Already wounded by the withdrawal of its Vioxx pain reliever from the market, Merck must now contend with hundreds of lawsuits over the drug’s side effects—lawsuits that threaten to further damage the company’s finances and reputation.

This week, Standard & Poor’s warned 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%, and the company lost $28 billion in shareholder value — partly in response to the loss of revenue from Merck’s second-best-selling drug, but also because of the lawsuits.

Richard Evans, an analyst at Sanford C. Bernstein Research, estimates Merck’s legal costs could reach $12 billion, while Merrill Lynch concludes Merck’s liability could be as high as $17.6 billion over the next decade or so.

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

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

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

Legal experts say lawyers suing Merck must prove two primary assertions: The company understood Vioxx’s risks and downplayed them, and that 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 given 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The drug “should have been withdrawn several years earlier,” the researchers conclude.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 weaknesses” in oversight.

A federal judge in Alabama has ruled that Merck needed 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 Multi-district 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.

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,” says Frank McClellan, a law professor at the Beasley School of Law at Temple University in Philadelphia.

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.

On Tuesday, the FDA 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’s competing pain reliever, 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.

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