which drugs to purchase.

"The evidence about separately created formularies, different tier systems, and individualized requirements for approval for reimbursement imposed on various plans' members and their prescribing physicians are significant," the Court wrote. "Standing alone, that evidence suggests that common fact questions surrounding what Merck knew and what it did would not predominate."

The Court also worried that nationwide application of its state law because it relies on a rejected theory concerning fraud on the market claims.

"In place of the traditional reliance element of fraud and misrepresentation, the CFA requires a consumer to demonstrate it has sustained an ascertainable loss. The Trust Fund asserts that the common facts surrounding Merck's marketing scheme created an effect on the price of Vioxx such that the ascertainable loss element of the CFA may be proven on a class-wide basis by use of expert analysis alone," the Court wrote.

"Merck urges that such an approach cannot demonstrate ascertainable loss because it amounts to a 'fraud on the market' theory. That theory is a creature of federal securities litigation, and it allows plaintiffs that purchase securities to demonstrate they were damaged simply because a defendant engaged in prohibited behavior and there was a change in price. This Court has rejected the fraud on the market theory as inappropriate in any context other than federal securities fraud litigation.

"The Trust Fund's proof theory - that it can demonstrate class-wide damages through use of a single expert who could opine about the effect on pricing due to Merck's marketing campaign - would indeed be the equivalent of fraud on the market."

Justices Virginia Long, John Wallace, Roberto Rivera-Soto, Jaynee LaVecchia and Helen Hoens made up the 5-0 decision. Justice Barry Albin did not participate. It is the Court's second high-profile business ruling this summer, following June's decision on public nuisance law and its application to the paint industry.