WSJ examines MRK's litigation troubles over Vioxx after FDA vote
Vioxx Comeback Could Tilt Balance in Merck Litigation
By BARBARA MARTINEZ Staff Reporter of THE WALL STREET JOURNALFebruary 22, 2005; Page B1
The possibility that Vioxx may once again be offered to patients raises a provocative question: Did Merck & Co. err by pulling its $2.5 billion painkiller off the market?
Critics had raised safety issues about Vioxx for years, but it wasn't until late last year that the company acknowledged a heart-safety problem. Merck withdrew Vioxx from the global market Sept. 30 after a clinical trial it undertook showed that patients taking it daily for 18 months had double the risk of heart attacks or strokes as patients who took placebos. The withdrawal invigorated attorneys who have filed hundreds of liability suits against the company; they saw the move as an admission that the drug was harmful.
In December came another bombshell: A clinical trial of Vioxx competitor Celebrex, made by Pfizer Inc., also found increased cardiovascular risk. The two events together strengthened the case for what was becoming a widespread view: that Vioxx, Celebrex and other so-called Cox-2 drugs shared a mechanism that contributed to heart attacks and strokes.
DRUGS AND RISKS
1 • Vote: If your doctor prescribed a Cox-2 inhibitor such as Vioxx, Celebrex or Bextra, would you take it?2 • Merck, Pfizer Face Advertising Obstacle3 • Where Findings on Painkillers Leave Patients4 • Complete coverage5
But Pfizer said it wouldn't withdraw its drug. That made Merck's decision to remove Vioxx from the market seem all the more hasty and perilous in terms of legal liability, said some drug industry executives speaking privately.
Then, last Friday, a panel of medical experts convened by the Food and Drug Administration voted 17 to 15 that Vioxx could be sold at least to certain patients, albeit with a strong warning label and other restrictions. Now, with Merck considering putting Vioxx back on the market, the dynamics of the litigation are poised to change. Merck declined to elaborate on its comments last week that it may resume selling Vioxx, and wouldn't comment on the impact of such a move on its litigation.
"Merck can look like they were super-cautious," said David A. Logan, dean of Roger Williams University School of Law in Bristol, R.I. "And when the FDA gives the yellow light to put the drug back on the market, they come out like such great public servants. That's a really nice dynamic in front of a jury," said Prof. Logan, who has taught torts and product liability for two decades.
The possible return of Vioxx speaks "to the psychology of the litigation," said Anthony Michael Sabino, associate professor of law at Tobin College of Business at St. John's University in New York. "In plain English, it means 'We're not afraid. This is a good product, it generally works, it may not work for everybody, but as a whole, this is a good product."' Mr. Sabino is a partner in a corporate litigation firm in New York, and does class-action work, but isn't involved in any pharmaceutical cases.
Because the Whitehouse Station, N.J., company voluntarily withdrew Vioxx, Merck technically still has FDA approval to market the drug. However, the agency has signaled that Vioxx wouldn't be allowed on the market without a significant change in the label to reflect the findings about heart health.
To be sure, Merck's move carries risks. The vote from the advisory committee was close, and the FDA could decide Vioxx shouldn't go back on the market. A denial from the FDA would be a blow to Merck's litigation defense and a sign that the FDA thinks the drug's dangers outstrip its benefits. Merck also ultimately could decide not to reintroduce the drug.
Still, investors seemed to think the FDA panel's recommendation would greatly ease Merck's legal liability; Merck's stock rose 13% Friday on the New York Stock Exchange.
More than 20 million Americans took Vioxx between its launch in 1999 and its withdrawal. Wall Street analysts have estimated liability costs for Merck of $4 billion to more than $20 billion. Merck hasn't set aside any funds for potential liabilities and has said it will vigorously defend itself against every case that claims Vioxx caused a heart attack or stroke.
As of last month, nearly 600 Vioxx cases had been filed in federal or state courts, and both Merck and plaintiffs attorneys said many more are expected to be filed. Because some of the suits were filed as early as 2001, discovery and depositions in some cases are already close to being wrapped up. The first cases are set for trial in May in Texas and Alabama state courts. Class-action certification has not been ruled on by a judge in any of the cases.
