Amid growing concern about litigation over Vioxx, the painkiller yanked off the market, Merck & Co. shares fell nearly 10% and Standard & Poor’s Rating Services placed the company’s triple-A corporate credit and senior unsecured debt rating on watch with negative implications.
Investors’ worries about the litigation grew after an article in yesterday’s Wall Street Journal reported 1 that e-mails, memos and other internal documents suggest that company officials fought to keep safety concerns from destroying the drug’s commercial prospects. With annual sales of $2.5 billion, Vioxx last year accounted for about 11% of Merck’s overall revenue.
In September, Merck withdrew Vioxx after a company-sponsored study found a doubling of the risk of heart attack or stroke for patients who took the painkiller for more than 18 months. Merck had described that data as “unexpected.” But the internal documents suggest the company became aware of the drug’s problems years ago.
The documents are part of suits filed against Merck since 2001 on behalf of people who had heart attacks or strokes after taking Vioxx. At least 300 such lawsuits have been filed across the country, according to the company, and thousands more are being prepared in the wake of the withdrawal. More than 20 million Americans have taken Vioxx since the painkiller was introduced in 1999.
Merck reiterated comments from its Friday news release in which it warned that documents “will be deliberately presented out of context to advance the interest” of plaintiffs. The company has declined to talk specifically about the documents, citing the litigation and a court-protective order, but has said it has acted appropriately and responsibly.
Merck’s stock price fell $3.03, or 9.7% to $28.28 yesterday in 4 p.m. New York Stock Exchange composite trading. Merck’s stock price has fallen 37% since the day before the Vioxx news, wiping out $36 billion in market capitalization.
Prudential Equity Group downgraded Merck’s stock to “neutral weight” from “over weight” and lowered its stockprice target to $33 from $37. Tim Anderson, a Prudential analyst, wrote in a report that the positive news in Merck’s drug pipeline “will likely get lost in the negativism from ongoing Vioxx coverage.”
Meanwhile, plaintiffs attorneys are moving to make more Merck documents public, according to Christopher Seeger, ofNew York law firm Seeger Weiss LLP, who is leading the Vioxx litigation in New Jersey state court. Merck should “stop hiding behind the protective order that they are insisting on and allow everybody to draw their own conclusions about the documents,” Mr. Seeger said.
Plaintiffs attorneys have also been contacted by Sen. Charles Grassley, head of the Senate Finance Committee, to provide internal Merck documents about Vioxx. Andy Birchfield, who has 58 cases filed in six states, spent 31/2 hours talking with Sen. Grassley staffers yesterday and also provided the office with internal Merck documents.
The Senate Finance Committee is examining the conduct of Merck and the Food and Drug Administration in their handling of Vioxx, and last week committee investigators met with Merck attorneys and representatives. Committee Chairman Grassley, an Iowa Republican, has written to Merck asking for a broad list of information, including records of its interactions with the FDA and of all trials the company did with Vioxx inside the U.S. and overseas.
“I intend to obtain answers and context from Merck on Vioxx,” Sen. Grassley said in a statement. “Millions of Americans deserve an explanation from Merck and the FDA about why this dangerous drug was on the market for so long, apparently without adequate warnings about its risks.”
Mr. Birchfield said his Vioxx case in federal court in Birmingham was scheduled to go to trial in December, but now is “up in the air”; Merck has requested that all federal court Vioxx cases be consolidated into one court under one judge.