Vioxx article

 

Eagle Eye On Legal Tactics

 

With one win, one loss, and a mistrial for Vioxx litigation, Merck may wind up with large-scale settlements and eroded company value if more losses are accrued.

 

by Rebecca Mayer

Med Ad News

January 13, 2006

 

Merck & Co.’s future rests on its legal strategy. The September 2004 worldwide market removal of the blockbuster arthritis drug Vioxx brought a surge of lawsuits, and the company has announced plans to fight each Vioxx case individually. So far, the lawsuits against Merck have resulted in one win, one loss, and a mistrial. Analysts contend the company could face very significant legal liabilities, and therefore, may have to consider a broad settlement if Merck continues to lose cases.

 

Merck withdrew Vioxx from the market after data from a clinical trial showed an increased risk of heart attack, stroke, blood clots, and other cardiovascular complications among patients prescribed the medication. Comprising rofecoxib, Vioxx is a cox-2 selective nonsteroidal anti-inflammatory drug that was approved by FDA in May 1999 for the relief of the signs and symptoms of osteoarthritis, for the management of acute pain in adults, and for the treatment of menstrual symptoms. The drug was later approved for the relief of the signs and symptoms of rheumatoid arthritis in adults and children.

 

The first Vioxx product-liability trial resulted in a Texas jury handing Merck a $253 million verdict. Merck is appealing that decision. Subsequently, a New Jersey court in Atlantic City ruled in favor of the defense. Most recently, the first federal case resulted in a hung jury. There are now more than 7,000 cases filed against Merck. Plaintiff lawyers believe that number is likely just a drop in the bucket. Many critics believe that the $2.5 billion-a-year product should have been recalled as early as 2000.

 

The lawsuits against Merck generally allege Vioxx caused cardiovascular problems, including heart attacks, strokes, blood clots, kidney damage, or gastrointestinal bleeding. Most of the lawsuits are product-liability cases or personal-injury suits. Many of the plaintiffs are seeking financial compensation, however, some potential class-action suits seek medical monitoring for Vioxx users who have not yet suffered health problems.

 

Attorneys and New Jersey court personnel say many of the cases were filed because plaintiffs in a handful of states faced a deadline of one year from when Merck pulled the blockbuster painkiller from the market Sept. 30, 2004. Some of the newly filed cases were triggered by the huge Texas verdict, which will be slashed under that state’s caps on punitive damages. Other cases were added to the long list by lawyers rushing to file suits so they are in line for an eventual jury trial or settlement, lawyers say.

 

"We believe that we have strong points to raise on appeal and are hopeful that the appeals process will correct the verdict," says Kenneth C. Frazier, senior VP and general counsel, Merck. "Our appeal is about fundamental rights to a fair trial."

 

New Jersey’s courtrooms are the most-popular venue for the Vioxx litigation because Merck cannot move cases in its home state to federal court. Plaintiffs’ lawyers believe that this law may work to their advantage because they perceive federal courts as less friendly.

 

Like most states, New Jersey has a two-year statute of limitations, with the clock starting when the plaintiff first knew he or she had reason to sue. States with a one-year filing deadline include Kentucky, Louisiana, and Tennessee.

 

Many attorneys believe that Merck wants to see how the first few cases play out, however, settlement talks are inevitable. Merck has set aside reserves of $675 million for its legal costs, but the company has not set up a fund to pay for settlements or jury awards.

 

Before Vioxx’s withdrawal, FDA officials announced that patients taking Vioxx had a 50% greater chance of heart attack and sudden cardiac death. The study also determined that patients taking the highest recommended daily dosage of Vioxx had three times the risk of suffering a heart attack and sudden cardiac death as those not taking standard painkillers.

 

Courtroom antics

 

In the first Vioxx trial, Ernst v. Merck, a Texas jury awarded $253 million to the widow of a Vioxx user. Merck is examining various bases for appeal, including, allowing opinion testimony to be given to the jury by unqualified experts; allowing opinion testimony that was not based on a reliable scientific basis as required by Texas law; allowing evidence with no relevance to the issues of the case, which unfairly prejudiced the jury; and allowing undisclosed surprise witness and expert testimony contrary to Texas law.

