In a shocking scare to the entire pharmaceutical industry, a Federal Judge in Virginia fined a drug manufacturer and its officers and General Counsel 634 million dollars for misleading the public about the addictive dangers of its drug.

United States District Judge James Jones handed down the sentence yesterday. The drug company, Purdue Pharma, L.P., manufacturers the pain killer OxyContin. Those sentenced included the company President Michael Friedman, the General Counsel Howard Udell, and the former Chief Medical Officer Paul Goldenheim. Each plead guilty to federal charges and must pay $34 million of the fine. In addition they were placed on 3 years probation and must perform 400 hours of community service.

Another drug company, Merck, has been found liable by several juries for making misleading statements concerning their now withdrawn drug, Vioxx. Merck (NYSE:MRK), faces 16,000 lawsuits in New Jersey and thousands more in Louisiana, California, Alabama, Illinois and Florida.

Vioxx users contend that Merck lied to doctors, lied to the FDA, lied to the New England Journal of Medicine, and lied to the general public about the dangers of Vioxx.

They also are under investigation by Congress and several state Attorneys General. There are estimates that somewhere between 80,00 to 150,000 users of Vioxx suffered heart attacks or strokes from their use of the drug. Merck, based in Whitehouse Station, New Jersey, denies any responsibility. Their General Counsel, Kenneth Frazier, promises that Merck will try every case one at a time. There are four simultaneous trials, involving 10 plaintiffs, set to start in Atlantic City, New Jersey on October 9, 2007.

Merck has been found totally or partially at fault in about half of the 15 trials to date with total verdicts in the hundreds of millions of dollars. Merck also has reported to the SEC that they have spent over 1 billion dollars defending the lawsuits to date. If they keep their promise to try all 30,000 pending cases, the legal fees will be in the tens of billions of dollars.

All of the Vioxx victims hurt by the drug, are being hurt again by Merck’s ill-conceived strategy of trying every case one at a time. Merck needs to act responsibility and compensate victims for the harms they caused. The Merck Board of Directors should carefully review the OxyContin matter and consider doing what is right for the harms they have caused.


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