VIOXX LIABILITY COULD REACH $50 BILLION
Merck has vowed a steadfast legal defense of its withdrawn pain drug Vioxx despite a stinging defeat last week in the first liability case to go to trial. But a second loss in a trial set to begin next month could force the firm to settle the thousands of remaining lawsuits at a cost of up to $50 billion, according to an analyst.
The precedent in the Vioxx legal battle was established Aug. 19 when a jury in Brazoria County, Texas, found Merck liable for the death of Robert Ernst, a 59-year-old Vioxx (rofecoxib) user. The jury awarded the man's family $24 million in actual damages and $229 million in punitive damages. Merck plans to appeal the verdict.
The verdict should be put in its appropriate context, said Kenneth Frazier, senior vice president and general counsel of Merck. "This is the first of many trials," he said. "Each case has a different set of facts. Regardless of the outcome in this single case, the fact remains that plaintiffs have a significant legal burden in proving causation."
In Texas, for example, the plaintiff's lawyer argued that Vioxx caused cardiac arrhythmias, or irregular heartbeats, which contributed to Ernst's death. The next trial, set for September in New Jersey, centers on claims that Vioxx caused a heart attack in a man who had no evidence of heart disease.
But a defeat in the New Jersey trial, scheduled to begin Sept. 12, could change Merck's strategy, according to a pharmaceutical analyst. The outcome of this trial, which involves a Vietnam veteran who had a heart attack while taking Vioxx and survived, will play an important role in determining the total liability Merck may face.
The potential liability of settling a high number of suits at high payouts may exceed $25 billion, and could reach as high as $50 billion in a worst-case scenario, Rauch said. Earlier estimates by other industry observers had put the firm's liability in the range of $4 billion to $20 billion.
In Merck's case, the damages were excessive, particularly the $229 million punitive award, said Richard Samp, chief counsel at the conservative Washington Legal Foundation. This amount will likely be reduced on appeal, he told FDAnews.
Texas law limits punitive damages to twice economic damages and up to $750,000 for non-economic damages. In the Ernst case, the jury awarded the plaintiff $450,000 in economic damages and $24 million in non-economic damages. Assuming the Texas punitive damages cap applies in the Ernst case, the $229 million award would be reduced to approximately $2 million, a figure that was confirmed by Merck's Frazier.