 

"We believe that the plaintiff did not meet the standard set by Texas law to prove Vioxx caused Mr. Ernst’s death," says Jonathan Skidmore of Fulbright & Jaworski, a member of Merck’s defense team. "There is no reliable scientific evidence that shows Vioxx causes cardiac arrhythmias, which an autopsy showed was the cause of Mr. Ernst’s death, along with coronary atherosclerosis.

 

"This case did not call for punitive damages. Merck acted responsibly — from researching Vioxx prior to approval in clinical trials involving almost 10,000 patients — to monitoring the medicine while it was on the market — to voluntarily withdrawing the medicine when it did."

 

In the second case, Frederick Humeston, an Idaho postal worker who suffered a heart attack while taking Vioxx, sued Merck, contending that the drug maker hid Vioxx’s risks in an effort to preserve sales. Mr. Humeston, 60, stated that he had been in good health before his heart attack and had turned to Vioxx to relieve pain from an old Vietnam War wound. He had taken the medication for about two months when he suffered a debilitating heart attack while sitting in an easy chair.

 

Merck’s defense showed Mr. Humeston suffered risks such as age, stress, obesity, and hypertension. Mr. Humeston underwent medical treatment for anxiety and a blood clot in his leg, according to court records.

 

Merck’s legal credibility came into question in this case when Judge Carol Higbee threw out testimony from the company’s first defense witness, Briggs Morrison, Ph.D., former VP, Merck Research Labs (merck.com). Dr. Morrison had told the jury that the company conducted several studies of Vioxx before putting the drug on the market, all concluding that Vioxx posed no threat to heart health. After three hours of testimony by Dr. Morrison, the plaintiff’s lawyers questioned the Merck scientist’s expertise. With the jury out of the courtroom, Dr. Morrison stated that he had not been involved in the cited studies but had simply reviewed them.

 

Judge Higbee struck Dr. Morrison’s entire testimony because he was not an expert on the clinical studies that he referenced to the jury. One of Merck’s lawyers exploded when Judge Higbee threw out the testimony. Some legal experts believe that this event affects Merck’s credibility and expect the company to screen witnesses more carefully in the future.

 

Other legal experts say any criticism of the outburst of trial counsel is unfair, especially among anyone who was not present in the court that day. "Often attorneys will disagree with the court on a ruling that the attorneys feel is key to its defense," says Diane Romza-Kutz, managing partner, health and life-sciences practice, Epstein Becker & Green PC. "It may also have been very important at that point in time to make a record, preserving an issue for post-trial motions or appeal." Judge Higbee is expected to preside over additional Merck cases in the future, and therefore, what effect the dynamics between defense counsel and the judge will have on those cases remains to be seen, she says.

 

"It is my understanding that Merck had identified Dr. Morrison as a fact witness, that is, a witness expected to relate first-hand knowledge of some fact in question during the trial," Ms. Romza-Kutz says. "Instead, it appears that Dr. Morrison was providing testimony typically brought out from expert witnesses. The expected content of expert-witness testimony must be declared well before trial so that opposing counsel may adequately prepare for cross examination and obtain experts on their own behalf."

 

Ms. Romza-Kutz identifies Merck’s line of questioning for the witness as a strategic move because even if the jury members are instructed to ignore this testimony, the questions were already answered in their presence. If the testimony is deemed important to Merck’s defense, the attorneys will likely introduce this testimony in another way, perhaps by calling one of the scientists who conducted the studies to the stand.

 

When the New Jersey case commenced, one of Merck’s lawyers, Ted Mayer, mentioned that the company was thinking about seeking a mistrial or filing an emergency appeal in response to the stricken testimony. Merck’s lawyers argue that withholding Dr. Morrison’s testimony has an impact on the fundamental fairness of the proceedings.

