Healthy Skepticism Library item: 11635

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Publication type: news

Johnson LA.
Merck still facing long road in court
Associated Press 2007 Oct 1
http://www.nj.com/business/ledger/index.ssf?/base/business-1/119121401197840.xml&coll=1

Full text:

Three years after Merck pulled its blockbuster painkiller Vioxx from the market due to increased heart attack and stroke risk, there’s no end in sight for the massive litigation it ignited.

Shortly after Vioxx was withdrawn Sept. 30, 2004, stock analysts said Merck’s liability could reach $50 billion, and doomsayers predicted Merck’s demise.

Neither look possible now, as Merck has won nine of the 14 product-liability trials resolved so far and had other key victories, including beating back two multibillion- dollar class-action lawsuits, on behalf of shareholders and private insurers seeking to recoup what they paid for Vioxx prescriptions.

Still, legal experts say it will be a few years before it is clear how the Vioxx saga will end.

A few things are certain:

The Whitehouse Station- based drugmaker won’t change its policy of fighting each lawsuit, rather than reaching settlements with plaintiffs, at least until enough cases are eliminated to make settlements relatively cheap.

“We think there’s hard evidence of the strategy working,” said Merck legal spokesman Jim Fitzpatrick.

He said between January and August, the number of pending product-liability cases dropped 4 percent, as many were dismissed or dropped.

“It’s unequivocally brilliant,” analyst Steve Brozak of WBB Securi ties said of the strategy. Merck has seen its stock outperform the pharmaceutical and biotech sector in dexes this year, partly because of strong revenues from new products, he said.

But there are still at least 45,200 product liability cases pending, another 14,450 on hold with the statute of limitations suspended, 266 potential class-action lawsuits al leging patient injuries or stockhold ers’ economic losses, and one class action certified in Canada. Meanwhile, New York and six other states are suing to recoup what they paid for Vioxx through Medicaid.

The meter for legal costs on both sides will keep spinning at a dizzying pace.

As of June 30, Merck had spent $1.04 billion for defense costs and had another $828 million in reserve. Plaintiffs’ lawyers say they are spending $650,000 to $1.5 million per case.

Plaintiffs’ law firms will collaborate more to win more cases.

“If we stay like a dog on the bone, there won’t be much meat left,” predicted Russ Herman, one of three attorneys running the plaintiffs steering committee handling pretrial steps for thousands of federal cases.

Next week, they will have U.S. District Judge Eldon Fallon, who is overseeing those cases, review a huge guidebook they’ve prepared for lawyers representing Vioxx users who had heart attacks.

In exchange for 5 percent of any money they later win, those lawyers will get “the plaintiff’s strategy for winning cases,” with everything from the top expert witnesses and ways to combat Merck’s defenses to the 100 best documents to use and results from focus groups and mock trials, Herman said.

Courthouses around the country, mainly in Merck’s home state and in New Orleans, where Fallon is coordinating the federal cases, will remain clogged with Vioxx cases for years to come.

A new round of trials has started. Next year, Fallon hopes to start hearing the first trials with Vioxx users who suffered strokes, and New Jersey Superior Court Judge Carol Higbee plans to use other judges to simultaneously run four trials with a few plaintiffs each.

Chris Seeger, co-lead counsel for New Jersey and federal plaintiffs, said Merck has mainly won cases where expected — where plaintiffs had many cardiac risk factors.

“I don’t think they’re going to beat us out in a war of attrition,” he said.