April 21, 2006

Texas jury awards $32 million in Vioxx case

By Jeff Franks

RIO GRANDE CITY, Texas (Reuters) - A Texas jury on Friday
found that the painkiller Vioxx caused the death of a
71-year-old man who had taken the drug for less than a month,
and awarded his family damages of $32 million, which will be
greatly reduced by state law.

The verdict in what legal experts had said was a weak case
against Vioxx maker Merck & Co. Inc. may raise pressure on the
company to start settling some of the 10,000 other cases it now
faces, analysts said.

The jury awarded Leonel Garza's family $7 million in
compensatory damages for mental anguish and personal loss and
$25 million in punitive damages, but the latter will be cut to
no more than $750,000 because of a cap imposed by Texas law.

Merck immediately said it would appeal the decision.

It withdrew the $2.5 billion-a-year drug in September 2004
after it said a study found that use of Vioxx for more than 18
months doubled the risk of stroke and heart attack.

Garza died on April 21, 2001, exactly five years ago, after
taking Vioxx less than a month for arthritis.

Attorneys for Garza's family had sought more than $1
billion in damages, saying Vioxx caused blood clots that led to
a fatal heart attack, but they were pleased with the verdict.

They said Merck lied when it said only long-term use of
Vioxx presented health dangers and accused the company of
keeping the drug on the market long after learning of its risks
because the New Jersey-based company needed the sales.

"This is the first verdict in which short-term use of Vioxx
has been found by a jury to be causative of heart attacks. It
goes a long way in dispelling this 18-month fiction that Merck
has insisted on using in these trials," said lawyer Joe

Garza's family declined comment and left the court
immediately after the verdict to attend a special mass for
Leonel Garza.

Merck lawyers blamed Garza's death on heart disease that
had plagued him since 1978. They said medical records indicate
he may have taken Vioxx for only a week and stopped the
medicine nearly three weeks before his death.

"Obviously, we're disappointed. We thought the facts were
overwhelming that Vioxx was not involved in any way in Leonel
Garza's death," said Merck attorney Richard Josephson.

"I think we'll be vindicated in post-trial motions or
appeal," he said.

The trial took place in Starr County, a poor and heavily
Hispanic area on the U.S.-Mexico border that is known as
plaintiff friendly.

Escobedo said location was not a factor in the verdict. But
Merck's Josephson said, "Starr County has always been a
difficult jurisdiction for corporate defendants."

Even though Texas law will reduce the punitive damages,
Fordham University law professor Benjamin Zipursky said the $25
million award indicates problems for Merck as it faces
thousands more Vioxx cases.

"The most significant fact is the fact that there is
liability at all because it is a weak case," he said. "Even
though it's quite clear the punitive damages will be cut down
to $750,000, it is not wholly irrelevant because that is not
the case in all jurisdictions."

Oppenheimer analyst Scott Henry said the jury's decision
could encourage more Vioxx cases and perhaps help convince
Merck that it will have to stop fighting and start settling
lawsuits, which it so far has refused to do.

"Every case that goes against Merck just reinvigorates the
plaintiffs attorneys," he said.

"At some point one would expect them to start settling. The
only way they avoid a settlement (is) if they win a bunch of
these cases," which doesn't appear to be happening."

But Kenneth Frazier, senior vice president and general
counsel, told a conference call after the verdict that the
company would fight each case and settle none.

"These are the early days of this litigation. We are in it
for the long haul," he said. Merck last year spent $285 million
on legal fees related to Vioxx, and said its reserve fund for
future litigation stood at $685 million at the end of 2005.

Wall Street is watching the Vioxx trials closely for clues
about how much the Vioxx issue ultimately will cost Merck.

Previously, Merck had won three cases and lost two. It has
vowed to appeal the lost cases.

Last August, a Texas jury awarded damages of $253 million
in the first verdict against Merck, although Texas law will
reduce the damages to $26 million. Earlier this month, a New
Jersey jury awarded damages of $13.5 million in the second
verdict against Merck.

Shares of Merck closed down 26 cents at $34.74 on the New
York Stock Exchange.

(Additional reporting by Deena Beasley in Los Angeles, Kim
Dixon and Deb Sherman in Chicago)