Wed, Dec. 15, 2004
The N.J. drugmaker plans to battle all claims individually, its general counsel told analysts and reporters yesterday.
Philadelphia Inquirer Staff Writer
WHITEHOUSE STATION, N.J.
An executive at Merck & Co. Inc.
offered a glimpse yesterday of its legal strategy over the recalled painkiller
Vioxx when he said it would try to defeat any attempt to certify a class action
and fight all claims individually.
"These are individual
cases that are not appropriate for class treatment," Kenneth C. Frazier,
general counsel and senior vice president, told analysts and reporters. He
added, "This litigation most certainly will play out over a number of
Digging in its heels on the
drug debacle that has intensified scrutiny of the industry and the federal drug
review process, Merck tried to present an upbeat picture of its overall
prospects during an annual business review at its international headquarters
here, about 60 miles north of Philadelphia.
The company, with thousands
of employees across Pennsylvania and New Jersey, said it had laid off 5,100 of
them already, slightly more than the 4,700 disclosed earlier. It identified
most as part-time contractors involved in manufacturing but declined to say
where they worked. Merck had 63,200 employees worldwide at the end of 2003.
Vioxx was an
anti-inflammatory drug and pain reliever that Merck withdrew voluntarily on
Sept. 30 after a company-sponsored clinical trial showed increased risk of
heart attack in some patients after 18 months. It had generated at least $2.5
billion in sales in 2003, making the drug its top seller.
The price of the company's
stock has plunged since the withdrawal, closing yesterday at $29.62, up 57
cents. Shares were trading above $45 as of Sept. 29.
Analysts have put Merck's
liability and legal costs over Vioxx at about $20 billion, with estimates
ranging from just a few hundred million dollars to $55 billion.
Frazier declined to comment
on any of the figures but did offer a few details about the nature of the
lawsuits it faces so far. As of Nov. 30, the company knew of at least 475
lawsuits involving roughly 11,000 plaintiff groups, alleging that Vioxx caused
gastrointestinal bleeding, cardiovascular events and kidney damage.
As of this week, an
additional 18 lawsuits had been filed related to shareholder claims and
class-action lawsuits alleging securities-law violations. Ten others have been
filed under a federal law governing savings plans, such as 401(k) plans. Two
state pension boards also have sued, Frazier said.
He also said the Food &
Drug Administration, the Justice Department, one Senate committee, and two
House committees are conducting investigations. And several countries, including
France and Israel, have begun Vioxx investigations.
Merck expects the first civil
case to come to trial during 2005, Frazier said. But he said the company was
confident that it could defeat any claims of direct causation, noting that
plaintiffs will be at pains to prove that Vioxx alone caused, for example, a
About 60 percent of the cases
filed so far are in state courts; the rest, in federal court. The company has
filed a motion to combine all the cases in one federal district, but still
expects to have to fight initially in Texas or Alabama, where courts are
thought to be less sympathetic to companies in such cases, analysts have said.
While declining to compare
Merck's situation directly to any other past product-liability case, such as
the withdrawal of the diet-drug combination known as "fen-
," Frazier did say that Johnson & John-son's
strategy in defense of its heartburn remedy
showed that major liability losses could be avoided.
The company's comments were
not surprising to analysts, who had pushed executives without success to
speculate further on their strategy if Merck lost its bid to block any
"The cost of litigation
is the defining issue right now," said Richard T. Evans, senior research
analyst at the New York investment firm Sanford C. Bernstein & Co. Inc.
In other issues, Merck
highlighted several promising drugs in early development but did not announce
any major product launches for 2005, which analysts in the past have called a sign
Merck did announce that it
" as the name of its new
vaccine for the human
virus, or HPV, which
can cause cervical cancer. Merck is racing to file this year for FDA approval
of the drug, hoping to beat GlaxoSmithKline P.L.C., which is also developing
such a vaccine, called
Contact staff writer
Thomas Ginsberg at 215-854-4177 or