Merck Vioxx Litigation Score Card

Evelyn Pringle September 14, 2006

In the homestretch leading up to the latest trial in New Orleans, the score in the Vioxx litigation was 5 to 4 in favor of Merck. However, in mid-August, 2006, a New Jersey victory for Merck was thrown out reversing the score to 5 to 4 in favor of plaintiffs.

But none of the winning plaintiffs should count their chickens before they are hatched because according to Merck's SEC filing on August 7, 2006, although the company has set aside $685 million for attorney fees and legal defense costs: "The Company has not established any reserves for any potential liability relating to the Vioxx Lawsuits or the Vioxx Investigations, including for those cases in which a verdict or judgment has been entered against the Company, and are now in post-verdict proceedings or on appeal."

And furthermore, Merck states in its SEC filing, "At this time, the Company believes that its insurance coverage with respect to the Vioxx Lawsuits will not be adequate to cover its defense costs and any losses."

A New Orleans trial is now underway, and during his September 12, 2006, opening statement, the plaintiff's attorney, John Boundas, told the eight-member jury that Merck lost sight of the truth and patient safety, in the company's zeal to promote the blockbuster painkiller Vioxx

Mr Boundas, along with co-counsel Steve Kherkher, is representing plaintiff, Robert Smith, in the third federal case to go to trial.

US District Judge Eldon Fallon told the jury that he expects the trial to last 2 1/2 to three weeks, and will include half-days on Saturday.

Under the company's first top executive hired from the business rather than the medical community, Merck marketed a "dangerous, defective drug that never ever should have been prescribed, and never ever warned about the dangers," Attorney Kherkher told the jury.

According to Mr Kherkher, the doctor who prescribed Vioxx for Mr Smith, has said that about a half-dozen Merck sales representatives "would drum into him, 'Vioxx, Vioxx, Vioxx,'"

Mr Smith was taking Vioxx for pain resulting from a knee injured in a softball game in 1998.

All federal Vioxx product liability lawsuits have been consolidated and transferred to the US District Court for the Eastern District of Louisiana with Judge Fallon presiding.

Judge Fallon has informed attorneys on both sides that he plans to try 5 cases in 2006, selected from four categories to include: (1) heart attack with long term use; (2) heart attack with short term use; (3) stroke; and (4) cardiovascular injury that occurred after the labeling changes were made on Vioxx in April 2002, describing the results of the VIGOR trial.

After conducting the five trials, Judge Fallon has said he wants to work out a global settlement for the 5,700 federal Vioxx cases on his docket.

After the first trial, Judge Fallon had attorneys from both sides choose two more cases for trial in his court. Mr Smith's trial is the first case chosen by Merck. His case is a category 4 because he started taking Vioxx six months after the heart attack warning was added to the label.

As the trial was ready to begin, lawyers for the plaintiffs accused Merck of trying to sweeten the jury pool with an adverting campaign aimed at making people think better of the company. "Merck is going around the back door, hoping to get folks to forget about this killer drug and, instead, think a bunch of nice warm thoughts about the company that manufactures it," said Vioxx steering committee spokesman, Russ Herman, in a news release.

The first Vioxx trial took place a little over a year ago, and on August 19, 2005, a Texas jury awarded $24 million in actual damages, plus $229 million in punitive damages, to the widow of Robert Ernst, a Vioxx user who died suddenly in May 2001 at age 59, after taking Vioxx for 8 months.

Company documents and emails revealed at the trial showed that Merck was aware of the cardiovascular risks (CV) of Vioxx as early as 1997. Attorney, Mark Lanier, presented jurors with one 1997 email that read: "The possibility of increased C.V. events is of great concern," said Merck scientist, Dr Alise Reicin. "I just can't wait to be the one to present those results to senior management," she added.

The jury also saw a "Dear Doctor" letter from 2001, in which Merck told physcians that in the largest trial ever of more than 4000 Vioxx patients, only 0.5% or 20 patients, suffered cardiovascular events, when in fact, the jury learned, 14.6% or 590 patients experienced cardiovascular problems.

