BACKGROUND
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The withdrawal of Vioxx by Merck will spawn a massive wave of litigation related to cardiovascular problems linked to the drug. Vioxx was recalled on September 30, 2004, following studies that indicate users are twice as likely to suffer heart attacks and strokes than people who take other anti-inflammatory drugs. The recall is the result of mounting concern by experts that the drug might be related to cardiovascular risks. Concerns about the safety of Vioxx began in early 2001. In April of 2002, the FDA required Merck to add new label warnings for cardiovascular risks.
Merck's decision to recall Vioxx is based on a three-year clinical study. More than 20 million people have taken Vioxx since it was launched in 1999. Sales of the drug reached $2.5 billion last year. The study found that users of the 25 milligram dose of Vioxx for more than 18 months were twice as likely to have a heart attack or stroke as patients taking a placebo. The study estimates that approximately 27,785 heart attacks and cardiac deaths may be related to Vioxx. Researchers had been concerned about the safety of Vioxx for years. Merck had criticized previous studies as inconclusive and not based on placebo-controlled clinical trials. |
 VIOXX - A NEW MASS TORT
The rapid growth in claims involving hazardous drugs has played a major role in the evolution of mass tort litigation. The public is acutely aware of the billions of dollars paid to thousands of Dalkon Shield,
breast implant and diet drug victims. When a drug is recalled due to health concerns, it is standard practice for claims to quickly enter the legal arena. Within hours of a recall, law firm articles are posted to advance litigation and protect the rights of victims.
Vioxx claims will result in thousands of suits, including class actions, injury claims, multi-district proceedings, appeals and a litany of rulings that will affect public health and tort law for years. The response by the legal community to the Vioxx recall will be swift and pervasive, and may ultimately result in compensation plans that rival the implant and diet drug settlements, now recognized as some of the largest in history.
Hazardous drug liability can be enormous and affect a drug company for years. The announcement alone cut Merck's stock price by 20%. Billions in stockholder equity were lost. History tells us that this type liability can damage a company for 4 to 20 years. Other mass disasters, such as Fen-Phen and breast implants, resulted in legal overhangs that not only damaged the product maker, but had an adverse impact on others as well, ranging from doctors to FDA investigators. One week after the recall, legal and financial prognosticators were debating Merck's liability, with one risk assessment placing the Vioxx exposure at $10 billion or more. See, "Vioxx Lawsuits", Oct. 5, 2004, The Wall Street Journal, by Barbara Martinez.
As a stark reminder of how uncertain mass tort liability can be, the diet drug exposure of Wyeth was placed at around $4.5 billion in 1999. After six years of litigation, Wyeth has increased its assessment and has set aside over $14 billion to cover claims. The final payout is still uncertain as claims have climbed to over 600,000. Wyeth's risk may relate to funding for the Fen-Phen settlement trust and claims could go higher depending on the size and number of jury awards. Liability risks in mass tort litigation are notoriously hard to predict. The biggest liability case of all, asbestos, has confounded experts for decades. Experts have pegged asbestos exposure at anywhere between $80 billion to $250 billion.
Continued: The legal response
and conclusion |