 

According to Ms. Romza-Kutz, Merck may consider filing an appeal if the attorneys believe that Dr. Morrison’s testimony is critical to the company’s defense. If this can be accomplished in a manner consistent with the rules of evidence, she believes that considering an appeal or other motions may very well be appropriate.

 

Dr. Morrison testified in his deposition that he knew nothing about the preclinical studies, says Jim J. McHugh Jr., partner, pharmaceutical mass tort and class-action department, The Beasley Firm. Dr. Morrison stated that he was not involved in the studies and was not capable of rendering opinions on their results. Merck put him on the stand, however, and asked him to testify to these studies he knew nothing about, was not qualified to testify to, and did not talk about in his deposition.

 

"It was a sneak attack," Mr. McHugh says. "Thus the judge struck him as a witness and told the jury to ultimately disregard his testimony. However, during closing arguments, Diane Sullivan has him sitting in the court room, right near counsel table, and pointed at him when she said Merck ... It was completely improper."

 

According to Jane Thorpe, partner, products liability and food and drug law, Alston & Bird, the exclusion of Dr. Morrison’s testimony will come up in subsequent trials.

 

"It is also likely, we would have to know more about what disclosures were made in New Jersey and in every court, generally speaking, you have to make a disclosure about the content of the expert’s testimony," Ms. Thorpe says. "And in this case, I’m sure that was done and then there was a deposition, and there was obviously a disagreement about the content of the disclosure and the scope of his testimony in the deposition. There will be different disclosures in the next case, with regard to Morrison, so this is going to be a fight that is fought probably over and over again during several trials down the road."

 

Impact of Merck’s first win

 

Many critics harshly evaluated the way in which Merck’s legal team handled the first Vioxx trial, and though Merck has won its first case, the criticism is still running rampant. Any criticism against Merck’s trial team appears to be based on hindsight, according to Ms. Romza-Kutz.

 

In the Texas trial, the team focused its defense on the science of the case, while the plaintiff’s attorney focused on Merck’s marketing activities, Ms. Romza-Kutz says. The plaintiff in that case was a marathon runner who had died after taking Vioxx, which made the defense a little more difficult and complicated.

 

The recent New Jersey victory for Merck was a very different scenario, according to Ms. Romza-Kutz. In that case, the plaintiff suffered what was characterized as a relatively minor heart attack and survived. In addition, he had a very significant medical history for other conditions that may have led to his heart attack. Proximate cause was much more difficult to establish. The facts and circumstances in the two cases may very well have made the difference in the outcome, Ms. Romza-Kutz told Med Ad News.

 

"The message must remain clear, and it will be key to make sure that plaintiffs counsel does not divert the jury’s attention from the message, which is drugs are tested through a rigorous trial process, known reasonable risks are warned of, and physicians act as the learned intermediary between the patient and the access to the drug," Ms. Romza-Kutz told Med Ad News.

 

Merck’s attorneys maintain that they presented a case that was solidly based on scientific evidence and that Mr. Humeston would have suffered a heart attack when he did, whether he had been prescribed Vioxx or not.

 

The Merck legal team presented evidence that the company had carefully studied Vioxx before and after FDA approval, and consistently made the results of those studies available to FDA and the medical community.

 

"The jury found that Merck acted responsibly with class from selling the drug to marketing the drug to attaching then alternately voluntarily withdrawing the drug." Mr. Frazier says. "We recognize, however, that this litigation is not over; that there are more cases to come. As we said from the very beginning, we intend to defend these cases one by one on the unique facts that are raised in each of these cases. Our strategy, we believe, is still the right one.

 

"The company did provide the information fully and promptly to the medical and scientific community, to regulators around the world, to patients and physicians through medical journals. And there’s simply no question in our minds that we provided the available data in a way that was intended and actually did accomplish the full dissemination of the information and that we did not stop there. We continued to study the drug after that."

 

Raymond James analysts contend that plaintiffs will have a difficult time proving Vioxx caused their heart attacks. That is because most people have other risks for heart disease such as obesity, high blood pressure, or high cholesterol.

