Vioxx Lawsuits Surge to Beat Deadline

posted on:
September 29, 2006

author:
Staff

 TRENTON, N.J. – A surge of lawsuits has swamped courthouses just ahead of the two-year anniversary of drugmaker Merck & Co. pulling its blockbuster painkiller Vioxx from the market. 

Saturday was the deadline for many users to sue the Whitehouse Station, N.J.-based drugmaker over heart attacks, strokes or other harm they blame on Vioxx. Patients in 22 states, many heavily populated ones, can no longer sue Merck because they have a limit of two years on initiating personal injury lawsuits; four other states have one-year limits.

Merck is holding its own defending Vioxx in the courtroom, racking up its fifth win this week. Most experts say Merck’s fight-every-case strategy is discouraging an even bigger flood of suits, although each trial is costing millions.

So far, well over 21,700 suits, many with multiple plaintiffs, have been filed, up sharply from the 14,200 Merck reported as of June 30. Merck also has at least 5,800 agreements waiving the statute of limitations for other Vioxx users.

The company faces at least 190 potential class action suits by Vioxx users and Merck shareholders. Merck is challenging the one class action already approved, for health insurers and unions seeking to be reimbursed for Vioxx they bought for health plan members—a case that could cost Merck $15 billion if it loses.

In New Jersey, which has a two-year limit for both types of suits and has the most cases because it’s where Merck is based, more than 6,500 cases have been filed since June 30. By Wednesday, 13,624 Vioxx cases had been recorded in Atlantic County Superior Court.

In New Orleans, where federal lawsuits are being coordinated by U.S. District Judge Eldon Fallon, about 950 new cases have been filed since June, for a total of 6,650. Court personnel said filings picked up strongly in September.

Despite the Vioxx hangover, Merck’s financial performance has improved amid cost cutting and strong sales of key drugs, including asthma/allergy treatment Singulair and cholesterol drugs Vytorin and Zetia. Three new vaccines were approved this year, one of them the world’s first to prevent cervical cancer. The stock price has recovered to within a couple dollars of its $45 level the day before the Sept. 30, 2004 Vioxx withdrawal.

“If you compare the company’s focus and energy and morale with where we were two years ago, the focus and energy is back,” Merck Chief Executive Officer Richard T. Clark told The Associated Press. “What’s really important is that the company internally is focusing on our mission … putting patients first and scientific excellence and business excellence.”

The company expects approval soon for Januvia, a new type of diabetes drug, but on Friday said formulation problems have delayed plans to seek approval for a new cholesterol drug.

Clark said the sweeping restructuring plan he announced last December, including focusing research on a smaller number of common illnesses, is on track and he’s shooting to produce about 5 percent growth in revenues and profit by 2010, compared to last year’s levels. The company has cut about 3,400 of the 7,000 jobs planned for elimination and has closed one manufacturing plant and three research facilities. It plans to shutter another five factories and three research sites under Clark’s plan to cut a total of $5 billion in costs by 2010.

“It’s not time to declare victory yet, but I think we’re headed in the right direction,” Clark said.

Law professors generally applaud Merck’s strategy of trying individual cases and resisting calls from plaintiffs lawyers and judges to consider mass settlements.

“It sends the message to plaintiffs’ lawyers that there is not easy money to be had in the Vioxx litigation,” said Howard Erichson, a law professor at Seton Hall University. “You don’t want to encourage a feeding frenzy.”

Erichson said Merck has contained the litigation better than expected, averting the half-million or more plaintiffs that sprang up in “mega-mass tort” cases over asbestos, tobacco and breast implants.

Anthony Sabino, a St. John’s University professor of business law, said each trial helps the plaintiff and defense lawyers figure out which types of cases would be best to settle.

Merck has retained a stable of top lawyers since it pulled Vioxx after its own study—meant to win approval Vioxx for a new use—showed the pill increased heart attack and stroke risk. About 2 million people, mostly elderly arthritis sufferers, were then taking Vioxx.

Since the first trial over Vioxx in July 2005, Merck lawyers have stressed each plaintiff’s risk factors for a heart attack, such as high cholesterol, clogged arteries, old age and smoking. Merck convinced six juries out of 10 that such health problems, not Vioxx, harmed the plaintiff, although one of Merck’s victories was reversed due to new evidence; that case will be retried in January.

Merck, the No. 7 drugmaker in worldwide sales according to health information company IMS Health, won’t discuss its Vioxx-related legal costs, but had reserved $970 million for those costs and spent $285 million of that as of December.

Chris Seeger, a New York lawyer who represents about 2,000 Vioxx plaintiffs, estimates Merck is spending $15 million on each trial.

“They could have settled these cases for a fraction of that,” Seeger said. “Their shareholders are getting burned.”

Ted Mayer, a Merck lawyer, said he expects many lawsuits to be dismissed for weak evidence, particularly ones filed at the last minute with little review. He said 328 federal cases have been dismissed so far.

“We believe in our defense,” Mayer said. “This is the right strategy for us.”

Andy Birchfield, who with Seeger heads the plaintiffs’ steering committee for the federal trials, said by week’s end he expected a total of 5,000 cases filed or under agreement to waive the filing deadline.

Birchfield said recent reports in the New England Journal of Medicine discrediting Merck’s repeated claims that Vioxx didn’t cause harm before 18 months of use—“part of its trial strategy”—will be raised in future trials.

“That certainly helps our case,” he said.

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