Updated from 3:18 p.m. EDT
on Thursday suffered a double dose of Vioxx legal defeats, and the courtroom setbacks sent its stock lower in heavy trading.
In New Orleans, a federal court jury awarded $51 million to a man who claimed Vioxx caused his heart attack. Halfway across the country, a state court judge in New Jersey overturned a Merck victory from November and ordered a new trial.
The Louisiana case is the fourth trial loss for Merck relating to the arthritis and pain-relief drug that it pulled from the market in September 2004.
The New Jersey-based drugmaker has won five trials.
one of those victories was vacated by a New Jersey judge who said new evidence had become available. Merck said it disagreed with the decision, arguing that the evidence wasn't new. Merck said it's contemplating its next move, including an appeal.
Merck's stock fell $2.35, or 5.7%, to close at $38.83. The stock dipped as low as $38. Volume of 36.2 million shares was more than triple the daily average for the past three months.
The New Orleans jury awarded $50 million in compensatory damages and $1 million in punitive damages. Merck, which is appealing the first three cases it lost, said it would appeal this case, too.
"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," said Kenneth Frazier, Merck's general counsel. "While this is not the outcome we had hoped for, our commitment to defending these cases one at a time remains the same."
Although the company has set aside reserves for the cost of defending Vioxx, it still hasn't created a reserve for potential liabilities.
The New Orleans jury said Merck failed to adequately describe Vioxx's risks to the doctors of Gerald Barnett, 62, a former agent of the Federal Bureau of Investigation. Barnett suffered a heart attack in 2002. He took Vioxx between early 2000 and September 2004. Merck's attorneys said Barnett's risk factors, including his age and a family history of heart disease, contributed to his heart attack.
Merck withdrew Vioxx from the market one week after Barnett stopped taking the drug. The company said it acted because a clinical trial showed Vioxx patients who took the drug for more than 18 months had a higher risk of cardiovascular problems than people who were given a placebo.
Thus far, Merck says it has been named as a defendant in about 14,200 personal-injury lawsuits in the U.S., as well as some 190 purported class actions. An unknown number of lawsuits have been filed in other countries.
Meanwhile, in Atlantic City, N.J., Superior Court Judge Carol Higbee vacated Merck's victory in a case involving Frederick Humeston, an Idaho postal worker, who blamed Vioxx for a heart attack. The jury said Vioxx didn't cause the heart attack and that Merck didn't commit consumer fraud in marketing the drug. Humeston said he suffered a heart attack in September 2001 when he was 56. He took Vioxx intermittently for two months, Merck says.
The case is expected to be retried in January, said Christopher Seeger, Humeston's lawyer.
Seeger, a partner in the Seeger Weiss law firm, said the judge tossed out the November 2005 verdict primarily due to information that was made public the following month involving a Merck clinical trial.
The New England Journal of Medicine
said on Dec. 8 that the authors of a Merck-sponsored clinical trial, known as the VIGOR trial,
should make corrections to an article that was published in the journal in November 2000. An editorial in the
cited "inaccuracies and deletions."
Merck later responded that the research was conducted properly and
that the article didn't merit a correction.
"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, a member of Merck's outside legal team, said Thursday. Mayer is a partner at Hughes Hubbard & Reed.
Mayer said the "underlying facts" of the journal's 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 said he doesn't believe the editorial would have affected the verdict.