From 4-Traders.com's Jon Kamp

Two former Merck & Co. Inc. (MRK) employees have sued the company in federal court alleging Merck overstated the effectiveness of a mumps vaccine for which the U.S. government paid hundreds of millions of dollars.

Merck--which stressed that none of these allegations relate to the safety of its product--said the lawsuit is "completely without merit", and that it plans to "vigorously defend itself." The Whitehouse Station, N.J., drug maker also noted that the U.S. Department of Justice has thus far declined to participate in the case after its own two-year probe.

Mumps is a contagious disease that causes symptoms like fever, headache and swollen salivary glands. It was a common illness for kids and young adults before childhood vaccinations became common decades ago, according to the Centers for Disease Control and Prevention, although there were outbreaks in 2006 and 2009. The agency says vaccines are the best way to prevent mumps.

Merck introduced the first vaccine 45 years ago, and since the 1970s it's been part of a combination product that also immunizes children against rubella and measles. According to the lawsuit--filed by former Merck virologists Stephen Krahling and Joan Wlochowski--the company allegedly defrauded the U.S. for more than a decade by hiding the fact the vaccine had become less effective.

As a result, the former employees say the government has long paid for a product that doesn't live up to Merck's claims. The lawsuit seeks a judgment against Merck equal to three times the damages suffered by the U.S., plus the maximum allowable award for the former employees under federal whistleblower laws. Read the full story at 4-Traders.com.