Besides relieving some of the legal pressure, the return of Vioxx would certainly help Merck's huge revenue challenges over the next few years. On top of losing Vioxx's $2.5 billion in revenue overnight -- about 11% of the company's sales -- Merck also faces declining sales of its biggest drug, cholesterol fighter Zocor, which will go off patent in the U.S. next year. A recent court decision also could lead Merck to face generic competition in its Fosamax osteoporosis pill in 2008, a decade earlier than expected. The company has been working hard to bolster its drug pipeline by dramatically increasing the number of licensing deals with smaller drug companies, but few potential blockbusters are likely to emerge anytime soon.
Certainly, a restored Vioxx wouldn't bring in nearly as much revenue as it previously did. But a comeback would produce some sales, considering that Vioxx was the only one of the Cox-2 drugs that was proven to be gentler on the stomach than older, less-expensive painkillers.
Plaintiffs' attorneys generally said a Vioxx comeback would give them even more ammunition against Merck.
"It will just make more money for us," said Daniel Becnel, a Louisiana attorney with about 100 filed Vioxx cases and 2,000 more he said he's working on. A Vioxx return "would give me a whole bunch more cases," he said. Mr. Becnel said a comeback also would put doctors at increased litigation risk. "I don't think too many doctors will prescribe it and the doctor that will prescribe it is playing Russian roulette with his malpractice insurance."
Plaintiffs attorneys also played down the potential courtroom strength of having the FDA willing to allow Vioxx back on the market. "With the concerns that have come to light in recent months about the effectiveness of the FDA, I don't know that that would present a major hurdle for us," said Andy Birchfield, an Alabama attorney who is leading many of the Vioxx cases and one of whose cases may be first to go to trial in May. In a news release yesterday, Mr. Birchfield called on Merck to leave the drug off the market because to do otherwise "most certainly will result in further cardiovascular injuries and deaths."
Write to Barbara Martinez at barbara.martinez@wsj.com6
By BARBARA MARTINEZ Staff Reporter of THE WALL STREET JOURNALFebruary 22, 2005; Page B1
The possibility that Vioxx may once again be offered to patients raises a provocative question: Did Merck & Co. err by pulling its $2.5 billion painkiller off the market?
Critics had raised safety issues about Vioxx for years, but it wasn't until late last year that the company acknowledged a heart-safety problem. Merck withdrew Vioxx from the global market Sept. 30 after a clinical trial it undertook showed that patients taking it daily for 18 months had double the risk of heart attacks or strokes as patients who took placebos. The withdrawal invigorated attorneys who have filed hundreds of liability suits against the company; they saw the move as an admission that the drug was harmful.
In December came another bombshell: A clinical trial of Vioxx competitor Celebrex, made by Pfizer Inc., also found increased cardiovascular risk. The two events together strengthened the case for what was becoming a widespread view: that Vioxx, Celebrex and other so-called Cox-2 drugs shared a mechanism that contributed to heart attacks and strokes.
DRUGS AND RISKS
1 • Vote: If your doctor prescribed a Cox-2 inhibitor such as Vioxx, Celebrex or Bextra, would you take it?2 • Merck, Pfizer Face Advertising Obstacle3 • Where Findings on Painkillers Leave Patients4 • Complete coverage5
But Pfizer said it wouldn't withdraw its drug. That made Merck's decision to remove Vioxx from the market seem all the more hasty and perilous in terms of legal liability, said some drug industry executives speaking privately.
Then, last Friday, a panel of medical experts convened by the Food and Drug Administration voted 17 to 15 that Vioxx could be sold at least to certain patients, albeit with a strong warning label and other restrictions. Now, with Merck considering putting Vioxx back on the market, the dynamics of the litigation are poised to change. Merck declined to elaborate on its comments last week that it may resume selling Vioxx, and wouldn't comment on the impact of such a move on its litigation.
