How bad will the lawsuits get, Really, Really Bad.

posted on:
November 1, 2004

author:
Staff

 Surveying the wreckage of the worst pharmaceutical tort litigations of the past, investors naturally want to know: Will Vioxx be the next Baycol, or Rezulin, or fen-phen? Our prediction is: yes, but bigger. 

Consider fen-phen, the diet-drug cocktail that, it turned out, could cause heart valves to deteriorate. Before it was pulled from the market in 1997, it reached about six million people. Wyeth has taken a $16.6 billion charge against earnings, so far, to cover the litigation costs. By comparison an estimated 20 million Americans have taken Vioxx.

Next, look at the medical problems Vioxx can allegedly cause. Cholesterol drug Baycol could trigger a rare muscle disease called rhabdomyolysis. If someone taking Baycol came down with rhabdomyolysis, both she and Bayer could be pretty sure the company owed her money. Accordingly, many Baycol cases have settled quickly. Bayer has settled 2,861 cases for $1.1 billion and has 7,577 pending.

In contrast, Vioxx may cause heart attacks and strokes. Given the millions who were taking Vioxx, it is a statistical certainty that thousands suffered heart attacks. Obviously Vioxx won’t have caused all those, but plaintiffs lawyers will likely have little trouble finding medical experts who’ll testify to a causal connection. The ultimate decision will be made by jurors who will have heard a grieving spouse recount how their seemingly healthy, vigorous, nonsmoking mate, with no history of heart disease, inexplicably dropped dead after keeping a daily regimen of Vioxx.

Here’s one such widow: “About six months after his death,” recalls Evelyn Irvin Plunkett, referring to her husband, Dickie Irvin, who died suddenly at age 54 a month after starting Vioxx, “my daughter Leslie called me, saying I needed to look at an article in Newsweek.” The article cited a study by Cleveland Clinic cardiologist Eric Topol reporting an elevated risk of heart attack among Vioxx users. “I had the autopsy report with me,” she says. “It was almost word for word what my husband had died of.”

Early reports of heart-attack risk among Vioxx users emerged in 2001. Plaintiffs lawyer Jere Beasley of Montgomery began filing suits that year. His firm has 58 cases pending, the first of which could go to trial in Birmingham as early as December. Christopher Seeger, a lawyer in New York, began filing Vioxx cases in 2002. He now has about half of the more than 150 that were consolidated in an Atlantic City court long before Merck pulled Vioxx. Likewise, about 375 cases were consolidated in the Los Angeles superior court before the recall.

Now the litigation has entered a new phase. Andy Birchfield Jr., of Beasley’s firm, says he is investigating about 1,000 more possible cases. By Oct. 12, lawyer Don Strong of Oklahoma, a veteran of the Baycol litigation, had filed three new Vioxx cases and was sifting through the medical records of another 1,200 Vioxx clients, he claims, adding, “I expect to have 2,500 to 3,000 by the end of the month.” Clearly Vioxx litigation is the real deal.

For their part, Merck’s lawyers maintain that the company acted honorably and will be able to mount a strong defense. As detailed in the accompanying story, Merck says it was completely open with the FDA and the public about possible problems with Vioxx. It says that as soon as questions arose about a link to cardiovascular disease, it added a warning to the Vioxx label and undertook the study that ultimately doomed the drug. Says general counsel Kenneth Frazier: “We communicated appropriately about the product, we monitored it appropriately, we studied it appropriately, and in the end we took the actions that were in the best interests of patients.”

If juries ultimately accept Merck’s account, things obviously might not look so bad for the company. Importantly, Merck contends that reliable science shows only a small increased cardiovascular risk for Vioxx beginning after 18 months of usage. Most of the cases filed so far involve plaintiffs-like Dickie Irvin-who spent much shorter periods on the drug. It’s at least conceivable that a judge could rule that only plaintiffs with more than 18 months’ exposure can proceed to trial.

But the chances of things playing out that way are not good. Remember, in the Baycol, Rezulin, and fen-phen litigations the manufacturers earnestly argued-and argue to this day-that they acted responsibly. Second, plaintiffs will contest every aspect of Merck’s story. Some three million documents have already been produced in the New Jersey litigation (including e-mails, which are never good for defendants), and though those documents are still under seal, the plaintiffs lawyers obviously feel they’ve got some aces. “They knew about cardiovascular risks at least as early as 1996,” claims Seeger. He’ll argue that Merck swept adverse evidence “under the carpet.” Plaintiffs lawyers may also try to introduce evidence that Merck used direct-to-consumer advertising to buffalo consumers into asking for Vioxx when cheaper off-patent medicines, like ibuprofen, work just as well for most people.

The direct-to-consumer advertising poses additional legal headaches for Merck. Some jurisdictions-notably New Jersey-have already held that once a drugmaker starts pitching directly to patients, it loses the protection of a legal rule that says it need only provide warnings sufficient to alert the doctor, not the patient, to a drug’s risks. At least 33 of the Vioxx cases pending in New Jersey are brought by out-of-state plaintiffs who may well be seeking the benefit of that holding. Two of the New Jersey cases are actually from abroad; if those suits are allowed to proceed, Merck’s problems could quadruple, as Vioxx was sold to an estimated 80 million people worldwide.

What’s more, jurors hearing Vioxx lawsuits will do so in the emotional climate of a trial and through the distorting filter of hindsight. In addition, Merck’s lawyers will have to fight to overcome lay perspectives on their industry, as pharma defense lawyers always must. That Merck was still running trials on the safety of the drug after its introduction into the market-which is, to some degree, a common, inevitable, and even commendable practice-may be disturbing to jurors, who think of drugs as being definitively proved safe before they’re introduced.

More fundamentally, concepts that are givens for drug companies, doctors, and the FDA are not always shared by the public—notably, the truism that no drug is without risk. “That’s not an intuitive concept for a juror,” says Amy Schulman, who has been litigating pharma cases for the Piper Rudnick law firm for 15 years. Though jurors know in theory that a drug can have side effects, she says, “that’s very different from: ‘It has happened to me!’”

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