 

The jury in the New Jersey case showed the public is capable of understanding that no scientifically valid studies show the short-term use of Vioxx to increase the incidence of heart attacks, according to Michael Krensavage, an analyst for Raymond James (raymondjames.com). Mr. Humeston claims to have taken Vioxx for two months.

 

Results from Approve, a trial designed to test Vioxx’s effect on colon polyps, showed Vioxx patients experienced no excess thrombotic events, such as heart attacks or strokes, during the first 18 months of taking the drug. Only after 18 months did Vioxx patients experience more problems than those taking a placebo.

 

Patients had to take Vioxx for at least a year before they experienced even a 1% chance of having a thrombotic event. At one year, data show no difference in the number of thrombotic events between placebo and Vioxx patients.

 

Raymond James’ analysis of Approve data suggests that Mr. Humeston had less than a 1-in-200 chance of having a heart attack at two months whether or not he was taking Vioxx. Therefore, a ruling against Merck would have been utterly unconscionable, Raymond James analysts say. Punitive damages would represent an even more ludicrous conclusion.

 

"What this verdict really stands for is the fact that jurors are able to appreciate what the true facts were surrounding the development and marketing of this drug," Mr. Frazier says. "And that they are able to appreciate, for example, that the science simply does not support the claims that are being made in most of these cases about the alleged connection between Vioxx and whatever seeded the event that occurred, particularly where you have short-term use.

 

"It really underscores what we have always passionately believed here at Merck, which is that the company did the right thing, that the science is on our side in these cases, and that juries of individuals that may not come from scientific backgrounds, if exposed to that information in the right way, will reach similar conclusions."

 

Now that Merck has won its first trial, many industry experts are speculating about the impact the verdict will have on the company and whether there will be any far reaching effect on the industry.

 

"Everyone close to the litigation knew that Merck was going to win a few trials, most likely the early ones," says Jeff Cooper, managing partner, SimmonsCooper LLC. "With each passing trial, Merck’s chances of prevailing go down."

 

Even if Merck had lost the Humeston case, appeals likely would have delayed any payments for years, Mr. Krensavage says.

 

For Merck, the New Jersey verdict will have a few different effects, according to John Brenner, partner, McCarter & English LLP. "Even today, roughly half of [Merck’s] docket is in New Jersey," he says. "A lot of people outside New Jersey do not realize that New Jersey juries take their jobs very seriously, and you have to convince them of issues of this kind of complex scientific and medical-products case."

 

Mr. Brenner is not certain how far outside New Jersey the verdict can be extrapolated. He believes that the case will be an eye-opener for a lawyer who is considering filing a claim. "There are three lawyers who took up about eight weeks trying a case and came away with nothing," he says. "You at least have to factor that in to your decision, if you are a lawyer bringing a Vioxx suit. It will not necessarily dictate the outcome of the decision, but you would have to factor it in somewhere."

 

Mr. McHugh believes that the general public understands that this is probably the first of many trials. Furthermore, he believes that the plaintiffs have the resolve to dedicate themselves to the battle.

 

Mr. McHugh believes that Christopher A. Seeger, partner, Seeger Weiss LLP, and David Buchanan, Beasley Allen, did a wonderful job in the New Jersey case and that if they tried the same case again, in front of a different jury, they would have a great shot at a plaintiff verdict.

 

Raymond James repeats a strong buy based on the belief that Merck’s dividend yield of 5.7% represents an attractive return while investors wait for Merck to resolve its Vioxx problems and introduce new drugs.

 

The analysts’ price target of $42 assumes Merck shares trade at 17 times the estimated 2005 earnings of $2.47 per share. Merck shares currently trade at 10.8 times the estimated 2005 earnings per share, a 32% discount to the group.

 

Federal level

 

Supporters of the defense and the plaintiff teams worry that the federal court cases, which began at the end of 2005, may differ from the state trials, resulting in new challenges. Other experts believe that there will be little, or no, difference.

