Merck Backs Down

After the $253M decision against Merck, they announced

[I]t would appeal the verdict. The company has said it will fight every Vioxx lawsuit in court rather than settling cases. This verdict illustrates the dangers of that strategy, especially because Mr. Ernst's case had been viewed as relatively weak, lawyers said. Merck shares fell 89 cents, or 2.9 percent, to $29.52 after the verdict was announced.

But now, they say that they may settle some cases

Merck had previously said that it planned to defend every personal-injury lawsuit filed over Vioxx, a painkiller and arthritis medicine that has been shown to raise the risk of heart attacks and strokes.

But the general counsel, Kenneth C. Frazier, said in an interview yesterday that Merck would consider settling suits brought by people who took Vioxx for long periods of time and had few other risk factors for heart disease. Nearly 5,000 Vioxx suits have already been filed, and tens of thousands more are expected.

Mr. Frazier's comments appear to represent a subtle but important shift in strategy for Merck, although he denied that the company had made any change in its position.

Backpeddle.

And it's hitting them where it hurts too, in their bank accounts

Merck shares fell another 6 cents yesterday, closing at $27.77.

Comments

[JLo]

There seems to be an assumption both in your post and in a lot of the coverage of this first trial that Merck knew the likely outcomes of using Vioxx and took a chance that they might not be found out. I don't buy it.

Scientists dig deep into every likely possibility with a treatment, and if this was known to be a possible outcome, it was also likely known how it would play out. Much as we like the archetype of the sinister corporation, it's unlikely that this one would have been that incompetent or risky. I'm reluctant to take on the view that every corporation is trying to put one over on people.

That said, though, where's the outrage at the tobacco, oil, and banking industries? Profit margins, the most commonly cited reason for hating pharmaceuticals, are quite a bit higher in banking and oil, and rather than improving health, tobacco knowingly diminishes it.

I'm not for a moment saying that Merck or any other corporation is altruistic. Corporations are legal entities bringing fallible individuals together. They are neither good nor evil of themselves, but rather a reflection of those who manage them. I have seen corporations do bad things, but more often out of incompetence than evil intent.

Just like Bush et al, I don't believe they can be diabolical and stupid at the same time.

[albert]

There seems to be an assumption both in your post and in a lot of the coverage of this first trial that Merck knew the likely outcomes of using Vioxx and took a chance that they might not be found out. I don't buy it.
From the NYT [first article]:
Critics had been saying for years that the drugs posed safety risks. And at trial, documents and e-mail messages from Merck scientists disclosed discussions of Vioxx's potential heart risks as early as 1997, more than two years before the company began selling the drug.

Scientists dig deep into every likely possibility with a treatment, and if this was known to be a possible outcome, it was also likely known how it would play out.
From NYT [ibid.]
The jury award represents about 1.1 percent of Merck's 2004 revenue, $22.9 billion, but it accounts for more than a third of the $675 million the drug maker has set aside for its Vioxx liabilities thus far. --Yes, they did know of of the potential outcome and set aside about 3% of their 2004 revenue for it. Another issue with this Merck case is how aggressively they marketed/pushed this drug on doctors and patients.

That said, a drug like Tylenol would probably have a very hard time getting approval these days.

I'm not calling these guys stupid, I'm calling them diabolical.

I've got problems with the tobacco, oil and banking industries as well. But this was about Merck.

[JLo]

Fair enough. The last thing I'd want to be is an industry apologist, but I find it hard to believe that this outcome--which could have been predicted--or the risk of it would have been acceptable to management. No ego-loving executive wants his legacy defined this way.

As for the evidence you cite, every company has discussions about potential risks its products present. Toy companies talk about children choking. That doesn't mean they think it probable that children are going to choke on their toys, but they discuss it. And they take acceptable risks. Additionally, all companies set aside budget to respond to lawsuits. I think it's telling that Merck didn't set aside more.

The media can only report what they know, and attorneys can only promote their clients' interests. Both tend to embellish, and neither has a corner on the truth.