Updated from Aug. 19
, the side effects from Vioxx just got a whole lot worse.
The giant drugmaker suffered a
painful legal setback Friday, when a Texas jury held the company liable for the death of a Vioxx user and ordered it to pay $253 million in damages as a result. On Monday, shares in Merck fell 1.5%, adding to a 7.7% plunge late Friday. Monday morning, Merck was down 42 cents to $27.63.
The verdict could simply be the first blow of many for the company, which still faces thousands of lawsuits carrying tens of billions of dollars in potential damages.
Plaintiffs have accused Merck of knowingly concealing heart risks associated with Vioxx, which ranked as one of the company's best-selling drugs before its voluntary withdrawal last year. Merck has denied any wrongdoing and pledged to defend each suit on its merits.
For its part, Merck had hoped to win its first trial by proving to a jury in Texas -- typically known for conservative courtroom decisions -- that Vioxx did not cause the victim's death. However, several lawyers with Vioxx plaintiffs of their own called the evidence against the company "overwhelming" and expressed absolutely no surprise at the jury's decision, its speed in reaching it and the huge damages that resulted.
"This just tells me -- and should tell everybody -- that a jury of 12 people didn't buy anything Merck had to say," said Don Strong, whose Oklahoma City law firm is handling more than 2,000 Vioxx cases that should begin to go to trial next year. Even so, "the company will more than likely have to take another hit or two before it finally realizes that the garbage it has been throwing up in the news and as a defense is just that -- garbage. Nobody's going to buy it."
Chris Seeger, whose New York law firm began suing Merck even before the company withdrew Vioxx from the market, is eager to throw the next punch. In less than a month, Seeger is scheduled to present the case of Mike Humeston -- a healthy Purple Heart recipient who suffered a sudden heart attack -- before a jury in "incredibly mainstream" New Jersey. He says that Merck "has got a little more on its hands" with that case than it did with its current one.
Seeger's firm began investigating Merck in 2001, following a troubling study about Vioxx and filed its first lawsuits against the company the following year. It now represents 500 heart attack victims and serves as co-lead counsel in a class-action lawsuit that, by itself, could cost the company an estimated $10 billion.
Wall Street has estimated Merck's total Vioxx exposure at anywhere between $4 billion and $55 billion. The company's stock plunged 7.7% to $28.06 on Friday's news.
For its part, Merck has vowed to vigorously defend itself against the 4,000-plus cases still pending against the company in court. But Seeger, for one, believes that Merck has made a huge mistake by vowing to "fight to its death" with so much evidence against it.
Likewise, Strong feels that Merck should have at least begun preparing for potential losses. Instead, he says, the company has set aside only the money necessary to litigate the cases and nothing at all for any damages.
"I don't know where their confidence comes from," Strong said. "But this verdict today shows that it's certainly misplaced."
Edward Ricci, a high-profile Florida attorney whose firm represents 450 Vioxx plaintiffs, believes the company clearly overestimated its chances in the current case. He says companies typically rely on just three strategies to defend themselves against product liability lawsuits. First, he says, they can try to prove that the product was not defective at all. Second, he says, they can try to minimize any damages that were in fact suffered. And finally, he says, they can try to show that their product did not actually cause the damages that did occur.
However, Ricci says, Vioxx was obviously defective -- linked to heart attack deaths in some -- and was yanked from the market as a result. Thus, he says, Merck set out to prove that the victim in this particular case died from heart problems that were unrelated to the drug. Instead, he says, damaging testimony from the coroner who reviewed that patient's death convinced the jury otherwise.
Ricci believes that Merck has lied to the American public and will ultimately pay a high price as a result. He compares the company's situation to that once faced by
, which lost huge amounts of business -- on top of a big courtroom trial -- for allegedly covering up fire hazards associated with its now-infamous Pinto. Ricci himself represented victims of the Pinto disaster.
Now, Ricci believes that Merck has similar problems on its hands. And he feels that the first Vioxx verdict has already set the tone for other cases going forward.
"This wasn't one case; it was the bellwether case for tens of thousands of people who died or suffered injury after taking Vioxx," he said. "I would say that this is the Pinto case of pharmaceuticals -- and it blew up in Merck's face."