 

The scientific burden of proof is similar between the state and federal cases and the rulings in the pretrial motions should not differ greatly, Mr. McHugh says. "The federal judge may allow more evidence in for plaintiffs than Judge Higbee allowed in," he says. "Some of the evidence that we are not permitted to show the jury such as, Merck designed a black-box label for Vioxx ... we will have a second shot with Judge Fallon. But with scientific burden’s Approve and the jury, I do not think there is going to be a great noticeable difference. And there are equally qualified lawyers in both forums."

 

Mr. Brenner believes that jury trials largely depend on the jury, whether on the state or federal level. He has heard commentary that because of the standards of admissibility of scientific evidence in federal court, things may be different there. The standards that apply in federal court, however, are not very different from the ones that apply, for example, in the New Jersey state court, he says.

 

Defense strategy

 

Merck has been criticized and commended for the approach of its legal team in the courtroom. The Merck legal team, like any other product liability team for a pharmaceutical manufacturer, faces a difficult battle in positioning its client before a jury, according to Ms. Romza-Kutz.

 

"Juries typically see pharmaceutical companies as being profit-driven without any compassion for the patients who take the medications," Ms. Romza-Kutz says. "This is a twisted viewpoint, particularly if the process for drug development, approval, and marketing costs can be illustrated to the jury."

 

Focusing on the science is a solid starting point. The science, clinical-trial process, drug-approval process, and learned intermediary doctrine, although not looked favorably upon by the New Jersey courts, should all be useful in Merck’s defense.

 

"Unless you are standing in the shoes of the trial lawyers, it’s very difficult to assess the deck of cards you have been dealt," Ms. Thorpe says. "It’s not appropriate to make those kinds of criticisms because you cannot know all the facts."

 

Some experts contend that Merck played some dirty tricks, acting out of desperation. "Their desperation is exemplary of what desperate companies will do in desperate times," Mr. McHugh says.

 

Before the trial began, for instance, Judge Higbee requested that the defense attorneys not mention that the plaintiff hired a lawyer to sue Merck. "What’s the first thing that their lawyers did when they opened," Mr. McHugh says. "They said, ‘Mr. Humeston took Vioxx for two months and had a heart attack, has surrounded himself by lawyers, and come to this court room and asked you to hold us accountable.’"

 

Merck’s attorneys are attempting to establish that the company acted responsibly when marketing its product to the public, Ms. Romza-Kutz says. The New Jersey jury indicated on their verdict form that Merck provided adequate warnings to physicians and consumers regarding Vioxx. This seems to say that they believed Merck’s defense that the company responded promptly once evidence of harm was brought to its attention, and Merck was unaware of the dangers the product may have posed until that time. Evidence of Merck’s conduct in testing its product will remain highly relevant in the proceedings, according to Ms. Romza-Kutz.

 

"It is difficult to say whether the Merck team did a better job in explaining the science, or whether the science was simply easier in this last case," Ms. Romza-Kutz says.

 

In Texas, Merck attempted to differentiate between heart arrhythmias and a heart attack. The jury found this to be a distinction without a difference, particularly when the trial was largely focused on Merck’s marketing activities and the profits the company earned from Vioxx. In the New Jersey case, the plaintiff had only taken the drug for a very short time, and Merck was able to present scientific evidence that supported its contention that treatment with Vioxx of a very short duration does not cause heart damage.

 

"It remains to be seen how Merck will present the science when the patient had taken the drug longer, had more evidence of heart damage, less co-morbidities, and alleges more severe injury, such as death," Ms. Romza-Kutz says.

 

Merck’s defensive strategies were very effective in the New Jersey case, Mr. Cooper told Med Ad News. "They ruthlessly attacked the plaintiff’s credibility on every single point," he says. "They did not try the case as a defense of Merck, they tried it as a prosecution of the plaintiff."

 

Although the attack strategy worked with the New Jersey jury, Mr. Cooper says the tactic is a risky one for most cases. "It has a propensity to backfire, especially when a jury realizes that the wrongdoer is Merck, not the plaintiff," Mr. Cooper says.

