According to a Bloomberg News report published today, Credit Suisse First Boston business analyst Catherine Arnold doubled her liability estimate for Merck & Co. to $10 billion. Merck is appealing last week’s jury verdict in Texas that awarded Robert Ernst’s widow $253 million.

In today’s NY Times there’s a story discussing the reason(s) why Merck lost its first Vioxx trial. The story concludes Merck lost because of bad facts. Jurors got to see a mountain of documents and email messages that showed how Merck researched Vioxx’s heart risks and presented what it knew to doctors and consumers. The documents showed that scientists at Merck were worried about Vioxx’s potential cardiovascular risks as early as 1997, two years before Merck began selling the drug. In spite of these bad facts, Merck’s general counsel, Kenneth C. Frazier, continues to insist, “We know we acted responsibly.” Go figure.

The size of the first Vioxx verdict ($259 Million) against Merck is an indication that juries in other cases will be angry at Merck when they hear the evidence of the company’s wrongdoing. The core evidence presented in the Ernst case is the same evidence that will be presented in other cases. While each case will have medical facts that vary for each plaintiff, the acts of wrongdoing by the company will be similar in each case. The Ernst verdict will likely be reduced significantly by the Judge under the provisions of some of the Texas tort reform laws that were passed to protect big companies but the significance of the large award by the jury indicates that Merck will have serious problems defending the 4,000 lawsuits that have already been filed and the tens of thousands of lawsuits that will be filed in the next few years.
Merck boldly claims that it will fight each case and will not settle. To date there have been no reported settlements by Merck of any cases. However, if the lawsuits drive the stock price of the company down far enough and it it is advantageous to the company’s shareholders the company has a duty to the shareholders to start settling cases.
The next trial set is in New Jersey in September and the first federal trial in the consolidated multidistrict litigation is in November in New Orleans. This multidistrict litigation is the consolidation of all of the cases pending in all the federal courts throughout the country which have been consolidated in New Orleans before Judge Eldon Fallon.
Additional evidence is being discovered every week in the ongoing depositions in the pending cases and it is likely that more evidence of wrongdoing by Merck will be uncovered that can be used in later trials. For example, recent evidence has been discovered that Merck’s early studies showed an increase in heart attacks after only a few weeks of Vioxx use. Merck had said when Vioxx was pulled off the market that the evidence of increased heart attacks only were shown after 18 months of Vioxx usage. That statement has now been shown to be untrue. David Graham, a scientist at the FDA, has estimated that Vioxx has killed over 60,000 people. That is more people than were killed in the Vietnam war. The Vioxx debacle is a public health catastrophe and apparently the only ones actively investigating or prosecuting Merck are the private trial lawyers and their brave clients.

Merck & Co. was found negligent in the death of a 59 year old triathlete who used Vioxx. The jury awarded the man’s widow $24 million in actual damages and $229 million in “exemplary” or punitive damages for a total of approximately $253 million. A jury of seven men and five women ruled 10 to 2 against Merck on each of three key questions. They found Merck failed to warn doctors of Vioxx’s danger, that the drug was improperly designed, and that Merck’s negligence caused Robert Ernst’s death. Merck plans to appeal.

In spite of problems, drug companies have raised their prices almost 13% since 2003. The first half of this year, they’ve raised prices about 5.5%. As a response to impending Medicaid reform, drug companies have raised their prices, when greater pricing pressures are expected.

At a time when the pharmaceutical industry has come under fire for its advertising to consumers, the FDA has decided to step in and review drug ads. The last guidelines were set in 1997 and are in dire need of review since many have died or suffered severe injury after having used these advertised drugs. Research shows that many doctors and consumers believe drug ads. The ads have been criticized for not fully disclosing their potentially letal side effects.

The FDA has finalized a new label for the drug Celebrex warning of increased cardiovascular risks such as heart attacks and strokes. The new label on Celebrex will recommend the drug be prescribed at the lowest dose and shortest time possible. The label will also carry a warning that Celebrex shouldn’t be used to treat pain associated with heart-bypass surgery. Sounds like a drug I want to take. . .

Yesterday, jurors heard videotaped testimony from the pathologist who said that the death Robert Ernst, a 59 year old triathlete taking the painkiller Vioxx was more than likely caused by a heart attack, damaging Merck’s defense in the first Vioxx trial nationwide. The videotaped testimony was shown almost immediately after the Texas Supreme Court denied Merck’s attempt to stop jurors from hearing it. The testimony is crucial because Merck has acknowledged a link between Vioxx and heart attacks and strokes, but has maintained that there is no such link between Vioxx and arrhythimias. The pathologist’s testimony gives a big boost to one of the plaintiff’s biggest challenges, which was making a link between Vioxx and arrhythmia. After a Merck lawyer asked the pathologist whether she was changing her story in the autopsy report, Dr. Araneta replied, “I’m not changing my opinion, I’m just explaining it further. That’s the autopsy report, but it’s not the end of the story.”
Apparently not, although Merck would like it to be.

A pathologist’s testimony in the nation’s first Vioxx trial has dealt a blow to Vioxx’s manufacturer Merck & Co. Dr. Maria Araneta the pathologist who performed the crucial 2001 autopsy on Robert Ernst stated in deposition testimony that Ernst’s death from arrhythmia, or an irregular heartbeat, was probably brought on by a heart attack even though such an admission was not noted in her autopsy report. Her opinion counters Vioxx maker Merck & Co.’s reliance on her report to bolster its position that Mr. Ernst didn’t have a heart attack. “Arrhythmia does not spontaneously occur. Something must trigger it,” Dr. Araneta stated in her deposition on Tuesday.

The jury in the first Vioxx trial heard a lot of evidence last week that Merck hid the risks of Vioxx. Dr. Nancy Santanello, a senior Merck scientist was questioned about documents that showed Merck was concerned about Vioxx’s heart risks as early as 1998, even before it began selling Vioxx. Testimony showed that Merck never conducted a large study specifically designed to measure whether the long-term use of Vioxx raised cardiovascular risks- even though Dr. Edward Scolnick, Merck’s top scientist, said it was essential that Merck run such a clinical trial. Approximately 20 million people took Vioxx between May 1999 and September 2004 when Merck withdrew the drug after a clinical trial showed that it was linked to heart attacks and strokes. Merck has reserved $675 million for its legal costs in defending Vioxx suits.