Merck braces for another Deluge of Lawsuits by Vioxx Users

posted on:
October 3, 2004

author:
Staff

 Following Merck & Co.’s withdrawal of the blockbuster painkiller Vioxx, patients, shareholders and even the company began scrambling to figure out their next moves. 

Lawyers sharpened their claws.

Former Vioxx users filed their first lawsuits against the Whitehouse Station-based drug giant years before the stunning announcement Thursday that Merck was recalling the $2.5 billion arthritis drug because of a doubled risk of heart attack and stroke.

Legal experts expect a flood of cases to follow, and the recall could add momentum to those already filed.

“We will end up with a much larger number of cases now, because you have public awareness that Vioxx causes heart attacks and strokes, that it’s a dangerous drug. People will begin making the connection,” said Andy Birchfield, an Alabama-based attorney representing 37 plaintiffs who filed Vioxx cases against Merck in New Jersey.

Depending on its eventual size, the liability could be another financial blow to Merck on top of the revenue hole left from Vioxx’s removal. Merck officers defended the company’s overall financial strength Thursday, and said it plans a vigorous legal defense.

Merck said two class-action suits had been filed against the company prior to the withdrawal, as well as numerous individual ones. In an Atlantic County court, where Vioxx lawsuits in the state are being consolidated into a mass tort case, 175 suits had been filed as of Sept. 20.

Noting the widespread use of Vioxx, which was taken by an estimated 20 million people in the United States since its launch in 1999, comparisons arose invoking the massive “fen-phen” diet drug litigation. Madison-based Wyeth has set aside $18 billion to handle liability stemming from the recalled diet drugs Redux and Pondimin.

But experts said it was too soon to say whether Vioxx would come close to approaching those figures.

“It’s going to take years to sort out Vioxx,” said Anthony Sabino, associate professor of law at the Tobin College of Business of St. John’s University.

Within days, Sabino said, he expected Merck to create a large legal reserve fund that could reach billions of dollars.

While the number of people taking Vioxx was huge, the key factor will be how many people can show they were hurt by it, said Kenneth M. Labbate, a partner with the New York-based firm Ohrenstein & Brown, who specializes in defending product liability claims.

“Simply taking the product will not be enough,” Labbate said. “You’re going to have to show you were damaged by it.”

Another key issue, Labbate said, is determining “what [Merck] knew and when they knew it.”

Merck’s response could play in its favor. In its press conference Thursday, Peter Kim, president of Merck Research Labs, laid out a time-line that showed executives acted quickly to recall the drug – five days from the recommendation that the clinical trial be stopped to Merck’s telling regulators it was pulling the product.

“It’s one thing to put a potentially defective product on the market, but another [question] is, did they act responsibly,” Labbate said.

But the argument that Merck acted responsibly could be punctured by its active defense of Vioxx in the face of previous studies that questioned the drug’s heart safety, David Moskowitz, a pharmaceutical stock analyst with Friedman Billings Ramsey, wrote in a note to investors Friday.

Birchfield said his case is backed by internal documents now under a protective court order.

“We feel very strongly that we can show not only that this is a dangerous drug … but Merck knew and should have known that this was a dangerous drug, and kept it on the market for years after,” said Birchfield, head of the mass torts section of the firm Beasley Allen in Montgomery, Ala.

Birchfield said he believes a case set for trial in December in Birmingham federal court will be the first Vioxx trial.

The first of his New Jersey cases is scheduled to begin next spring.

Pharmaceutical stock analysts, who have spent the past few years handicapping Wyeth’s diet-drug exposure, began doing the same for Merck on Friday.

In a note to investors, analysts at Bear Stearns said liability concerns were “overblown”:

“We do not think this has the making of a diet drug liability.” Similarly, analysts at Sanford C. Bernstein said product liability was likely to be “manageable.”

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