 

One Merck strategy has been to deny everything, according to Mr. McHugh. Merck’s consultant, Garrett FitzGerald, M.D., chairman, pharmacology, University of Pennsylvania Institute of Translational Medicine and Therapeutics, pointed out Vioxx’s mechanism of action in 1995. According to Mr. McHugh, Dr. FitzGerald said the drug is pro-thrombotic, which became known as the FitzGerald theory. Merck’s strategy has been to slam and challenge their own consultants, saying that they were wrong. For example, Merck claims that Dr. FitzGerald’s assessment was incorrect.

 

The plaintiff’s attorneys bring this lack of faith in the consultants, some in house, some external, to the attention of the jury. According to Mr. McHugh, these consultants had simply stated there was a major risk that needed to be investigated. Merck officials never studied and justified the findings. Instead, the company deemed the findings theoretical or said the consultants were wrong.

 

Another defense strategy was challenging and creating issues that did not exist, Mr. McHugh says. For instance, the Merck team questioned the credibility of the plaintiff to take the jury’s eye off the ball. "Merck effectively argued to the jury that the plaintiff received a stressful letter and that’s what triggered his heart attack," he says. "They were effective in arguing it, but it was absurd. The guy had no risk factors but still they created risk factors and attacked the credibility of the plaintiff by creating non-issues and they attacked his wife."

 

Bias and attacking the plaintiff is a defense strategy common to all trials, and Merck used the tactic effectively in the first trial, Mr. McHugh says. "Basically, the strategy is to deny and refute the opinions of its own consultants and attack the credibility of plaintiff’s witnesses and victims," Mr. McHugh says.

 

In addition, the defense attorneys attempted to show that the results of the Vigor trial were explained by a theory they created, one not accepted by anyone in the medical community, Mr. McHugh told Med Ad News. Merck’s theory is that naproxen is cardioprotective as opposed to Vioxx being pro-thrombotic. The Vigor trial showed that five times as many people in the Vioxx arm had heart attacks as compared with people taking naproxen.

 

"They created a theory that was nonexistent in the science and they sold it to this jury that the five times greater risk of heart attacks in the Vioxx arm was explainable because naproxen is cardioprotective like aspirin," Mr. McHugh says.

 

Another strategy has to do with the internal e-mails about Vioxx. Mr. McHugh references an e-mail in which the president of Merck’s research labs said Vioxx is pro-thrombotic and the problem is mechanism-based. "He wrote this, I believe, in 1997, and what they do is they say to the jury, in a company there are a few people who send e-mails they wish they never sent and it was true and maybe sometimes it’s for the purpose of scientific debate but you cannot hold the company accountable for those e-mails," Mr. McHugh says. In the courtroom, Merck established that the employee cannot be held accountable for the e-mails.

 

"It will continue to be important to explain any internal documents which purport to demonstrate that Merck executives knew the drug caused heart problems, but waited to warn patients and physicians in order to maximize profits," Ms. Romza-Kutz told Med Ad News.

 

Merck’s attorneys had to explain a series of internal company e-mails that suggest some of Merck’s employees were concerned about Vioxx’s safety before the product was put on the market. According to Ms. Romza-Kutz, Merck was able to persuade the jurors that the e-mails and memos were taken out of context and did not reflect the overwhelming views of Merck employees.

 

In reference to the in-house documents showing that company officials knew Vioxx was endangering the public and did nothing to prevent problems, Mr. Cooper says "It is hard to hide that from juries over the long haul."

 

Merck’s lawyers are going to have to persuade the jury that the company was not out to put profits ahead of safety, Ms. Thorpe says. The lawyers will have to elicit testimony that puts the internal documents in the context in which they were written. The effort to explain those documents has gone on in Texas and in New Jersey, but the lawyers must have the witnesses explain what the documents mean so the jury understands that Merck is a good company and not putting profits ahead of safety.

