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The Honolulu Advertiser
Posted on: Friday, August 18, 2006

Merck loses $51 million Vioxx case

By Cary O'Reilly
Bloomberg News Service

Merck withdrew Vioxx in 2004 when a study showed it doubled the risk of heart attacks after 18 months of use. Merck has won five Vioxx verdicts and lost four, and still faces 16,000 Vioxx lawsuits.

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Merck & Co. suffered two legal setbacks when jurors ordered the drugmaker to pay $51 million to a man who blamed his heart attack on its Vioxx painkiller and a judge ordered a new trial in a case the company won last year.

Shares of Merck, the No. 4 U.S. drugmaker, fell 7.7 percent to $38.83 in New York Stock Exchange composite trading yesterday, its biggest decline in a year.

Federal jurors in New Orleans ruled that Vioxx caused the heart attack of Gerald Barnett, 62, a former FBI agent. Merck blamed Barnett's heart attack on his diseased coronary arteries. Merck withdrew Vioxx in 2004 when a study showed it doubled the risk of heart attacks after 18 months of use.

The verdict may complicate Merck's plans to fight every one of the 16,000 Vioxx lawsuits it faces, a number that will rise in coming weeks as patients face a filing deadline. Merck has won five verdicts and lost four, compiling liabilities of $349 million, an amount that will drop to $99 million because of state caps on punitive damages. The verdict yesterday was the company's first loss in federal court.

"I do think it's going to go into their tactics," said Michael P. Kelly, a lawyer at McCarter & English in Wilmington, Del., who represents drugmakers. "The magnitude of the compensatory-damages award is what scares me the most here. It sounds like the jury either loved the plaintiff or hated Merck."

Jurors awarded $50 million in actual damages to Barnett and $1 million in punitive damages, which are awarded for bad conduct. Jurors found that Vioxx caused Barnett's heart attack, that Merck negligently failed to warn Barnett's doctors adequately, and the company "knowingly misrepresented or failed to disclose a material fact" about the drug to physicians.

Merck plans to ask U.S. District Judge Eldon Fallon to reduce or set aside the verdict, company lawyers said.

"Both the finding and the amount of damages were totally uncalled for in this case because Merck acted appropriately in providing information to the medical, scientific and regulatory communities," Merck general counsel Kenneth C. Frazier said. "While this is not the outcome we had hoped for, our commitment to defending these cases one at a time remains the same."

In a separate ruling, a New Jersey judge ordered a new trial in the case of Frederick Humeston, an Idaho postal worker who failed to persuade jurors last November that Vioxx caused his heart attack. The judge said a new jury may consider a New England Journal of Medicine editorial printed after the Humeston trial that criticized Merck's handling of heart attack data.

Analysts said Barnett's win could have been worse for Merck.

"The $50 million seems pretty high considering the patient is still alive, but they were spared on punitive damages," said Jon Paul LeCroy, an analyst with Natexis Bleichroeder in New York. "It's a slightly worse-than-average scenario for a loss."

Barnett's lawyer, Mark Robinson, asked jurors after the initial verdict for $25 million in punitive damages. Merck lawyer Phil Beck argued that the $50 million in actual damages was enough for Barnett.

Merck has lost four verdicts to patients who blamed Vioxx for their heart attacks. In the first Vioxx case, a Texas jury awarded $253 million to the widow of a patient, which will be reduced to $26 million by state limits on punitive damages.

Mark Lanier, whose client won the $253 million verdict, said the New Orleans award "is a portent of what is to come."

"Merck is in serious trouble," he said. "For every four cases they try, they'll lose three. Wall Street has made a huge mistake. The analysts who think that Merck's strategy of trying every case is correct are just dead wrong, and (Merck is) in serious trouble."

Lawyers for Barnett, who said he was "very happy" with the verdict, argued that the company ignored Vioxx's risks as it marketed the profitable painkiller. The drug generated $2.5 billion in sales in 2004, about 11 percent of Merck's revenue.

Barnett, an FBI agent for 27 years, took Vioxx for about three years before his attack and two years afterward. His energy and activity levels sagged after his heart attack, his lawyers said. His wife, Corinne, sought damages for the loss of his companionship.

This is the third federal court trial over the drug. The first ended in a hung jury, and Merck won the retrial.

Beck, of the Chicago law firm Bartlit Beck Herman Palenchar & Scott, represented Merck in the Barnett case and the federal trial it won in February.

Merck is scheduled to face four Vioxx trials this year in federal court in New Orleans, two in state court in Alabama, and one each in state courts in California, Illinois and Texas.

Fallon, who is presiding over nearly 6,000 Vioxx cases, will next hear a case that had been scheduled for trial by a tribal court of Mississippi's Choctaw tribe.