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Merck in Vioxx Fight for Long Haul

Posted on: Friday, 9 September 2005, 18:00 CDT

TRENTON, N.J. - On the eve of the second trial over its painkiller Vioxx, pharmaceutical giant Merck & Co. on Friday reasserted that it plans to aggressively fight the mounting lawsuits over the withdrawn drug, despite recently saying it might settle some suits.

Kenneth C. Frazier, Merck's general counsel and senior vice president, also tried to reassure investors that liability over Vioxx - estimated by analysts at up to $50 billion - isn't a threat to the Whitehouse Station-based company.

"We are in this for the long haul. We have both the resources and the resolve to address these cases one by one over many years," Frazier told reporters during a conference call. "Merck's future is both secure and promising."

Frazier seemed to backpedal slightly on statements he made last month indicating the company might settle a small number of lawsuits with Vioxx users who had limited heart risk factors and took the drug for 18 months or more.

"We will have to make decisions about what's the right way to proceed with those cases," Frazier said, but he said repeatedly that Merck will fight each case individually.

Merck pulled Vioxx from the market last September after research linked the popular arthritis drug to increased risk of heart attack and stroke after 18 months' use, although some plaintiff attorneys and doctors say the risk began rising much sooner. Nearly 5,000 cases have been filed against Merck.

Mike Krensavage, pharmaceuticals analyst at Raymond James & Associates, said Merck officials may fear establishing "a big cookie jar" by saying they will settle cases, driving more patients to file lawsuits.

Frazier said the "very capable legal team" representing Merck in a trial starting Monday in Atlantic City would stick with the company strategy of presenting "sound, reliable evidence" to convince the jury Vioxx did not cause plaintiff Frederick Humeston's heart attack. Frazier said Humeston, of Boise, Idaho, who survived a heart attack four years ago, only took Vioxx intermittently and had multiple cardiac risk factors, which Humeston's lawyer disputes.

The general counsel for Merck said the company has been making changes "as we go along," but would not discuss possible shifts in strategy between this trial and the first one, in which a Texas jury awarded $253.4 million to the widow of a Wal-Mart produce manager who had taken Vioxx for several months. That amount will be reduced to about $26 million because of Texas' caps on punitive damages, and Merck plans to appeal.

Frazier also reiterated that the Texas jurors used "flawed science" in their decision, partly because an abnormal heart rhythm rather than a heart attack was blamed for that plaintiff's death.

Meanwhile, pharmaceuticals analyst Tony Butler at Lehman Brothers said the conference call appeared to be an attempt to get favorable, or at least less unfavorable, publicity before the Atlantic City trial, given what Merck has called a negative media blitz since the Texas verdict.

Superior Court Judge Carol Higbee, who will hear the Humeston case, ruled Friday that TV cameras will be allowed in court, rejecting Merck's assertion that broadcasting the trial could poison the jury pool for future Vioxx cases to be held in Atlantic County.

It wasn't immediately clear which outlet would carry the proceedings. Court TV plans gavel-to-gavel coverage, with no commentary, streamed over the Internet as part of a pay service. CNBC, Bloomberg News and CBS have all expressed an interest in airing it.

Merck lawyer Charles W. Cohen told her the televising of trials creates a "surrogate juror effect" in which viewers watch trial testimony, make judgments about witnesses' credibility and form lasting opinions, sometimes without hearing all the evidence.

Lawyer Thomas J. Cafferty, who argued against Merck's motion on behalf of Court TV and Bloomberg News in the 30-minute hearing in Atlantic City, said future Vioxx trial jurors could be impartial even if they had seen coverage of the Humeston case. Jury selection could weed out those found to have a bias, he said.

Merck will appeal Higbee's ruling, Cohen said late Friday.

Frazier told the reporters a major credit rating agency recently affirmed Merck's financial strength, which he said will allow the company to continue investing in research on new drugs.

Four days after the Texas verdict, Moody's Investors Service affirmed its rating of Merck at Aa3, the lowest of three investment-grade ratings for long-term debt and a level below Merck's rating in January. Moody's cited expectations of good cash flow and expectations Vioxx-related payments will be made over 10 or more years.

"During the next six months, we will be facing at least six trials," Frazier noted.

He said the first trial in federal court is still scheduled to start Nov. 28, but will be moved from New Orleans to a venue still to be determined because of the devastation along the Gulf Coast from Hurricane Katrina.

Merck shares rose 12 cents to close at $29.31 in trading Friday on the New York Stock Exchange.

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Associated Press correspondent John Curran in Atlantic City contributed to this report.

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On the Net: http://www.merck.com

Source: Associated Press/AP Online

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