"Merck can look like they were super-cautious," said David A. Logan, dean of Roger Williams University School of Law in Bristol, R.I. "And when the FDA gives the yellow light to put the drug back on the market, they come out like such great public servants. That's a really nice dynamic in front of a jury," said Prof. Logan, who has taught torts and product liability for two decades.
The possible return of Vioxx speaks "to the psychology of the litigation," said Anthony Michael Sabino, associate professor of law at Tobin College of Business at St. John's University in New York. "In plain English, it means 'We're not afraid. This is a good product, it generally works, it may not work for everybody, but as a whole, this is a good product."' Mr. Sabino is a partner in a corporate litigation firm in New York, and does class-action work, but isn't involved in any pharmaceutical cases.
Because the Whitehouse Station, N.J., company voluntarily withdrew Vioxx, Merck technically still has FDA approval to market the drug. However, the agency has signaled that Vioxx wouldn't be allowed on the market without a significant change in the label to reflect the findings about heart health.
To be sure, Merck's move carries risks. The vote from the advisory committee was close, and the FDA could decide Vioxx shouldn't go back on the market. A denial from the FDA would be a blow to Merck's litigation defense and a sign that the FDA thinks the drug's dangers outstrip its benefits. Merck also ultimately could decide not to reintroduce the drug.
Still, investors seemed to think the FDA panel's recommendation would greatly ease Merck's legal liability; Merck's stock rose 13% Friday on the New York Stock Exchange.
More than 20 million Americans took Vioxx between its launch in 1999 and its withdrawal. Wall Street analysts have estimated liability costs for Merck of $4 billion to more than $20 billion. Merck hasn't set aside any funds for potential liabilities and has said it will vigorously defend itself against every case that claims Vioxx caused a heart attack or stroke.
As of last month, nearly 600 Vioxx cases had been filed in federal or state courts, and both Merck and plaintiffs attorneys said many more are expected to be filed. Because some of the suits were filed as early as 2001, discovery and depositions in some cases are already close to being wrapped up. The first cases are set for trial in May in Texas and Alabama state courts. Class-action certification has not been ruled on by a judge in any of the cases.
Besides relieving some of the legal pressure, the return of Vioxx would certainly help Merck's huge revenue challenges over the next few years. On top of losing Vioxx's $2.5 billion in revenue overnight -- about 11% of the company's sales -- Merck also faces declining sales of its biggest drug, cholesterol fighter Zocor, which will go off patent in the U.S. next year. A recent court decision also could lead Merck to face generic competition in its Fosamax osteoporosis pill in 2008, a decade earlier than expected. The company has been working hard to bolster its drug pipeline by dramatically increasing the number of licensing deals with smaller drug companies, but few potential blockbusters are likely to emerge anytime soon.
Certainly, a restored Vioxx wouldn't bring in nearly as much revenue as it previously did. But a comeback would produce some sales, considering that Vioxx was the only one of the Cox-2 drugs that was proven to be gentler on the stomach than older, less-expensive painkillers.
Plaintiffs' attorneys generally said a Vioxx comeback would give them even more ammunition against Merck.
"It will just make more money for us," said Daniel Becnel, a Louisiana attorney with about 100 filed Vioxx cases and 2,000 more he said he's working on. A Vioxx return "would give me a whole bunch more cases," he said. Mr. Becnel said a comeback also would put doctors at increased litigation risk. "I don't think too many doctors will prescribe it and the doctor that will prescribe it is playing Russian roulette with his malpractice insurance."
Plaintiffs attorneys also played down the potential courtroom strength of having the FDA willing to allow Vioxx back on the market. "With the concerns that have come to light in recent months about the effectiveness of the FDA, I don't know that that would present a major hurdle for us," said Andy Birchfield, an Alabama attorney who is leading many of the Vioxx cases and one of whose cases may be first to go to trial in May. In a news release yesterday, Mr. Birchfield called on Merck to leave the drug off the market because to do otherwise "most certainly will result in further cardiovascular injuries and deaths."
Write to Barbara Martinez at barbara.martinez@wsj.com6
