Shares of Merck fell 3% in after-hours trading after a New Jersey court awarded a former Vioxx patient $4.5 million in damages late Wednesday.
The Whitehouse Station, N.J.-based company was cleared of claims filed by state resident Thomas Cona, 59, who claimed long-term use of the painkiller contributed to his heart attack.
The jury, which awarded compensatory damages to 77-year-old John McDarby and his wife, will now determine whether the couple should receive punitive damages.
Prudential Equity Group analyst Tim Anderson said the trial outcome was an overall negative for Merck (nyse: MRK - news - people ) shares, despite the mixed ruling.
"The reason for this is that in the plaintiff that used Vioxx over a longer duration, Merck was found guilty of 'failing to warn' of Vioxx's safety issues, and Vioxx was felt to be a 'substantial contributor' to the plaintiff's heart attack," Anderson wrote in a client sent to investors Wednesday evening.
He added, "Punitive damages can reach up to five times compensatory damages which would be a very substantial amount - the compensatory damages amount by itself is already large, in our opinion."
The research analyst maintained a "neutral weight" rating on Merck.
source: http://www.forbes.com/markets/2006/04/05/merck-vioxx-legal-0405markets15.html 5apr2006
ATLANTIC CITY, N.J. A jury here found that Merck & Co. failed to warn consumers of Vioxx's safety problems and held the drug maker liable for the heart attack of one of two plaintiffs, awarding him $4.5 million in compensatory damages.
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Legal Woes Merck & Co. faces more than 9,200 lawsuits over its painkiller Vioxx. Three cases have gone to trial:
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The jury also found Merck committed consumer fraud in both cases by making misrepresentations to doctors concerning the drug's cardiovascular risks, and that it intentionally hid or omitted material information when marketing the drug.
A second phase of the trial, in which the jury will consider what punitive damages Merck should pay to the plaintiff whose heart attack it found was caused by Vioxx, starts Thursday.
The verdict could have far-reaching implications by establishing two important principles: that Vioxx use over the long term, which Merck itself acknowledges raises heart-attack risks, can make for a strong case; and that plaintiffs with high cardiovascular risks can still successfully blame Merck for their heart attacks.
After deliberating for almost two days, the jury of six women and two men reached a split decision on whether Vioxx was a substantial contributing factor in the heart attacks of two men, whose lawsuits against Merck were merged for the purposes of this trial. Thomas Cona, 60 years old, and John McDarby, 77, both say they took Vioxx for more than 22 months and suffered heart attacks as a result.
The jury concluded that the drug was responsible for only Mr. McDarby's heart attack. It awarded him $3 million in compensation for pain and suffering, and gave his wife $1.5 million for her loss of "society and services of her husband." In addition, both men will be reimbursed for their attorneys' fees and their out-of-pocket costs for Vioxx a sum that's tripled under New Jersey consumer-fraud law. Mr. Cona will receive $135 and Mr. McDarby $11,904.
The two plaintiffs and their cases differed in key respects. Mr. McDarby had prescription records for the four years during which he took Vioxx, while Mr. Cona's records were spottier. He had three prescriptions for about seven months of Vioxx and said he received samples from several doctors. W. Mark Lanier, Mr. Cona's attorney, said his client was left injured by his heart attack, but Mr. Cona appeared spry and upbeat on the stand. By contrast, following two broken hips, one at the time of his heart attack, Mr. McDarby is wheelchair bound, requires substantial assistance and gave his testimony in barely audible tones.
Though the verdict was split, its unified findings on Merck's actions suggest that the company is finding it difficult to persuade juries to dismiss evidence, including mounds of internal documents, suggesting that Merck executives were worried about the former blockbuster drug's safety before they took it off the market in the fall of 2004.
Mr. McDarby's win turns one of Merck's key defenses on its head: that Vioxx can't be blamed for heart attacks in people with a number of cardiovascular risk factors. The drug maker has consistently argued that such risk factors make it impossible to prove Vioxx caused their injuries, and in the Vioxx cases to go to trial so far, plaintiffs' attorneys sought to play down their clients' risk factors. But in this trial, attorney Robert Gordon billboarded Mr. McDarby's poor health and multiple risk factors, telling jurors that his client "was the last person who should have been on Vioxx."
