After less than 11 hours of deliberation, a Texas jury yesterday found Merck & Co. responsible for the death of a 59-year-old tri-athlete who was taking the companyâe(TM)s once-popular painkiller, Vioxx. 

The jury hearing the first Vioxx case to go to trial awarded the manâe(TM)s widow $253.4 million in punitive and compensatory damagesâe”a sharp rebuke to an industry leader that enjoyed an unusually favorable public image before the Vioxx debacle began to unfold one year ago.

The quick and punishing jury decision portends a difficult road ahead for a company that faces more than 7,500 lawsuits from customers who say they have been harmed by the painkiller once widely used by arthritis patients. The verdict also comes as the industry and the Food and Drug Administration that regulates it are struggling to respond to broad criticism that they have not put enough emphasis on the safety of prescription drugs.

Merck and the FDA have defended their actions in evaluating the benefits and risks of Vioxx from before it went on the market in 1999 until it was withdrawn last September. But a 10 to 2 majority of the jury of seven men and five women in a small town south of Houston did not agree and rejected Merckâe(TM)s argument that Robert Ernst died of clogged arteries rather than a Vioxx-induced heart attack that led to a fatal heart rhythm irregularity.

âeoeThey know truth, and they know justice,âe said Mark Lanier, an attorney for Ernstâe(TM)s widow, Carol. âeoeAnyone who said they are too âe~small-townâe(TM) or wonâe(TM)t understandâe”they are crazy.âe

Attorneys for Merck said the company will appeal and continue to fight other pending suits. As a result of yesterdayâe(TM)s jury decision, many more are expected to be filed.

âeoeWe believe that the plaintiff did not meet the standard set by Texas law to prove Vioxx caused Mr. Ernstâe(TM)s death,âe said Jonathan Skidmore, of Merckâe(TM)s defense team. âeoeThere is no reliable scientific evidence that shows Vioxx causes cardiac arrhythmias, which an autopsy showed was the cause of Mr. Ernstâe(TM)s death, along with coronary atherosclerosis.âe

The Texas case involved a seemingly healthy Wal-Mart produce manager who, according to the local coroner, died of a heart arrhythmia after taking Vioxx for eight months. The case was considered one of the weaker pending lawsuits because the drugâe”which was taken off the market by Merck after a clinical trial found that it doubled the risk of heart attacks and strokesâe”has not been directly tied to heart rhythm irregularities.

But the coroner testified that Ernst may well have died of a blood clot that she could not find, rather than the arrhythmia she identified. She also said that when Ernst died in 2001, she was not aware that Vioxx could potentially cause blood clots and so did not consider that as a possible cause of death.

The jury, which levied $229 million in punitive damages against Merck, appeared to be persuaded by testimony that Merck acted irresponsibly in aggressively marketing Vioxx despite research suggesting it might cause cardiovascular problems. The jurors concluded that the company failed to warn doctors of Vioxxâe(TM)s danger, that the drug was improperly designed and that Merckâe(TM)s negligence caused Ernstâe(TM)s death.

Skidmore said the case did not warrant punitive damages. âeoeMerck acted responsibly: from researching Vioxx prior to approval in clinical trials involving almost 10,000 patients, to monitoring the medicine while it was on the market, to voluntarily withdrawing the medicine when it did,âe he said.

Since Merck withdrew Vioxx, the entire class of COX-2 inhibitor painkillers has been found to pose an elevated risk of strokes and heart attacks. The drugs, which became worldwide blockbusters in the late 1990s by promising arthritis relief without the stomach problems that often come with aspirin and other painkillers, are now either off the market or sold with strong FDA warnings.

In the aftermath, the FDA has become more aggressive about publicly identifying emerging risks it finds in drugs and medical devices, and has sought to beef up its drug safety office.

The possible FDA fallout from the trial was quickly evident in a statement from Sen. Charles E. Grassley (R-Iowa), who held a hearing on the drug safety issue last fall.

âeoeThe Food and Drug Administration was also negligent in the Vioxx case,âe said Grassley, who has proposed making the drug safety office more independent. âeoeThose running the nationâe(TM)s public safety agency repeatedly dismissed the concerns of their own scientists and seemed to do everything possible to keep the public in the dark about emerging problems with Vioxx.âe

Peter Pitts, a former FDA associate commissioner and now a senior fellow at the Pacific Research Institute, said he hopes officials in Washington do not overreact.

âeoeNow is not the time to let lawyers rule,âe he said. âeoeI hope this verdict will not chill the nascent movement towards more open and transparent sharing of information between the pharmaceutical industry, FDA, physicians and patients.âe

Merckâe(TM)s stock fell almost 8 percent on news of the verdict, closing at $28.06 a share. Since the company withdrew Vioxx in September, its stock value has been cut almost in half. Merck reported $22.9 billion in sales in 2004, and incomplete 2005 data suggest it is the worldâe(TM)s fourth-largest drug company by sales.

The $229 million in punitive damages is likely to be reduced because Texas state law caps punitive damages at twice the amount of economic damages. Under that formula, $26.1 million is the maximum Carol Ernst could receive.

The Texas verdict was larger than many analysts and investors had expected, and it added to the perception that Merck is in trouble. If Merck loses a few more Vioxx cases, it is likely to come under pressure from Wall Street to settle them, which could cost billions.

A big settlement would not necessarily threaten Merckâe(TM)s survivalâe”the company brings in about $6 billion in cash annually, and payments under any settlement would likely be stretched over years. But Albert L. Rauch, an analyst at A.G. Edwards & Sons Inc. in St. Louis, said a big settlement could force Merck to cut its dividends to stockholders, which would almost certainly slash its share price further. That could make Merck a takeover target.

Scott R. Henry, an analyst with Oppenheimer & Co. Inc., has urged investors to approach Merck shares cautiously, but he said he is confident the firm could survive even a big hit from the Vioxx litigation.

âeoeThey do still make a lot of money, they donâe(TM)t have a lot of debt, and theyâe(TM)re one of the larger companies in America,âe Henry said. âeoeTimes are tough at Merck, but letâe(TM)s not confuse this with a company in critical condition.âe
An FDA expert advisory panel voted in February that Vioxx could be allowed back on the market for selected patients, but yesterdayâe(TM)s verdict made that possibility more remote. The next big case is scheduled to begin in a New Orleans federal court in November.

Andrew Birchfield, plaintiffâe(TM)s attorney in that case and co-lead counsel for the committee overseeing the 4,500 federal Vioxx lawsuits already filed, said the decision bodes well for others who may have been harmed by Vioxx. He said there were about 3,000 more state cases. As many as 20 million people took the drug worldwide, and semi-official estimates of the number of people possibly injured or killed have reached more than 100,000.

âeoeThe Texas case was a hard one because of that coronerâe(TM)s report pointing to arrhythmia as the cause of death,âe he said. âeoeBut the jury took that information, and all they heard about Merckâe(TM)s bad conduct, and they came to the conclusion that Vioxx caused the death and the company needed to be punished.âe

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