Merck Appoints Committee to Review Vioxx
TRENTON, N.J. – Merck & Co. Inc. has appointed a committee of board members and a retired federal judge to review the pharmaceutical giant’s actions before it pulled its blockbuster arthritis drug Vioxx from the market. The announcement ahead of a Wednesday conference call to announce the company’s earnings forecast for next year.
Merck announced the committee late Tuesday, saying it would act for the company’s board of directors in handling shareholder litigation over the Vioxx withdrawal and would advise the board on any action to be taken after the review.
"This is exactly what you would expect the board to do in carrying out its duties to shareholders," said Merck spokeswoman Joan Wainwright.
The committee’s purpose is "to ensure that the company acted appropriately and ethically," Wainwright said, but added there is no suspicion company officials did anything wrong.
Concerns about Merck’s legal liabilities, estimated at up to $18 billion, have knocked its shares down by more than one-third, wiping away more than $38 billion in market value since the recall announcement.
Merck’s action "raises more questions than answers," said independent pharmaceuticals analyst Hemant Shah of HKS & Co. in Warren, N.J. "Does the board know anything or have any suspicion beyond what has been disclosed?"
At the same time, Shah said it is possible the board is confident that a review can clear Merck’s name. If that is the case, the move could be viewed as a vote of confidence by the board for chief executive officer Raymond V. Gilmartin, he said.
Merck withdrew Vioxx, a popular drug for arthritis and acute pain, from the market on Sept. 30 after a company study showed the drug doubled the risk of heart attacks and strokes. The company said at the time that it was acting in patients’ best interests.
About 2 million people worldwide were then taking Vioxx, which had been Merck’s No. 2 drug with 2004 global sales of $2.5 billion. That amounted to 11 percent of the company’s $22.49 billion in revenue last year.
Merck said the special committee would be chaired by William G. Bowen, chair of the Merck board of directors’ committee on corporate governance and president of The Andrew W. Mellon Foundation. The board will be advised by attorney John S. Martin Jr., a former U.S. attorney who served as U.S. district judge for New York’s Southern District for 13 years before going into private practice in 2003.
Other board members serving on the special committee, which Wainwright said was assembled within the past few days, include Lawrence A. Bossidy, Dr. William N. Kelley, Rochelle B. Lazarus, Dr. Samuel O. Thier and Peter C. Wendell.
Merck announced the committee’s formation after the stock market closed Tuesday. Its shares fell 23 cents, or nearly 1 percent, to $27.89 in trading on the New York Stock Exchange. They fell another 4 cents in after-hours trading. Shares traded for about $45 before the Vioxx recall.
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