Already wounded by the withdrawal of its Vioxx pain reliever from the market, Merck & Co. must now contend with hundreds of lawsuits over the drug’s side effects.

The company’s reputation and finances could be in for deep damage.

Wall Street analysts are concerned about Merck’s potential legal liability. This week, Standard & Poor’s Corp. warned investors that it might downgrade its ratings on Merck’s debt because of the huge payouts the company might be forced to make.

Merck withdrew Vioxx from the market Sept. 30 because the drug doubled the risk of heart attacks and strokes in patients taking it longer than 18 months. Merck’s stock plunged nearly 27 percent, and the company lost $28 billion in shareholder value after the announcement. The dive was partly in response to the loss of revenue from Merck’s

second-best-selling drug, but also because of the lawsuits, said Richard Evans, an analyst at Stanford C. Bernstein Research. He estimates that Merck’s legal costs could reach $12 billion.

If plaintiffs win and prove their allegation that Merck put profits before patients’ welfare, the company’s reputation will also suffer.

David Moskowitz, an analyst at Friedman Billings Ramsey, said: “This has a credibility cost. Merck’s brand and stature are tarnished by this.”

Plaintiffs’ lawyers say there have been at least 700 Vioxx-related lawsuits filed against Merck so far, and one analyst estimated the number at more than 1,000. Merck says 300 suits have been filed.

Legal experts said lawyers suing Merck must prove two primary assertions: The company understood Vioxx’s risks and downplayed them, and the drug played a role in causing heart attacks or strokes.

A new analysis published online Thursday by the British journal The Lancet could help fuel the lawsuits. Swiss researchers, led by Peter Juni of the University of Bern, pooled results from 29 studies of Vioxx and found that people who took it had more than double the risk of heart attack than those who took dummy pills or other painkillers.

The drug “should have been withdrawn several years earlier,” the researchers conclude.

“The unacceptable cardiovascular risks of Vioxx were evident as early as 2000,” Lancet editor Richard Horton wrote in a commentary. He faulted Merck for “astonishing failures” in monitoring the safety of its drugs and the U.S. Food and Drug Administration for “lethal wealmesses” in oversight.

A federal judge in Alabama has ruled that Merck needs to be ready for trial after Dec. 13 in a case brought by William Cook, a retired miner who had been taking Vioxx for about a year when he suffered a heart attack in 2000. The case was filed before Merck pulled Vioxx from the market. However, Merck filed a motion with the Judicial Panel on

Multidistrict Litigation in Washington to consolidate all the federal cases in one jurisdiction, which could delay Cook’s trial, according to his lawyer, Andy Birchfield

Cook declined to be interviewed.

The case that goes to trial first will be closely watched by other plaintiffs and their lawyers, who are hoping for a precedent that could set a pattern for future lawsuits. Fordham University law professor Benjamin Zipursky suggested that the perfect patient for plaintiff lawyers would be a young person who took Vioxx for 18 months and had no other conditions that might trigger a heart attack or stroke. That would make it easier to prove Vioxx caused the plaintiffs illness, and a big settlement might push Merck to settle more cases.

However, many patients taking Vioxx for arthritis were older people who are generally more prone to heart attacks and strokes, so establishing the connection between their illnesses and the drug could be difficult.

“The more common the adverse effect, the more difficult the case could be to win,” said Frank McClellan, a law professor at the Beasley School of Law at Temple University in Philadelphia.

It’s not clear how helpful Cook’s case will be to either side. Cook, who is 50, was inactive before his heart attack because of a back injury. Doctors consider being sedentary a contributor to heart disease.

Other drugs that were taken off the market and the subject of numerous lawsuits such as Bayer AG’s cholesterol drug Baycol and Wyeth’s diet drugs Pondimin and Redux caused uncommon injuries that made proving liability easier.

Wyeth took its drugs off the market in 1997 and has paid $13.6 billion in legal fees and settlements of its $16.6 billion reserve – believed to be the biggest amount ever paid by a pharmaceutical company over a problem drug.

Baycol was withdrawn in 2001, and Bayer has paid $1.09 billion so far.

Only 6 million individuals took Wyeth’s diet drugs, while 20 million Americans took Vioxx. That has led some observers to think Vioxx’s payout could be larger.

Merck general counsel Kenneth C. Frazier said heart attacks happen frequently in the general population, and many factors, including obesity and age, increase the risk.

“These cases are not a slam dunk,” Frazier said.

He said that when all the facts are before a judge it will be clear that “Merck acted responsibly every step of the way.”

Plaintiffs’ lawyers must also prove that Merck knew Vioxx could cause heart attacks and strokes, but minimized the drug’s side effects while marketing it. They might find support for their case in documents that have come to light recently.

The Wall Street Journal reported this week that sealed court documents suggest Merck understood Vioxx’s dangers at an early stage. According to the newspaper, in a Feb. 25, 1997, e-mail, Merck official Briggs Morrison said patients taking Vioxx in a clinical trial should also take aspirin, which has heart-protecting powers, because otherwise “you will get more thrombotic events” – blood clots. In another e-mail, Merck research chief Edward Schonick wrote to colleagues on March 9, 2000, saying the cardiovascular events “are clearly there.”

Frazier said the documents were taken out of context and don’t reflect the evolution of thought on Vioxx as more data became available.

On Tuesday, the U.S. Food and Drug Administration released a study that said Vioxx may have contributed to an additional 27,785 heart attacks or deaths from 1999 to 2003 that might have been avoided if patients were taking Pfizer Inc. ‘s Celebrex. The study analyzed medical records of 1.4 million adult members of Kaiser Permanente, the nation’s largest HMO. Preliminary findings were released in August.

(More recently, safety questions have also been raised about Celebrex. The Canadian newspaper National Post reported that documents from Canadian health authorities linked Celebrex to the deaths of 14 persons who were taking it over the past five years. The documents include more than 100 adverse-reaction reports on Celebrex over the past five years, including 19 cases of heart attack, cardiac arrest or heart failure and five strokes. On Thursday, Pfizer officials defended the drug, noting that the death and reaction reports were not designed to determine cause and effect, and that years of large-scale clinical studies of the drug showed no increased cardiovascular safety risk.)

In the Vioxx controversy, doctors interviewed for this story also had complaints about Merck, saying the company tried to squelch negative opinions on Vioxx’s safety and downplay the drug’s risks.

Stanford University medical professor James Fries said a high-ranking Merck official, Louis Sherwood, tried to intimidate several doctors who expressed concerns about Vioxx’s safety. Fries said Sherwood made charges to these doctors’ superiors that the physicians were biased against the drug.

Fries said he received such a call about one of his doctors and learned it was part of a pattern. He said he wrote Merck chairman Raymond Gilmartin protesting the company’s attempt to suppress academic discussions.

“I think Merck went over the line,” Fries said. “Their approach was to try to get people fired for saying things they (Merck) didn’t agree with.” Fries said the calls stopped after his letter, which he said was sent in 2000 or 2001.

Sherwood did not return calls for comment. Frazier said Merck has never had a policy of retaliating against doctors, but has the right to “set the record straight” if it feels its products are being misrepresented.

Vioxx’s label was changed in 2002 to reflect studies, but lawyers maintain that it wasn’t strong enough and that the company continued to downplay the drug’s risks. The Cook lawsuit alleges that Merck had at least three programs to train sales representatives “to misstate and misrepresent the truly dangerous nature of Vioxx to prescribing physicians. ”

The materials are under court-ordered seal.

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