The jury also learned that in April 2001, Dr Brent Wallace, the doctor who prescribed the Vioxx to Mr Ernst, had received the "Dear Doctor" letter with the grossly understated statistics.

Mr Lanier also presented documents to the jury to show that Merck sales reps had at one time earned a $2,000 bonus if one of their doctor-clients prescribed Vioxx to their patients more than 55% of the time, and also earned another $2,000 if the rate went higher than 61%

Members of the jury were shown a training document that instructed sales reps to play "Dodgeball," to avoid answering questions if doctors tried to discuss the cardiovascular risks. In a training video played at trial, Merck told sales reps that Vioxx did not increase the risk of heart attacks.

To demonstrate how Merck used intimidation tactics to silence medical researchers who spoke out about the risks associated with Vioxx, Mr Lanier presented the jury with a copy of a January 2001, letter from Stanford Medical School professor, Dr James Fries, written to then Merck CEO, Ray Gilmartin, that described how Merck researcher, Dr Louis Sherwood, called Dr Fries to try and get him to make another Stanford professor stop making negative comments about Vioxx during college lectures.

According to Dr Fries in the letter, Dr Sherwood warned that if the professor did not stop, he would "flame out" and "there would be consequences for myself and Stanford."

After listening to all the evidence, the panel of five women and seven men ruled that Merck failed to warn doctors of the dangers of Vioxx, that the drug was improperly designed, and that Merck's negligence caused Mr Ernst's death.

Upon learning of the verdict, Texas Attorney General, Greg Abbott, who has sued Merck on behalf of the state's Medicaid program, told reporters that the verdict "validates why my office brought suit against this company in the first place."

"The jury concluded," Mr Abbott, stated, "that the untimely death of Mr. Robert Ernst was the direct result of his taking Vioxx."

"The verdict also shows why Texas deserves to get its money back from Merck; the company purposely peddled a drug on the open market that it knew could harm people," he said.

"Merck compounded this problem by giving false information to the state's Medicaid program about the drug's safety," Mr Abbott in Consumer Affairs.com, August 19, 2005.

The jurors told the Wall Street Journal at the time, that it took them less than one hour to dismiss the claim that Vioxx was not responsible for Mr Ernst's death and that they were outraged by what they saw as Merck's cover-up of the risks associated with Vioxx.

A factor that largely swayed the jury was Merck's failure to add a warning for patients on the Vioxx label, even after the company began warning doctors that the drug could be linked to CVs. Juror, David Webb said during an interview on Good Morning America on August 20, 2005, "$229 million was the amount of money that Merck would gain if they put off changing the label."

On the August 19, 2005, edition of CNN's Newsnight, juror Rhonda Wade echoed Mr Webb. "Our award," she said, "was based on the fact that once they figured out they had no choice but to make the label change, they chose to stall it in order to make as much as $229 million."

"Looking through their evidence," she stated, "time after time, you could see where they knew about the CV events and how important it was and they didn't do anything about it."

"That's what made up my mind," Ms Wade told CNN.

Under Texas law, the punitive damage award in the Ernst case will be cut substantially and Merck has announced its intention to appeal the verdict.

In the next trial, on November 3, 2005, Merck won a favorable verdict when a New Jersey jury found the company was not liable for the non-fatal heart attack in 2001,of Federick Humeston, a Boise, Idaho postal carrier who had taken Vioxx for about two months.

Mr Humeston alleged that his use of Vioxx caused a blood clot to form in his leg, which in turn caused his heart attack. The New Jersey jury disagreed.

However, in August 2006, New Jersey Judge, Carol Higbee, threw out the verdict that favored Merck and ordered a new trial based on new evidence involving allegations made in the December 2005, New England Journal of Medicine, that said Merck had deleted data about 3 heart attacks among patients who had participated in the Vioxx VIGOR trial.

The original and incorrectly stated results of the VIGOR trial were published in the same medical journal in 2000.

