- The Washington Times - Friday, November 5, 2004

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

Wall Street analysts are concerned about Merck’s potential legal liability. This week, Standard & Poor’s Corp. 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 percent and the company lost $28 billion in shareholder value after the announcement — 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 Sanford C. Bernstein Research. He estimates Merck’s legal costs could reach $12 billion.

A new analysis by Merrill Lynch concludes Merck’s liability could be as high as $17.6 billion over the next decade or so. The estimate is based on the prospect of nearly 51,000 successful lawsuits with jury awards or settlements of $100,000 to $300,000 for patients claiming heart attacks or strokes, plus another $1 billion to $2 billion for nuisance lawsuits. That would be slightly offset by Merck’s liability insurance of $650 million.

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

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

Plaintiffs’ attorneys said at least 700 Vioxx-related lawsuits have been filed against Merck, and one analyst estimated the number at more than 1,000. Merck says 300 lawsuits have been filed.

Legal analysts said 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.

Hundreds of plaintiffs’ attorneys plan to meet next week to plot strategy, the New York Times reported yesterday.

An analysis published online Thursday by the British journal the Lancet could help fuel the lawsuits. Swiss researchers led by Dr. 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.

Merck issued a statement Thursday saying that it had acted responsibly and that the Lancet analysis did not include two studies more favorable to Vioxx.

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 Multidistrict Litigation in the District of Columbia to consolidate all the federal cases in one jurisdiction, which could delay Mr. Cook’s trial, said his attorney, Andy Birchfield.

Mr. Cook declined to be interviewed.

The case that goes to trial first will be closely watched by other plaintiffs and their attorneys, who are hoping for a precedent that could set a pattern for future lawsuits.

Fordham University law professor Benjamin Zipursky suggested the perfect patient for plaintiff attorneys 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 plaintiff’s 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 is not clear how helpful Mr. Cook’s case will be to either side. Mr. Cook, who is 50, had a sedentary lifestyle before his heart attack because of a back injury. Doctors consider a sedentary lifestyle to be 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.

“I’m pretty confident we can show Vioxx caused my client’s heart attack,” said Mr. Birchfield, a partner at Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala. “There is a population that really shouldn’t have been prescribed Vioxx, especially because it was more likely to cause heart attacks and strokes.”

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

“These cases are not a slam dunk.” He said when all the facts are before a judge it will be clear that “Merck acted responsibly every step of the way.”

Arnold Levin, senior partner at Levin, Fishbein, Sedran & Berman in Philadelphia, which has filed two cases against Merck and is preparing another 38, said: “It would be pretty callous of Merck to say these are old people and they were going to get heart attacks and strokes anyway. That is not going win them any points with a jury.”

Plaintiffs’ attorneys also must 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.

Mr. Birchfield and other lawyers said they have documents that prove Merck knew about Vioxx’s problems long before they became public and that the company engaged in a campaign to mute the risks once they began emerging.

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