Vioxx criticism may tarnish Merck but settlement safe

posted on:
April 15, 2008

author:
Bill Berkrot

NEW YORK (Reuters) – Renewed criticism of Merck & Co’s handling of its withdrawn pain drug Vioxx may further tarnish the drugmaker’s image but is not about to scuttle its multibillion-dollar deal to settle thousands of personal injury lawsuits brought by former Vioxx users.

Researchers who analyzed court documents said Merck failed to disclose information it had on safety risks of Vioxx that may have led to avoidable injuries and deaths, according to articles in the Journal of the American Medical Association (JAMA).

The fresh publicity sparked calls by U.S. Congressman Charles Grassley, an Iowa Republican, for Merck to respond to the allegations, while health regulators promised to review the JAMA reports — all but guaranteeing Merck will not be able to put Vioxx in its rearview mirror any time soon.

However, attorneys for both sides agreed that the legal settlement will not be affected.

“It will not impact the settlement in any way,” said Andy Birchfield, one of the lead plaintiff attorneys involved in Vioxx litigation.

“JAMA’s position here would not be based on any new evidence,” Birchfield said. “There may be something that was new to them, but I’m quite confident it’s not based on any new evidence.”

Merck’s legal team agreed with Birchfield’s assessment.

“We do not expect these articles to affect the resolution because these issues were part of the litigation and were raised in trials,” said Kent Jarrell, a spokesman for Merck’s Vioxx legal team.

Still, the renewed Vioxx debate is not likely to help Merck’s years-long efforts to rebuild its once sterling reputation.

“The bad publicity might temporarily hurt Merck’s image and reputation, but I don’t expect it to have any material financial impact on the company,” said Mehta Partners analyst Shaojing Tong.

Merck agreed in November to pay $4.85 billion to settle most of the claims that Vioxx caused heart attacks and strokes in thousands of users. At the time the settlement was announced, Merck was facing some 26,600 lawsuits from former Vioxx users.

“The resolution is proceeding and Merck expects to meet and exceed thresholds in claims that would obligate the company to pay into the resolution fund,” Jarrell said.

The JAMA report and accompanying editorial said Merck failed to disclose information it had in 2001 from a clinical trial involving Alzheimer’s patients that showed patients taking Vioxx had three times the risk of death as patients taking a placebo.

Merck pulled the once $2.5 billion a year drug from the market in September 2004 after a different study found it doubled the risk of heart attack and stroke in patients who took it for more than 18 months. By then the medicine had been available for more than five years and was used by some 20 million U.S. patients.

Peter Kim, Merck’s research chief, denied any wrongdoing by the company and criticized the JAMA reports.

“The allegation that Merck misrepresented mortality data from our Alzheimer’s studies is just plain wrong,” Kim said in a statement.

“We are disappointed that such false and misleading statements about Merck from trial lawyers have made their way into a medical journal,” Kim said, adding that Merck provided complete mortality data from the studies to the U.S. Food and Drug Administration.

Tony Butler, an analyst for Lehman Brothers, was also critical of the JAMA reports.

“It’s important that medical journals further the advancement of medicine to physicians, but I’m not sure this is doing that,” Butler said. “There is no science in this article.”

The latest Vioxx uproar, ripping open old wounds, comes at a tough time for Merck, whose shares have been battered over a controversy involving the cholesterol drugs Vytorin and Zetia, which it sells in a joint venture with Schering-Plough Corp.

Merck shares are down about 28 percent this year, largely due to fallout from the Vytorin flap, giving back all the gains achieved in a solid 2007 performance. The stock closed down 18 cents at $41.22 on the New York Stock Exchange on Tuesday.

(Additional reporting by Lewis Krauskopf, Ransdell Pierson and Julie Steenhuysen; Editing by Gary Hill)

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