On August 17, 2006, the Seeger Weiss LLP law firm announced in a press release that the verdict in favor of Merck had been vacated after oral argument in the New Jersey Superior Court. "The Honorable Carol E. Higbee ruled that the November 2005 trial verdict should be vacated on various grounds," Seeger Wiess said in the press release, "including findings by the New England Journal of Medicine that Merck had failed to report material cardiovascular safety data in connection with the publication of its landmark Vioxx clinical study know as Vigor."

"The judge's ruling," Seeger Weiss said, "nullifies the verdict for all purposes, and will allow plaintiff, Frederick "Mike" Humeston, a new day in court."

Seeger Weiss partners Christopher Seeger and David Buchanan argued the vacatur motion at the hearing. In response to the decision, Mr Seeger stated: "It was difficult for our trial team to hear Merck's witnesses repeatedly distort the truth about the Vigor study results."

"The judge's ruling today," he said, "corrects just the latest injustice committed on the entire Humeston family by Merck and ratifies the proper functioning of the judicial process."

This is not good news for Merck's legal defense team because since the conclusion of the first trial, even more studies have surfaced that show the risks associated with Vioxx can occur almost as soon as a person starts taking the drug.

According to a study by Canadian researchers, Vioxx can raise the risk of heart attacks in less than two weeks. The researchers found that over 25% of 239 elderly patients who had heart attacks while using Vioxx, did so within six to 13 days, according to the study published online on May 2, 2006, by the Canadian Medical Association Journal

And there is more bad news for the Merck team from researchers at the University of Newcastle in Australia in a study released this month, which determined that the heart attack risks are most pronounced in the first month after patients begin taking Vioxx.

A second study that was also released this month by researchers at Harvard School of Public Health, Brigham and Women's Hospital and Harvard Medical School, based on 114 trials involving more than 116,000 patients, found a 2.9-fold increased risk for arrhythmia with Vioxx users, a 43% increased risk of peripheral edema (swelling of the arms and legs), a 55% increased risk of hypertension, and a 2.3-fold increased risk of adverse kidney events in Vioxx users.

The latter two studies will be published in the October 4, 2006 print edition of the Journal of the American Medical Association, but were released online a month ahead of publication.

The research also confirms that low doses of Vioxx increases the risk of heart attack and in some cases, within 30 days of starting the pills. Merck's main argument from day one has been that the heart risk does not occur until people are on Vioxx for 18 months.

"It is clear that Vioxx increases the risk of heart attack. And that increase in risk begins with the first tablet a patient takes," said Dr David Graham, associate director for science in the Office of Drug Safety at the FDA, in an editorial accompanying the online JAMA studies.

"For tens of thousands of patients who experienced MI (myocardial infarction) while taking (Vioxx)," he said, "the drug may have been the decisive risk factor, over and above any other risk factors, that contributed to the occurrence of this life changing and potentially fatal event."

In the editorial, Dr Graham also points the finger of blame for the Vioxx disaster at the FDA. "In this case," he wrote, "they knew before the drug came on the market that Vioxx increased the risk of heart attack."

This past spring, much to the dismay of Merck's legal team, Vioxx plaintiffs subpoenaed Dr Graham's testimony as an expert witness, and his deposition testimony is expected to used in several Vioxx lawsuits.

A mistrial was declared in the first federal Vioxx trial to go to a jury, on December 12, 2005, when the panel was unable to reach a verdict after three days of deliberations. The lawsuit was filed on behalf of the widow of Richard Irvin, a Florida man who died of a heart attack in 2001, after using Vioxx for about one month.

According to a court decision filed in the case on February 2, 2006, Mr Irvin was a 53-year-old man with severe lower back and hip pain, weighed approximately 230 lbs, and was 6' tall.

On April 9, 2001, he asked his son-in-law, an emergency room physician, to give him something for pain. He gave Mr Irvin a prescription for Vicoprofen and Methocarbrnol, which he was unable to tolerate because it produced severe nausea and vomiting and provided no significant pain relief.

Subsequently, Mr Irvin received some samples of Vioxx from a friend and it reduced his pain. On April 15, 2001, he contacted his son-in-law and requested a prescription for Vioxx and the prescription for 30 tablets was filled on April 22, 2001.

