For Merck, Vioxx Paper Trail won’t go Away

posted on:
August 22, 2005

author:
Staff

 Bad facts. Plaintiffs’ lawyers love that term. Merck may grow to hate it. 

On Friday, a Texas jury found Merck liable for the death of Robert C. Ernst, who died in May 2001 after taking Vioxx, a painkiller made by the company. After two days of deliberations, the jury said that Carol Ernst, Mr. Ernst’s widow, should be awarded $253.5 million.

In interviews after the six-week trial, jurors said they had concluded from the testimony and documents presented by Mrs. Ernst’s lawyers that Merck was long aware of Vioxx’s potential heart risks but hid those risks from patients. To the jurors, the evidence added up to a mass of damaging bad facts that overwhelmed the company’s defense.

Merck’s stock price fell almost 8 percent Friday afternoon, although Texas’s rules on punitive damages will automatically lower the verdict to $26.1 million and Merck has already said it plans to appeal the case.

Over the next few days, lawyers, Wall Street analysts and Merck’s own executives will try to explain the company’s devastating defeat and to predict what the Texas case means for the thousands of additional Vioxx suits that Merck will face. The answer could determine whether Merck will survive as a strong, independent company or will be crippled for years or even decades.

And the answer may not be what Merck or its investors hope to hear.

“Merck faces a challenge in future trials of addressing the company’s behavior,” said Peter A. Bicks, a defense lawyer with Orrick, Herrington & Sutcliffe and who is not involved in the litigation.

The Texas case was the first Vioxx lawsuit to reach trial, but 4,200 other suits have already been filed, and many are approaching juries. A second state trial is scheduled to begin in New Jersey in September, and the first federal suit is set for New Orleans in November. Merck has said that it plans to take every suit to court rather than offer settlements.

“Friday’s verdict in Texas was a disappointment to all of us at Merck because we know we acted responsibly,” Merck’s general counsel, Kenneth C. Frazier, said in a statement on Saturday. “We believe we have meritorious defenses, and we intend to vigorously defend individual Vioxx cases one by one.”

Should trials continue to go against it, Merck faces a basically unlimited pool of plaintiffs. Over five years, about 20 million people worldwide took Vioxx before Merck stopped selling the drug in September 2004, after a clinical trial found irrefutable evidence that Vioxx had heart risks compared with a placebo.

As Merck examines its defeat in Texas, it may be tempted to blame its problems on the ineptitude of its lawyers, who committed basic mistakes like failing to prepare witnesses and badgering Mrs. Ernst, a sympathetic widow, for 90 minutes on cross-examination.

Merck may tell itself that the part of Texas where the case was heard is favorable to plaintiffs and that the trial might have turned out differently elsewhere. It might even say that W. Mark Lanier, the Houston lawyer who represented Mrs. Ernst, is so skilled that he won a case that most other plaintiffs’ lawyers would not even imagine bringing.

All those responses have an element of truth. Unfortunately for Merck, they hardly begin to explain the enormous verdict, which the jury of seven men and five women in Angleton, Tex., about 40 miles south of Houston, returned on a 10-2 vote.

The real explanation may lie in the “bad facts” that Mr. Lanier presented to the jury.

Mr. Lanier offered jurors a trove of company documents and e-mail messages that revealed how Merck researched Vioxx’s heart risks and presented what it knew to doctors and consumers. The documents showed that scientists at Merck were worried about Vioxx’s potential cardiovascular risks as early as 1997, two years before Merck began selling the drug.

“The possibility of increased C.V. events is of great concern,” Dr. Alise Reicin, a Merck scientist, wrote in a 1997 e-mail message; “C.V. events” is scientific shorthand for cardiovascular problems like strokes or heart attacks. “I just can’t wait to be the one to present those results to senior management,” Dr. Reicin’s message continued.

The documents also revealed that Dr. Edward M. Scolnick, who at the time was Merck’s top scientist, said in March 2000 that the largest clinical trial ever conducted of Vioxx confirmed that Vioxx had heart risks, as he had feared. They showed Dr. Scolnick later referring to scientists at the Food and Drug Administration as untrustworthy. And they revealed that Merck had stridently resisted the F.D.A.’s efforts to add warnings to Vioxx’s label, and that it eventually complied only in ways that the Texas jury found unacceptably obscure. (“You had to dig three levels to see it,” one juror, Lorraine Blas, said of the potential heart problems described in one version of the drug’s labeling material.)