 

Mr. Cooper believes that Merck’s attorneys will most likely stick to the strategies that worked for them in the New Jersey case. He also believes that the strategies are very risky. "If the jury does not believe the plaintiff, they will always find for Merck," he says. "If they believe the plaintiff, however, they will award large damages because Merck will have spent its whole case attacking the plaintiff as opposed to defending its conduct."

 

Merck attorneys’ execution of the planned tactics could become ugly, but this is a risk the company is willing to take. "It is never our goal to attack anybody on the witness stand or anywhere else, but there’s an awful lot at stake in these cases, not just for Merck but for the future of the pharmaceutical industry," Mr. Frazier says. "Our view is that as people have prepared these cases for trial, there has been an attempt to spin facts in a way that is disadvantageous to Merck but also in the long run is disadvantageous to society. Our goal is never to attack individuals, but it is also to make sure that the jury understands the truth in each and every one of these cases, and we will take advantage of whatever tools are available under the rules of court to try and elicit what is really the truth in these cases."

 

Case-by-case strategy

 

Some analysts say there is a huge backlog of cases in New Jersey, with Judge Higbee — who is overseeing every New Jersey case —looking to assign cases to other judges and assuming that Merck must agree to settle the bulk of them.

 

Mr. Seeger, lead lawyer for Mr. Humeston, predicts that there will be a large number of cases filed at the two-year point, the end of the statute of limitations in many states. He expects to see 10,000 to 15,000 new cases filed in New Jersey through next September.

 

Ms. Romza-Kutz has difficulty predicting whether Merck will settle cases, particularly in light of some recent courtroom outcomes. She believes that Merck’s strategy at this point is to vigorously defend the claims filed against the company.

 

"There is some merit to such a strategy," Ms. Romza-Kutz says. "Often in the past, large companies which have been litigation adverse have entered into settlements to avoid the cost of litigation. Companies have begun to move away from this strategy understanding that this strategy comes with an inherent cost, that is, where settlement is likely, the decision to bring suit may be seen as easier."

 

In other words, once Merck has evaluated the company’s position regarding the claims, the lawyers may very well proceed to litigations where they have a meritorious defense as opposed to opening the settlement checkbook, according to Ms. Romza-Kutz. If there is significant cost to litigating every single case against a manufacturer, plaintiffs are more likely to be circumspect in bringing such cases unless the particular facts merit suing.

 

Mr. Krensavage believes that Merck has no choice in the matter as far as trying each case individually. He says the alternative would have much more serious financial implications.

 

Mr. McHugh believes that Merck will be able to try each case individually unless judgments run against Merck. "If it turns out that there is a string of three or four plaintiff verdicts in a row, which I believe there will be, then Merck’s status on Wall Street is going to be in serious jeopardy and the company will probably reevaluate the exposure to being somewhat greater than they thought after the Humeston trial, in which case, Merck will not be able to keep trying each case," he says

 

With each loss, Merck faces more risk to the value of the company, Mr. McHugh says. "People have life savings invested in Merck, in 401ks, in mutual funds, and with each plaintiff verdict, Merck is being reckless to these investors, and they have a duty that goes beyond compensating victims," he says.

 

In the near term, Ms. Thorpe believes that the case-by-case strategy could work in Merck’s favor, however, sometimes this type of litigation can go on for several years. "It takes a while for cases, particularly when there is a variety of cases like this, a variety of factual circumstances, to even identify what value each bucket of cases has," she says. "There is a whole variety of buckets that these cases fall in. There are people who have taken Vioxx with other NSAIDs, there are people who have taken short-term Vioxx only, and there are people with a variety of risk factors."

 

Ms. Thorpe is confident that Merck and the plaintiff’s lawyers are in the process of identifying groups of cases and thinking about the values of those cases. She suspects that Merck is going to try these cases for some time before any kind of settlement plan is announced or implemented.