Less than a month later, on May 15, 2001, Mr Irvin suffered a heart attack at work. Extensive resuscitative efforts were carried out but were unsuccessful, and according to court documents, Mr Irvin was pronounced dead at 9:02 am on May 15, 2001.

Mr Irvin's wife, Evelyn, brought the lawsuit against on behalf of herself and Mr Irvin's two minor children, alleging that Vioxx was a defective product, that Merck knew Vioxx was defective, and failed to adequately warn Mr Irvin.

Merck argued that none of the tests specifically showed that Vioxx ingested for less than a month can increase the risk of adverse cardiovascular events.

The jury could not agree on a verdict and a mistrial was declared. On February 17, 2006, after sitting through a retrial, a New Orleans jury ruled in favor of Merck

The next trial was held in New Jersey. On April 5, 2006, the jury held Merck liable for the heart attack of 77-year-old John McDarby, and awarded Mr McDarby $4.5 million in compensatory damages based on Merck's failure to properly warn of Vioxx safety risks.

After a hearing on April 11, 2006, the jury also awarded Mr McDarby an additional $9 million in punitive damages.

The same jury found Merck not liable for the heart attack of 60-year-old Thomas Cona, a second plaintiff in the trial.

Mr McDarby had suffered a heart attack on April 15, 2004, and subsequently broke his hip when he collapsed. He sought compensatory damages for both the heart attack and hip fracture.

While Merck attorneys tried to argue that Mr McDarby was an ex-smoker and had pre-existing conditions such as diabetes, his attorney countered by arguing that Merck was negligent in not telling physicians not to prescribe Vioxx to patients with Mr McDarby's risk factors.

During the trial, the plaintiffs' attorneys, Robert Gordon and Mark Lanier, argued that Vioxx was put on the market without adequate testing and that Merck ignored warning signs about the drug's safety. They told the jury that Merck failed to inform federal regulators of the dangers of Vioxx, and spent hundreds of millions of dollars marketing a drug that the company knew was unsafe.

While the jury found that Vioxx did not play a role in Mr Cona's heart attack, it did find that Merck was guilty of violating New Jersey's consumer fraud statute, and awarded $3,969 to Mr McDarby and $45 to Mr Cona on that claim.

The jury said Merck deceived doctors about Vioxx's cardiovascular risks, and deliberately concealed information about those risks from physicians.

Because the jury found consumer fraud in both cases, under New Jersey law, the plaintiffs were entitled to reasonable attorneys' fees, and the attorneys for the two plaintiffs have requested combined fees and costs of more than $5 million related to the prosecution of the fraud claim.

At the next trial in Texas, on April 21, 2006, by a vote of 10 to 2, after deliberating for about 8 hours over 2 days, a state court jury found Merck liable for the fatal heart attack of a 71 year-old retiree, Leonel Garza, who had used Vioxx for less than one month prior to his death.

Merck attorney, Richard Josephson, told reporters that the judge should have dismissed the case before it reached a jury because Mr Garza had many preexisting risk factors and the plaintiff's attorney had provided no scientific evidence to prove that Vioxx had caused Mr Garza's heart attack.

The family's attorney, Joe Escobedo, said Vioxx was especially dangerous to Mr Garza because of his other risk factors. "Mr. Garza was the last person in the world that should have been taking Vioxx," he said.

Mr Escobedo told the jury that Merck had known since 2000 that the drug posed heart risks but continued to sell it for four more years.

The jury awarded Mr Garza's family $7 million in compensatory damages and another $25 million in punitive damages. Under Texas law, the punitive damage award will be reduced to $750,000.

"We're really pleased," Mr Escobedo told reporters. "We thought that Mr. Garza's case was a very, very strong case."

Since Mr Garza took the drug for less than one month, his case was considered a "short-term use" case in the Vioxx litigation.

After listening to all the evidence in the next trial, on July 13, 2006, a New Jersey jury found Merck not responsible for the January 2004, heart attack of 68-year-old Elaine Doherty who had been taking Vioxx for two and a half years prior to the attack. The jury decided other risk factors, and not Vioxx, caused the heart attack.

