Merck says some Vioxx Lawsuits could be Settled

posted on:
August 29, 2005

author:
Staff

Merck & Co. will consider settling a limited number of lawsuits over its withdrawn painkiller Vioxx, a spokesman said Friday. The drug’s link to heart attacks and strokes has spawned thousands of lawsuits and last week’s $253 million jury verdict in Texas.

As recently as Wednesday, company lawyers were still saying they planned to fight each personal-injury lawsuit. On Thursday morning, Merck said that as of Aug. 15 it faced nearly 5,000 lawsuits alleging patients were harmed by the drug—almost 600 more cases than in its prior update five weeks earlier. The total includes about 150 potential class-action suits that could include many plaintiffs.

“Cases we’ll be looking at concern ingestion of Vioxx for 18 months or more,” by patients with limited heart risk factors, Kent Jarrell, spokesman for the company’s legal team, told The Associated Press.

While Merck could decide to fight some cases aggressively, Jarrell said “we could decide to settle” others.

“We are not entertaining the notion of a global settlement,” he said.

Shares of Merck fell 11 cents to $27.66 in trading on the New York Stock Exchange. That is up from its November low of $25.60 but 41 percent below its 52-week high of $47 before its Vioxx recall last September.

Whitehouse Station, N.J.-based Merck pulled the popular arthritis treatment from the market when its own study showed Vioxx doubled the risk of heart attack or stroke when taken for at least 18 months.

Jarrell said the company does not know how many patients took Vioxx for at least 18 months and also had low risks of cardiac problems but expects it to be “a relatively small number.” The combination of those circumstances would strengthen their cases.

“Merck is stepping up now and saying, ‘Maybe we should compensate people who were harmed after 18 months’” of Vioxx use, said Chris Seeger, the attorney going up against Merck in the next Vioxx trial in a state court, set to start Sept. 12 in Atlantic City.

Seeger said he thinks the shift is due to board members and shareholders angry that Merck lawyers until now insisted they would fight every lawsuit while Merck’s stock price continued to suffer.

Jarrell called the comment “one lawyer’s interpretation of what’s going on,” but would not discuss whether it is accurate.

He also would not say whether Merck has discussed possible settlements with plaintiffs’ lawyers.

However, Mark Lanier, the lawyer who last week won the Texas case, said Friday during a CNBC interview that he has received e-mails about Merck on the issue “from lawyers associated with lawyers associated with Merck.”

Lanier said he expects at least 50,000 U.S. Vioxx plaintiffs and that there are thousands more “foreign plaintiffs trying to figure out how to get into the American courts.”

U.S. Food and Drug Administration drug safety expert David Graham told the Senate Finance Committee last November that research indicates Vioxx caused up to 160,000 heart attacks and strokes.

Pharmaceuticals analyst Al Rauch at A.G. Edwards & Sons Inc. said the shift in Merck’s position on settlements appears to be a goodwill gesture after the jury in Angleton, Texas, last Friday awarded $253.4 million in damages—likely to be reduced to $26 million under Texas caps on punitive damages—to the widow of Bob Ernst. Ernst died in 2001 after taking Vioxx for eight months.

Rauch said Merck could be trying to limit unfavorable publicity by avoiding trials where patients have the strongest cases, and also may hope to show most Vioxx users who had heart attacks or strokes had risk factors such as obesity, tobacco use, high blood pressure or cholesterol, or family history of heart disease. That’s likely, he said, given that most Vioxx users were older people likely to have such conditions.

“If they (Merck) can come and get no one to settle with because everyone’s got a risk factor, then they can say, by itself, Vioxx does not cause heart attacks,” Rauch said.

His firm owns Merck stock.

Independent pharmaceuticals analyst Hemant Shah of HKS & Co. said Merck’s shift is not a surprise, but it’s too soon to tell whether it will trigger more lawsuits or reduce Merck’s future Vioxx costs.

“The Texas jury (verdict) may have triggered a new strategy, which is, let’s settle the most obvious cases because you don’t want to keep losing case after case because that feeds into itself,” Shah said.

He noted that pharmaceutical company Wyeth also insisted it would not settle any lawsuits after it pulled its diet drugs Pondimin and Redux from the market in September 1997 over links to heart valve damage.

“Now they have a global settlement,” Shah said.

Merck faces its first trial in federal court starting Nov. 28 in New Orleans.

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