Merck faces long road in Vioxx legal battle

John W. Schoen Senior producer • Profile • E-mail

In some legal cases, a mistrial is as good as a win for the defendant -- a sign that the evidence isn't strong enough to convince a jury. But Monday’s jury deadlock in the latest lawsuit over a pain reliever called Vioxx is hardly good news for Merck & Co. Inc., the drug’s maker. With the company’s overall sales sliding, more than 6,000 other Vioxx cases pending against it, and the recent claim by a respected medical journal that it withheld key evidence of the drug’s heart attack risks, Merck faces a potentially life-threatening legal battle.

“The Vioxx product liability exposure is difficult to predict with a high degree of accuracy,” wrote Bear Stearns analyst John Boris in a recent research note. “But we peg the liability at $10 billion.”

Approved by the Food and Drug Administration in 1999, Vioxx was sold as an alternative to other over-the-counter pain relievers that was easier on the stomach. Backed by a heavy advertising and promotion campaign, the drug became an industry blockbuster – eventually showing up in the medicine cabinets of more than 20 million people and generating more than $2.5 billion in sales in 2004 alone.

But Merck pulled the drug off the market last year after studies showed Vioxx could double the risk of a heart attack or stroke if taken for 18 months or longer. Last Thursday, the New England Journal of Medicine published an editorial accusing the company of withholding damaging data about the drug’s safety from an article that was published in 2000 by the journal, a widely respected source of information for doctors prescribing the medication.

That disclosure came in the middle of the first Vioxx lawsuit to reach federal courts, in which a judge Monday declared a mistrial after the nine-member jury deadlocked in the case of the heart attack death of a Florida man in 2001. The timing of the report may have played into the judge’s decision to declare a mistrial, Mark Lanier, an attorney who won the first Vioxx trial in Texas this summer, told CNBC.

“We are absolutely convinced Merck knew Wednesday afternoon the Thursday article was coming out" and closed its arguments to keep the report from the jury, he said. "The judge may be saying. 'Let's do this again and play fair.'”

In the meantime, Merck says it plans to continue to prepare for a retrial of the latest case.

"If a retrial is scheduled we will be right back with the same facts," Kenneth Frazier, Merck's general counsel, said in a statement.

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