In the next trial across the country in California, on August 8, 2006, a Los Angeles jury found Merck not liable for the heart attack in 2001, of 71-year-old Stewart Grossberg, a Southern California construction manager who had taken Vioxx for more than two years before he had a heart attack at age 66.

This case was the first to go to trial in California and is one of some 2,000 Vioxx lawsuits filed in the state, that have been consolidated in the Los Angeles Superior Court, with Judge Victoria Chaney presiding.

Legal analysts have various opinions as to why the jury ruled against Mr Grossberg, even though they were presented with much of the same evidence that resulted in verdicts for the plaintiff in other trials.

In a statement released before trial, Merck attorney, Thomas Yoo, said, "The evidence will show that Mr. Grossberg was at high risk for a heart attack regardless of whether or not he was taking Vioxx."

"His health and history," he stated, "also shows he has high cholesterol levels and a family history of cardiac problems."

In this case much like the others, Mr Grossberg alleges that he first took Vioxx in the summer of 1999, after seeing ads on TV touting the drug as a treatment for arthritis pain and that he took it for 26 months prior to his heart attack and subsequent surgery to have a stent placed in one of his arteries.

Two years later, Mr Grossberg began taking Vioxx again, but in late August 2004, he says he quit taking the drug after hearing about the problems with Vioxx. Three months later, he suffered chest pains and underwent a second stent surgery.

Merck knew that Vioxx would cause "massive, terrible side effects and they didn't tell anybody," Mr Grossberg's attorney, Thomas Girardi, told the jury in his opening statement.

"The real issue is a moral issue," Mr Girardi said. "They absolutely, positively, without a doubt knew they were going to harm a bunch of people and they said, 'Go for it.'"

"Heart attacks are a huge problem in the United States," Merck attorney, Phil Beck, argued in his opening statement. He told the jury that due to genetics, Mr Barnett had plaque built up in blood vessels, clogging the arteries, for years before taking Vioxx.

"That's just the way he is made," Mr Beck told the panel.

On the second day of the trial, jurors were shown the testimony of Dr Edward Scolnick, the former head of Merck's research laboratories, who testified in a videotaped deposition that people who took Vioxx died at a rate four times higher than those who didn't receive the drug in one clinical trial, and at a rate 2� times higher in another trial.

Both of the clinical trials referred to were conducted in 2001, to see if Vioxx could help Alzheimers patients.

However, according to Dr Scolnick, Merck did not turn over the clinical trial results to the FDA when the company officials met with representatives from the agency in April 2001.

He also told the jury that he was not aware of the trial results at the time.

On the third day of the trial, Dr Deborah Shapiro, director of clinical biostatistics for Merck, stated in a videotaped deposition that in the clinical trial called VIGOR that took place in 1999 and compared Vioxx and naproxen, "The data was unfavorable to Vioxx, and of course that was a matter of concern."

Jurors were shown a December 1999 memo that Dr Shapiro co-signed and gave to Dr Alise Reicin, a VIGOR study author, in which Dr Shapiro and another Merck researcher stated there were "serious vascular adverse experiences in the Vioxx program."

Dr Shapiro testified that she did not know what Dr Reicin did with the memo. "I don't know who she shared the letter with," she stated.

She also testified that she told various Merck officials about her concerns, but did not try to influence them with her feelings. "I tried to avoid giving my opinion because it was their opinion that ruled the day," Dr Shapiro said.

However, one Merck scientist asked her to "do additional analysis to explore the data because the trends were disconcerting," she testified.

Merck attorneys told the jury that Mr Grossberg's "health history is behind his heart attack, not Vioxx," and that his use of the drug was "sporadic and intermittent."

In the end, the jury ruled in favor of Merck.

On August 17, 2006, in the second federal case to go to trial, a jury in New Orleans ordered Merck to pay $51 million to 62-year-old retired FBI employee, Gerald Barnett, who suffered a heat attack on September 6, 2002, after taking Vioxx since 2000.

A resident of South Carolina, Mr Barnett used Vioxx for pain caused by injuries he received in a car accident.

