Friday, August 31, 2007
Merck's Post-Vioxx Comeback
Article on cnn.com -- Merck's post-Vioxx comeback, by Aaron Smith. Here's an excerpt:
When the Vioxx lawsuits started piling up, analysts projected, on average, some $30 billion in potential legal liabilities. But three years later, Merck hasn't paid a penny to anyone blaming Vioxx for their heart attacks.
The company has won 10 of the 15 lawsuits filed against it and has appealed all the cases it lost.
"They're winning 65 percent of the cases," said Joseph Tooley, analyst for A.G. Edwards. "When it's all said and done, I think the ultimate liability is going to be a much more manageable number than was originally anticipated."
But Merck still faces nearly 27,000 more cases. That hardly seems like cause for celebration.
Nonetheless, Ken Frazier, the company's lead counsel throughout the Vioxx debacle, has forged a simple legal strategy that analysts say has helped Merck escape major damage. He has refused, from the beginning, to consider any kind of mass settlement and has instead vowed to fight the cases one at a time.
"Their strategy in fighting every case and being very clear about it, and telling the whole world they were going to fight every case, was a brilliant strategy. Merck is, of course, in a much better position to defend itself than individual plaintiffs trying to take on this organized effort," said Bryan Liang, professor of health law studies at the California Western School of Law in San Diego.
Analysts believe this case-by-case strategy prevented some lawsuits from opportunists looking for an easy cash-out to ever make it to trial. So far, 4,650 plaintiffs have been dismissed, according to Kent Jarrell, the spokesman for Merck's outside counsel.
"Our core strategy has been examining individual cases," said Jarrell. "The approach is working. We've seen thousands of cases dismissed because the cases, on closer examination, weren't backed by facts."
The next Vioxx trial is scheduled for Sept. 17 in Florida Circuit Court in Hillsborough County.
A couple of thoughts in reaction -- First, the strategy of holding off settlement is only working for Merck because Merck is winning the individual cases. If Merck continued to lose case after case, the number of cases filed would likely increase, and the jury awards would add significantly to Merck's already-burdensome defense costs. Second, I would generally disagree with the implication of Professor Liang's comments about Merck being in a "much better position" to defend itself in individual cases, compared to plaintiffs. In modern mass tort litigation, not only do most plaintiffs' law firms invest in hundreds or thousands of cases for a product, but the plaintiffs firms generally work with other firms and use information technology to share information, pool resources, and coordinate strategy. As has been remarked, the situation is no longer "David versus Goliath" between the plaintiff and defense counsel in mass tort litigation, but "Goliath versus Goliath." That is a good thing, because it means that representation is more likely to be equal in individual litigation.