Merck Updates Vioxx Legal Saga

As the number of Vioxx-related cases mounts, Merck(MRK Quote) is discovering that some of its insurers don't want to pay for the company's defense against the lawsuits. Merck says it will fight the insurers' efforts to reduce or eliminate coverage.

Merck disclosed the insurance battle Friday after markets had closed. It didn't identify the insurance carriers or discuss how much coverage is at stake, according to a document filed with the Securities and Exchange Commission.

Merck said the insurers initiated an arbitration proceeding to cancel certain policies "and to void all of their obligations under those policies with respect to the Vioxx lawsuits." The carriers also want to "void their coverage obligations with respect to certain other types of losses covered by those policies," the SEC filing said.

Merck said the insurers also may seek other ways to reduce their coverage, including "the application of exclusions, the definition of loss, compliance with policy conditions ... coverage limits, and satisfactory proof of loss."

Merck added that the number of product liability lawsuits filed in state and federal courts has grown to 850 as of Jan. 31, featuring more than 2,400 plaintiff groups. Merck removed Vioxx from the market Sept. 30 after noting that a clinical trial showed long-term use of the arthritis drug -- more than 18 months -- was linked to higher risks of heart attacks and strokes.

Recently, Merck hinted it might bring Vioxx back to the market, under limited circumstances, following a 17-15 vote by a Food and Drug Administration advisory committee that the drug was safe and effective for certain patients under certain restrictions. Merck is waiting for the agency to act on the advisory panel's recommendation.

The FDA also is reviewing the advisory committee's vote on two other drugs in the same COX-2 inhibitor class as Vioxx. Both of these drugs, Celebrex and Bextra, are made by Pfizer (PFE Quote) and both are still on the market. The advisory panel supported Celebrex by a 31-1 vote; Bextra won approval by a tally of 17-13 and two abstentions.

Merck said it also has been named in approximately 90 other class-action lawsuits seeking compensation under state consumer protection and/or fraud laws. Merck has been named as a defendant in 21 lawsuits filed in federal courts alleging securities fraud relating to the marketing of and subsequent withdrawal of Vioxx.

In addition, 11 suits have been filed seeking payments on behalf of current and former employees who participate in Merck retirement plans. Merck also is being sued over Vioxx in four other continents.