He was awarded $50 million in compensatory damages and the jurors added another $1 million in punitive damages after finding that Merck "acted in wanton, malicious, willful or reckless disregard for the plaintiff's rights."

The New Orleans jury said Merck had "knowingly misrepresented or failed to disclose" a material fact to Mr Barnett's physicians and that doctors in the case were not at fault.

On the verdict form, the jury had the opportunity to assign a percentage of fault to the various physicians but the panel assigned all blame to Merck.

Mr Barnett's attorney, Mark Robinson, said the jury's award was "appropriate" and sends a message to Merck and other drug companies.

At the end of the trial, Judge Fallon said that he would hold three more federal trials this year and then decide how future cases will be handled. He said he will meet with Merck lawyers and plaintiffs' attorneys after the fifth trial to see if a resolution can be reached in the federal litigation, which includes roughly 5,700 cases filed on behalf of 16,100 plaintiffs.

Merck attorneys vowed to appeal the Barnett verdict, but in a stroke of luck for Merck, on August 30, 2006, Judge Fallon ordered a new trial to reassess damages, but left intact, the jury finding that Merck was responsible for Mr Barnett's heart attack..

"It is the $50 million compensatory damage award which the court finds grossly excessive," Judge Fallon wrote in an August 30, 2006 decision. "The plaintiff is retired," he said, "and therefore cannot recover for lost wages or lost earning capacity."

"No reasonable jury could have found" Gerald Barnett was entitled to $50 million in compensatory damages because of the heart attack he suffered in 2002, Judge Fallon ruled.

Mr Barnett's past and future medical bills, his pain and suffering, and other intangible losses are legitimate reasons for compensation, Judge Fallon stated.

But, since he is retired, the Judge continued, lost wages and earning capacity have no bearing on the damages and, while his energy may be reduced, he apparently has returned to many of his daily activities.

He may have lost nine or 10 years of life expectancy, Judge Fallon wrote, italicizing "may."

The new trial is limited to the question of damages, and the 5th US Circuit Court of Appeals has ruled that if a new trial is ordered for compensatory damages, it must also include punitive damages, Judge Fallon stated.

He said it was reasonable for the jury to conclude that Merck failed to warn Mr Barnett and his doctors about the health risks of Vioxx and that he was "not troubled" by the $1 million punitive damage award.

The Barnett verdict evened the score between Merck and Vioxx plaintiffs with four wins apiece.

The news of the verdict sent Merck's stock value down 5.7 percent.

In a separate ruling, Judge Fallon dismissed several class action lawsuits against Merck filed on behalf of individuals in Italy and France saying they should sue the company in their own countries.

The latest Vioxx trial started on September 11, 2006, in Judge Fallon's court, with former Vioxx user Robert Smith claiming the drug caused his heart attack in February 2003.

For the first time, this trial focuses on an individual who began taking Vioxx after its label said that the drug could increase the risk of heart attacks.

In a pre-trial deposition, the 56-year-old Kentucky patient said, "I was a perfectly healthy man until I took Vioxx and I had a heart attack."

Mr Smith says he did not realize that Vioxx might have caused his heart attack until he saw an attorney's commercial on TV in 2005.

In New Jersey, Judge Higbee cancelled a trial previously set for September 2006, and the next scheduled trial in her court will begin on January 16, 2007. Judge Higbee has stated that it will involve multiple plaintiffs, but the specific cases have not yet been selected, according to Merck's August 7, 2006, SEC filing.

If the drug maker insurance company is successful in arbitration, Merck is going to have to dig deep when the inevitable day arrives and it has to start paying off its debts to injured plaintiffs. According to Rich Duprey for Motley Fool on April 3, 2006, "Merck is potentially on the hook for at least $11 billion in damages stemming from charges that it misrepresented or concealed the increased risk of heart attacks inherent in its painkiller, Vioxx."

In addition, legal analysts say the financial toll on the company could rise dramatically with guilty verdicts under New Jersey's consumer fraud statute, which allows juries to award the plaintiff triple damages that are not allowed to be covered by insurance.