Outside the courthouse, Chuck Harrell, spokesman for Merck's legal defense team, said the split verdict was a "disappointment" to thousands of Merck employees. But he added that the split "at least suggests we need to look at these cases on an individual basis."
Merck stock fell to $35.10 in after-hours trading, down 89 cents, or 2.5%.
Mr. Lanier, who made headlines with a $253.4 million judgment against Merck last August, said that he was happy with the jury's conclusion that Merck had acted inappropriately, though he was disappointed the jury didn't believe that his client, Mr. Cona, took the drug for the period of time he alleged.
Mr. Gordon called his win a victory for the "100,000 people who took Vioxx and had heart attacks."
Peter Loftus contributed to this article.
A jury found that Merck & Co. failed to warn consumers of Vioxx's safety problems and held the drug maker liable for the heart attack of one of two plaintiffs, awarding him $4.5 million in compensatory damages.
THE JUDGE
State Superior Court Judge Carol E. Higbee, a former medical malpractice attorney named to the bench in 1993 and now assigned to more than 5,000 Vioxx cases filed in New Jersey.
A graduate of Temple University law school, she has been assigned mass litigation involving the acne treatment Accutane and hormone replacement drugs for menopausal women, with about 180 cases for each drug on her docket.
Last year, she ruled that health plans that paid for members' Vioxx prescriptions can proceed with a class-action lawsuit to recover billions spent on the withdrawn painkiller. She also presided over the first Vioxx trial in New Jersey, which ended in November with a jury absolving Merck in the heart attack suffered by an Idaho postal worker.
THE PLAINTIFFS
Thomas Cona, 60, of Cherry Hill, who owns an ultrasound imaging company, suffered a heart attack June 9, 2003, as he played golf. Mr. Cona said he took Vioxx for 22 months before that, and continued taking it until it was pulled off the market in September 2004 after being linked to increased risk of heart attack and stroke.
John McDarby, 77, a retired insurance agent from Park Ridge, was stricken April 15, 2004, after taking Vioxx for four years. A diabetic, he suffered a broken hip when he collapsed from the heart attack. Last year, he broke his other hip and now uses a wheelchair. His lawyers acknowledge he suffered from diabetes and clogged arteries but say he wouldn't have been prescribed Vioxx if the company had properly warned that people like him were at risk for cardiovascular complications.
THE LAWYERS
Representing Mr. Cona: Mark Lanier, a colorful Houston attorney, beat Merck in the first Vioxx case to go to trial when a jury in Angleton, Texas, awarded $253 million to the widow of a man who died after taking Vioxx.
Representing Mr. McDarby: Robert Gordon and Jerry Kristal. Gordon, a graduate of the University of Michigan and former assistant district attorney in Philadelphia, has won $392 million in jury verdicts during his career in private practice and worked on silicone breast implant, Rezulin and Baycol litigation. Kristal, a graduate of Georgetown University, specializes in pharmaceutical torts and has worked on Bextra, PPA and tobacco cases.
In their presentations, the two sought to embrace Mr. McDarby's frailties rather than minimize them, telling jurors that he never would have taken the drug had Merck not persuaded the U.S. Food and Drug Administration to water down a new warning label for the drug in April 2002.
Representing Merck & Co.: Four-member legal team led by Christy D. Jones, a veteran product liability and personal injury lawyer with the Butler Snow law firm, of Jackson, Miss. Jones, a Phi Beta Kappa graduate of the University of Arkansas and its law school, was the lone holdover from the Merck legal team that won the last Vioxx case to come to trial in New Jersey. She handled the bulk of the courtroom presentation in the Cona-McDarby case, avoiding the sort of confrontations co-counsel Diane Sullivan engaged in with Judge Higbee during the first New Jersey trial. Assisting her in the trial were Robert "Mike" Brock, Kevin Dunne and Hope S. Freiwald.
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