Merck Gets Walk

Although it's hard to make predictions based on two jury verdicts, that won't stop financial analysts and legal commentators from doing just that. Investors have been keeping a close eye on the Vioxx trials because Merck has signaled it won't settle the lawsuits filed over its handling of the drug.

Kenneth C. Frazier, Merck's senior vice president and general counsel, reiterated that strategy to reporters Thursday afternoon, saying the company stands by its plan to "defend these cases one by one."

As of Sept. 30, Merck says there were about 6,400 U.S. individual personal injury lawsuits pending, as well as 160 class-action personal injury cases. In addition, Merck faces an unknown number of personal injury suits filed in foreign countries, as well as shareholder litigation and other financial claims in the U.S.

Also, no one knows how many more suits will be filed, although some analysts suggested that Merck's New Jersey victory might deter some potential plaintiffs. Frazier said he wouldn't speculate on the strategies of trial lawyers. "Each case is a unique case," he said in a telephone conference call with reporters.

Merck continues to monitor the costs of litigation, but for now it's not changing the $675 million reserve set aside for courtroom battles, Frazier said. Merck hasn't established a liability reserve, and it has "no intention in the current timeframe" of doing so because "it is not appropriate," he added.

Analysts' estimates of Merck's potential liabilities have run as high as $55 billion, but many predict the cost will be $10 billion to $20 billion.

More Trials

The next test comes Nov. 28 when the first federal court Vioxx trial begins in Houston. Legal and financial experts say stricter rules of evidence and procedural requirements in federal court could provide Merck with an advantage.