 

Mr. Brenner hopes that Merck is able to fulfill its promise to fight each case individually. "It’s a bold statement to make," he says. "If you look at the last decade of mass tortes in pharmaceuticals, one way or another, and there are different ways, some method for resolving all or most of the cases short of trial has been arrived at. That’s not to say that Merck has to follow that, it’s just a comment on the history. With this many cases, thousands and thousands of cases, it’s been pretty unusual that any company can wind up trying absolutely every one."

 

Many analysts believe that there are lessons to be learned from the Wyeth (wyeth.com) diet-drug litigation as well as the tobacco-industry litigation.

 

According to Mr. Krensavage, when Wyeth offered to settle the litigation cases, the company essentially invited people to sue them. The company also invited fraud, he says. "Merck is going to fight each case one by one, and if Merck sticks to that, I do not think the company will write a check for at least four or five years, assuming that it loses in court and loses all of its appeals," he says.

 

Mr. McHugh says the last thing the plaintiff’s side wants is a federal national class-action settlement with a limited opt-out right that takes away the plaintiff’s right to pursue punitive damages. The plaintiff also does not want a multi-billion-dollar settlement administration where the money goes to claims’ administrators in special masters and defense legal fees as opposed to the victim’s hands. He says there were several loses recently in the Wyeth litigation and that wins and losses, if they are balanced, do not necessarily put an end to the litigation. If there is a streak of losses, that is a different matter.

 

"First of all, the plaintiffs’ attorneys are simply trying to get Merck to cave to a settlement," Mr. Krensavage says. "It’s expensive for the plaintiffs to fight Merck in court, they would prefer to get a big check for as little effort as possible so they can move on to chase other ambulances."

 

Future in and out of the courtroom

 

Many analysts believe that Merck’s lawyers will view the win in the New Jersey case as an indication that the company’s strategy of vigorous defense of every claim is worth the expense. "It is likely to re-energized the defense team and validate Merck’s position that these claims have little merit as currently filed," Ms. Romza-Kutz says.

 

According to Mr. Cooper, Merck will continue to employ aggressive tactics with the plaintiffs. He predicts that Merck’s lawyers will continue their attempts to destroy the credibility of the plaintiffs and hope that the jury disregards their bad conduct. "It is a strategy that will work in some, but not all trials," he says.

 

The main problem for Merck is that the company needs to win each and every trial to be successful, Mr. Cooper says. "If they only win 4 out of 5, they are still in deep trouble from a financial perspective, especially if each plaintiffs’ award is in the millions of dollars," he says.

 

Ms. Thorpe believes that the win in New Jersey was an important one. "Every win tells the bar, the bench, the public, the media that the sheer volume of the cases does not prove that the pharmaceutical product, that Vioxx, caused people to get sick," she says. "Just because lots of cases were filed, it doesn’t mean that they all have merit. That’s what this win does, it restores credibility to the science and factual case that Merck is trying to present."

 

Merck officials recently stated that the whole industry is on trial, not just Merck. Ms. Thorpe believes that the whole industry is, in fact, on trial and has been on trial for some time. "This kind of litigation impacts the confidence and the trust that consumers put into the pharmaceutical industry, and the pharmaceutical industry needs to do a good job of telling the public how important the industry is to public health," she says. "And that message has to come across broadly to the consuming public."

 

Mr. Krensavage believes that as Merck continues to win some of the smaller cases in a row, the interest generated by the media and the public will be somewhat quelled. "The mob probably will move onto the next Michael Jackson trial," Mr. Krensavage says. "Maybe there will be a Paris Hilton trial so they can start covering that.

 

"My advice to the defense is don’t give up. Do not write any checks."

 

Raymond James analysts continue to support Merck as a positive investment for their investors. "The street has this all wrong," Mr. Krensavage says. "Merck is not going to pay the money that some people think. To me, it’s one of the biggest misconceptions in pharmaceuticals, the liability that Merck will face."

 

The third Vioxx trial began Nov. 28, 2005, as part of the Federal Mobey District Litigation Proceedings. Dec 12, 2005, a federal court jury in Houston could not return a verdict in Plun