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Merck suffers setbacks as it defends lawsuits

Friday, August 18, 2006

NEW ORLEANS -- Merck & Co. was stung with two major legal setbacks over the withdrawn painkiller Vioxx on Thursday when a federal jury ordered the drug maker to pay $51 million to a heart attack victim, and a state judge in New Jersey overturned a November verdict favoring the company.

In New Orleans, the jury found that Merck "knowingly misrepresented or failed to disclose" information about Vioxx to retired FBI agent Gerald Barnett's doctors. It said Barnett, of Myrtle Beach, S.C., should get $50 million in compensatory damages. And it added $1 million in punitive damages, saying Merck "acted in wanton, malicious, willful or reckless disregard for the plaintiff's rights."

In New Jersey, state Superior Court Judge Carol Higbee ruled evidence uncovered since the November verdict entitled Frederick "Mike" Humeston, of Boise, Idaho, to another trial. In November, a jury absolved Merck of any liability related to his 2001 heart attack.

But Higbee decided the verdict should be vacated on several grounds including two editorials by the New England Journal of Medicine that chastised Merck for failing to report data on three patients who suffered heart attacks while taking Vioxx as part of a drug study when the company submitted the research for publication.

The study, known as VIGOR, has played an important role in the Vioxx trials, and the Journal said the data exclusion called into question the integrity of its conclusions.

As a result of throwing out the verdict, the judge ordered a new trial, and Merck is considering whether to appeal that ruling. The drug maker said it would appeal the New Orleans verdict.

"Both the finding and the amount of damages were totally uncalled for in this case because Merck acted appropriately in providing information to the medical, scientific and regulatory communities in a responsible and appropriate manner," Kenneth C. Frazier, a senior vice president for Merck, said of the New Orleans verdict.

As for the New Jersey case: "We have a significant disagreement with the court's decision because the evidence presented to the jury during the course of a seven-week trial in 2005 showed that Merck behaved appropriately with respect to Vioxx and also that Vioxx was in no way related to Mr. Humeston's heart attack," Ted Mayer, of Hughes Hubbard & Reed, a member of Merck's national defense team, said in a news release.

Mayer said the facts behind the editorial "were known to the plaintiff long before the trial, and the jury was aware of the issue because it was presented by the plaintiff's expert."

Mayer also said that the company intended to maintain its policy of trying every Vioxx case.

The lawsuits are among more than 14,000 Vioxx-related suits against Merck in state and federal courts.

David Logan, dean of Roger Williams University School of Law in Bristol, Rhode Island, said the New Orleans verdict would put pressure on Merck to consider settling cases.

"How long can Merck carry the cost of these verdicts?" Logan asked. "None of these cases are coming back small."

He said the cost of litigation and the management time devoted to overseeing the Vioxx cases remove resources that Merck should be spending on developing new products. "This is a drag on Merck going forward," he said. "it is an enormous tax on the company moving forward."

Jon LeCroy, an analyst with Natexis Bleichroeder, said there is no reason for the company to settle and every reason for it to continue to try each case, stretching out the process so that it doesn't have to dole out a lot of money at once and can wear down plaintiffs, some of whom will go away.

"Clearly it is costing them a lot to fight the cases but that will go up tenfold if they announce a settlement," he said, noting a settlement usually triggers more lawsuits.

Merck shares slumped $2.35, or 5.7 percent, to close at $38.83 on the New York Stock Exchange Thursday.

Barnett's lawyer, Mark Robinson, had asked for $25 million in punitive damages, arguing that it would send a message to drugmakers that they should not rush pharmaceuticals to market. Merck's lawyer, Phil Beck, argued that no further awards were needed to punish the drugmaker.

"My guess is that you have already awarded punitive damages. You sent a message loud and clear and the people at Merck heard that message," Beck said.

Outside the courtroom, Barnett said little, only that he was "very happy" with the verdict. Robinson said he was not disappointed with the relatively small punitive award, saying he wanted punitive damages added as a symbolic gesture to deter drug companies from putting unsafe drugs on the market.

On its verdict sheet, the jury had the chance to assign percentages of fault to Merck and various physicians, but assigned blame only to Merck.

The first federal trial had to be held twice. The first jury deliberated 18 hours over three days, but deadlocked over whether Vioxx was to blame for the death of a Florida man who had taken the drug for less than a month. The second jury in that case came back in less than four hours with a verdict for Merck.

In state courts, before Thursday, Merck had won four cases in New Jersey and California. It had lost two cases in Texas and one in New Jersey.

The New Jersey ruling removes one of Merck's state wins.

In federal court, the company now has one win and one loss.

The jurors who decided the Barnett case have at least two things in common with the plaintiff: All eight are men and they're all getting older.

Beck pointed out in closing arguments Wednesday that both are risk factors for heart attacks, and neither can be controlled.

Robinson has emphasized that his 62-year-old client, who underwent a quintuple bypass after a heart attack at the age of 58, was careful to keep his risks as low as possible with daily exercise, a healthy diet and drugs to control his cholesterol.

He told the jury that the problem was Vioxx, which Barnett took for 31 months before his heart attack in July 2002. He continued to take the painkiller for another two years, stopping one week before Merck pulled it from the market in September 2004, after a study showed it increased the risk of heart attacks and strokes.

Logan said that jurors may have empathized with Barnett. "Plaintiff lawyers want jurors to think 'There but for the grace of God goes me."' he said.


AP business writers Theresa Agovino in New York and Jeffrey Gold in Newark, N.J. contributed to this story.


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