Earlier this month, after months of negotiations, Merck announced a large but manageable $4.85 billion settlement of an unknown number of Vioxx plaintiffs who can prove they took the drug and suffered strokes or heart attacks.
Those plaintiffs still have to approve the deal. But it appears to be a watershed win for Merck, which had tenaciously fought the cases one at a time until now. With clear formulas and requirements for plaintiffs likely to receive between $50,000 and $1.5 million, the agreement was a major defeat for the personal injury bar, which had pursued Merck since Vioxx’s withdrawal from the market in 2004. The ambulance-chasers lost most of the cases they managed to bring to trial and saw thousands of others dismissed.
Yes, Merck has already spent more than $1 billion defending itself. Yes, some of the fees to plaintiffs’ attorneys will be spent on preparing new cases against drug and medical device companies. But the settlement was a fraction of what some on Wall Street (and in the media) had predicted. Merck now has good cards to play as it begins efforts to settle the rest of the cases.
It is heartening to some that Merck’s relentlessly tough handling of its litigation was a) victorious and b) in marked contrast to the bungling of the Fen-Phen cases at American Home Products before its merger with Wyeth. The final amount Wyeth needed to pay was four or five or six times what it initially told investors. Merck’s settlement is the inverse—perhaps one-fourth or one-fifth as much as Wall Street feared.
Merck stock jumped on the news. But for the industry, the Vioxx legacy is much more expensive. Vioxx and the timing of its withdrawal set in motion two long-term trends.
The Vioxx Legacy
First, the Vioxx story put the nation as a whole in a sour mood about the pharmaceutical industry. That’s required the FDA to implement an unwritten, informal tightening of its rules to approve drugs in the first place.
It’s not clear what political circumstances will allow those standards to be relaxed to pre-Vioxx levels, but we’d guess it will happen at a glacial rate if it occurs at all. It’s not clear tighter standards are serving the public, or just protecting the FDA from additional public criticism. That’s because no one outside the FDA can say exactly how the rules have changed.
Second, the Vioxx data catalyzed anti-industry sentiment among physicians and medical journal editors. It will be difficult to reverse this. Opinion-leader physicians have never been the industry’s biggest supporters, as ClinPage readers know. But Vioxx allowed them to take an even more antagonistic approach. The barriers to prescribing marketed drugs will be higher. Reactions to even the hint of a safety issue will be more swift and punitive.
The huge reduction in stent usage today is one example of this phenomenon. Many people saw the news coverage of stent-related issues. Few saw the more recent New York Times story quoting cardiologists who said perhaps stents weren’t so bad after all.
In the end, there is an unquantifiable Vioxx penalty or tax that is being paid by every company in the industry.
Merck has written a new play book for product liability cases. It can be proud of that. But aggressive, tough lawyers who point out the lifestyle choices and health problems of drug safety plaintiffs—as Merck mercilessly did in the court room—will have a bruising affect on the industry’s larger reputation. Vioxx was sold to ease pain and suffering. In court, Merck proved that its accusers had so many reasons to be in pain that it was hard to blame their drug.
In defending itself, Merck (and any company going down the same road) had no choice but to attack people who a) are quite sick or b) believed the TV ads that their product would ease their suffering. As such Merck’s hardball tactics in court were at odds with its advertised image as a company of miracle worker-scientists. The tension between the hard and soft sides of the same company, between the image in court and the one on TV, will be a glaring legacy of the Vioxx story.
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