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Sunday, November 11th 2007

Merck Settles

Oh the woe. The pharmaceutical industry couldn’t give two-cents about the status of physician’s medical liability, so let us not confuse the issue. Even so, I thought that the Vioxx trials were a clear example of the kind’ve litiganous society we’re living in.

So many cases, with so many risk factors for CAD and yet somehow these plantiffs who had taken Vioxx for all of a week in some cases felt that they knew Vioxx had caused their heart attack and they expected a jury of their peers to come to the same conclusion.

Merck’s initial refusal to settle these cases and to take them all on was not decided based on anything but the finances I’m sure, but still held some nobility in a world where so many are forced to duck and cover when pelted with medical lawsuits. But after three years of putting up such a fight, Merck has finally settled for nearly $5 billion dollars.

As proof of the soundness of their decision from a financial standpoint, their stock immediately went up. Still it is sad to see considering Merck’s ‘success’ in defending itself to this point.

The settlement, one of the largest ever in civil litigation, comes after nearly 20 Vioxx civil trials over the last two years from New Jersey to California. After losing a $253 million verdict in the first case, Merck has won most of the rest of the cases that reached juries, giving plaintiffs little choice but to settle.

Pressure on Merck to not continue to tie up the court system, is ridiculous if true.

Judges in Louisiana, New Jersey and California, who oversee nearly all the lawsuits, had pressed for a deal before a new wave of trials was scheduled to begin in January.

[Plantiff attorney Danny] Becnel credited Judge Eldon Fallon of Federal District Court, who is overseeing the federal lawsuits from his court in New Orleans, with pressing the two sides to the table.

“He had everything to do with it,” Becnel said. “He was critical.”

A much more reasonable pressure to apply would’ve been to the steering committee for the plantiff attorneys, for them to drop most of their markedly frivolous cases.

But, even with that pressure Merck still obviously made this decision as a financial one.

Merck, which has already spent more than $1.2 billion on Vioxx-related legal fees, the settlement will put to rest any fears that Vioxx lawsuits might bankrupt the company, or even have a significant financial impact. While eye-popping, the settlement payment represents less than one year’s profits for the company, the third-largest American drug maker.

[T]he agreement is far smaller than Wall Street analysts and lawyers predicted when Merck withdrew Vioxx, and especially after the verdict in the first case. In 2005, most analysts estimated that Merck’s ultimate liability in Vioxx would be between $10 billion and $25 billion.

Another chapter comes to a close in the Vioxx ordeal.

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