Mr. Lanier also introduced a marketing videotape that showed Merck sales representatives being trained to view doctors’ concerns about Vioxx’s heart risks as “obstacles” to be avoided or dismissed. Another marketing document taught representatives to play “Dodgeball” when doctors voiced concerns.

In their response to Mr. Lanier, lawyers for Merck told the jurors that the company had extensively studied Vioxx and did not believe that the drug had heart risks before last year’s clinical trial. They also said that Merck had marketed Vioxx responsibly to patients and doctors.

But the jury in Angleton disagreed. In interviews, several jurors said they had intended the verdict, which included $229 million in punitive damages, not to reward Mrs. Ernst but to punish Merck for its actions. Derrick Chizer, one of the jurors, said that the jury wanted to send Merck and the drug industry a message: “Stop doing the minimum to put your drug on the market.” Other jurors made similar comments.

The $229 million punitive damages figure was not picked at random, but referred to a 2001 Merck estimate of additional profit the company might make if it could delay an F.D.A. warning on Vioxx’s heart risk. Mr. Lanier mentioned that monetary figure in his closing argument.

Dr. Jerry Avorn, a professor at Harvard Medical School and frequent critic of the drug industry, said he was not surprised that the jury responded as vehemently as it did.

“Even as a seasoned observer of drug company affairs, I have been surprised at the way Merck handled the emerging evidence about cardiac risk with this drug,” Dr. Avorn said. “There was an element of the Watergate tapes that I was reminded of: many people had been critical of Nixon for a long time, but even Nixon’s critics did not expect to find the documentation of their worst fears made so clearly evident.”

Dr. Avorn said the jury’s decision to set a large sum for punitive damages was far more significant than the separate amount of $24 million it awarded Mrs. Ernst for her pain and suffering. The punitive damages, Dr. Avorn said, reflect the jury’s “overall sense of Merck,” he said.

In the courtroom immediately after the verdict, a reporter asked Mr. Lanier how he had won the case. “The documents,” he replied. “The documents tell the truth.”

Now the documents may haunt Merck in every Vioxx lawsuit that reaches a jury. And Merck may face even more bad facts in future trials, as the other lawyers suing the company work their way through the trove of 7 million papers that Merck has already produced, said Richard T. Evans, a drug industry analyst at Sanford C. Bernstein & Company.

Meanwhile, federal prosecutors are conducting their own criminal investigation of Merck, and with their broad subpoena power they may find documents that plaintiffs’ lawyers have not yet uncovered.

To be sure, s
ome one-time factors did cause the Angleton case to be particularly disastrous for Merck. In the future, its lawyers will presumably avoid cross-examining 60-year-old widows for 90 minutes, as Gerry Lowry – one of Merck’s lead lawyers in this case – did to Mrs. Ernst. Ms. Lowry, for example, repeatedly questioned her about Mr. Ernst’s relationship with his adult children from a previous marriage, whom Mrs. Ernst does not know and who were not a part of the lawsuit.

Mr. Bicks, the outside lawyer, said Ms. Lowry’s approach was fraught with unnecessary risks. “Conventional trial wisdom is that there is no reason to personally attack a person who has lost a loved one.”

Merck’s witnesses may also be better prepared so they are not embarrassed by being unable to answer basic questions about the clinical trials that they say convinced them of Vioxx’s safety, as happened to Dr. Alan S. Nies in the Angleton case.

In addition, Texas has relatively liberal rules of evidence, so Merck may be able to keep juries from seeing some of the documents Mr. Lanier used in this trial. In its statement after the case, Merck said it believed that Judge Ben Hardin, who oversaw the Angleton case, had wrongly allowed irrelevant and scientifically flawed testimony. And many judges may not allow juries to see some of Merck’s more inflammatory marketing materials.

But many provocative documents, such as the e-mail messages in which Merck scientists discussed their early concerns about Vioxx, are clearly relevant to the litigation and will be allowed everywhere. And unless Merck can quickly figure out how to explain those documents to juries, it will soon face an enormous problem. Even Merck, with $22 billion in sales and $6 billion in profits last year, can withstand only so many $250 million verdicts before it is forced to rethink its plan to fight every Vioxx lawsuit.

“There are 4,000 of these cases out there,” said David Berg, a Houston trial lawyer. “The black hole gets bigger the more and more they get hit.”

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