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Corrected: Attorney urges punitive damages against Merck

April 6, 2006

In 2nd paragraph please read … Gilmartin, the former
chief executive of Merck, … instead of … Gilmartin, the
chief executive of Merck.

By Anna Driver

ATLANTIC CITY, New Jersey (Reuters) – An attorney for a New
Jersey man who won a $4.5 million verdict against Merck & Co.
in the latest trial over the withdrawn painkiller Vioxx urged
the jury on Thursday to send a strong message to the drugmaker
by awarding punitive damages.

Raymond Gilmartin, the former chief executive of Merck,
which faces about 10,000 lawsuits over the withdrawn drug, took
the stand for the first time. Gilmartin, who led Merck during
the development and withdrawal of Vioxx, maintained the company
did not try to mislead doctors or regulators.

The stock fell 3.4 percent on fresh concerns on the size of
the damages and Merck’s ability to defend itself in the massive
litigation.

“Because of your verdict, you now have the undivided
attention of Merck,” Jerry Kristal, an attorney for 77-year-old
plaintiff John McDarby, said at the start of the punitive phase
of the trial in Atlantic County Superior Court, in Atlantic
City, New Jersey.

“You now have the undivided attention of other companies
that make potentially dangerous products. The message you can
send is very important, not just for the McDarbys, for society
as a whole.”

On Wednesday, the jury found that Vioxx had been a
substantial contributing cause of a heart attack suffered by
McDarby. The jury decided the drug was not a significant cause
of a heart attack suffered by a second plaintiff, Thomas Cona.

Merck pulled the $2.5 billion-a-year drug off the market in
September 2004 after a study showed it doubled the risk of
heart attack and stroke among people who used it for at least
18 months.

In her opening arguments on Thursday, Merck attorney
Christy Jones argued that the company “acted in good faith and
the doctors and scientists at Merck did their very best to
comply” with federal health regulations.

Gilmartin echoed that sentiment, testifying that the
drugmaker saw no increased heart attack risk after reviewing a
2000 study involving Vioxx.

“We saw no evidence there was increased risk of heart
attack,” Gilmartin told the court.

The 2000 Vioxx study, known as Vigor, found higher rates of
heart problems among patients taking Vioxx than among patients
taking an older painkiller, naproxen. Merck has argued that the
Vigor study showed the heart-protective qualities of naproxen
rather than increased risks of Vioxx.

Gilmartin resigned from Merck in May 2005, well ahead of
his scheduled retirement in 2006.

Under New Jersey law, any punitive damages, which can be
awarded as a punishment to rectify a wrong committed by a
defendant, would be capped at $22.5 million — five times
compensatory damages.

“The compensatory damages amount by itself is already
large, in our opinion,” Prudential analyst Tim Anderson wrote
in a research note.

Merck director Lawrence Bossidy said he did not expect the
latest Vioxx verdict would change Merck’s legal strategy of
approaching each case individually.

“I don’t think it has any long-term consequences,” Bossidy
said on cable television network CNBC. “I think it will be
decided on a case-by-case basis.”

The McDarby case is the second multimillion-dollar Vioxx
verdict against Merck.

In August 2005, Merck was ordered by a Texas jury to pay
$229 million in punitive damages and $24 million for mental
anguish and loss of companionship to the widow of a Texas man
who took the drug for about eight months. The total award is
set to be cut because of a Texas law limiting damages.

Deutsche Bank Securities analyst Barbara Ryan said Merck
must stick with its strategy of trying every case in court or
risk following in the steps of Wyeth, which has taken more than
$21 billion in charges to cover financial liability related to
its recalled diet drugs.

“To settle now would open them to an unending line of
plaintiffs … Each case must be litigated on its merits —
i.e. cause and effect — as was confirmed with this split
verdict,” Ryan said.

Rob Gordon, another McDarby attorney, said his New York law
firm, Weitz and Luxenberg, has 1,000 Vioxx cases filed in
Atlantic County and plans to file 1,500 more before September.

JP Morgan analyst Chris Shibutani said he still believes
Merck has a strong case when it comes to whether Vioxx caused a
heart attack in a particular case and whether the company
adequately warned about the drug.

Merck shares dropped to the mid-20s after the company
pulled Vioxx off the market. But the stock has risen about 30
percent in the past six months.

The shares were down $1.21 at $34.78 in afternoon trade on
the New York Stock Exchange.

(Additional reporting by Julie Steenhuysen in Chicago)


Source: reuters



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