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Dave Taylor
Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains three weblogs, The Business Blog at Intuitive.com, focused on business and industry analysis, the eponymous Ask Dave Taylor devoted to tech and business Q&A and The Attachment Parenting Blog, discussing topics of interest to parents. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

Merck's Vioxx Liability: The Death of Big Pharma?

A staggering verdict was found in Angleton, Texas against pharmaceutical conglomerate Merck & Co. when the jury today handed back $24 million in actual damages plus an additional $229 million in exemplary, punitive damages for the widow of former Vioxx patient Robert Ernst.

The background story is that triathlete Robert Ernst had been on the prescription heart drug Vioxx and then died of what the coroner later described as "arrhythmia" or an irregular heartbeat. Ernst's widow's attorney argued that Vioxx had led to a heart attack that had caused the arrhythmia, not the direct death.

While Merck voluntarily removed Vioxx from the marketplace last September after studies linked Vioxx to a higher rate of heart attacks and strokes after taking the drug for 18 months, it was too late for thousands of potential victims. Ernst is the first of over 4000 lawsuits alleging injuries from Vioxx.

If this one case produces a verdict of almost $255 million, then even if only 10% of the 4000 cases already filed were settled in favor of the plaintiff, not Merck, it could theoretically cost upwards of $100 billion, a crippling blow to one of the largest pharma companies in the world.

The verdict wasn't just based on the medical evidence, however. The jury ruled against Merck on three key questions: Merck failed to warn doctors of the dangers of Vioxx, that the drug was improperly designed in the first place (and that's going to be just about impossible to recover from and significant fuel for attorneys representing other clients), and finally that Merck's negligence caused the death of Robert Ernst.

Merck, of course, is going to appeal, but the writing's on the wall, and the implication for big pharma overall is clear: you can't risk developing new drugs at all, ultimately, because even with the best disclosure mechanisms and the best communications strategy, you can find that the little speed-bump in the testing phase comes back as a 500-foot monster and, like this Vioxx settlement, might just crush your firm.

Oh, and I don't believe that Merck is exemplary in its communications, but it is important to recognize that they are wrestling with the problem all companies face: shareholder value or transparent communications?

I believe that this verdict will hasten product liability reform and caps on limitations on verdicts. Otherwise we'll see that all big pharma will eventually be crushed by some drug problem or another and that we'll end up with much less pharmaceutical innovation. Given that I believe that as a population we are becoming less healthy, and that without the continuing evolution of pharmacological medicines, we've got a really big public health problem coming in a decade or two.

There's no disputing that this is a significant verdict against Merck. But what do you think about the implications for the industry, and for the state of public health?

Reference reading:

Posted by Dave Taylor at August 19, 2005 4:03 PM

Comments

Vioxx and all the COX-2 inhibitors were designed on the basis of junk science. The major failure here was the usual treating of symptoms without understanding the cause of the symptoms.

If you don't attack the cause, you are no smarter than a puppy chasing it's tail. COX-1 and COX-2 are produced where inflammation occurs, inflammation being a normal body process used to heal injuries. Most of the people I deal with have arthritis and other problems due to the really bad diets they consume combined with lack of exercise. This eventually puts their body into a self-destructive autoimmune inflammation process that will not be fixed by attacking the inflammation process itself, but by reducing caloric intake, increasing exercise and eating less processed/refined foods. Not a message most people want to hear, but if I eat the way my friends do, then I go arthritic. If I follow proper diet and exercise, the pain goes away without NASAIDS or COX-2 inhibitors.

The major problem for Merck and friends is that they cannot sell diets and in most of their advertising, they paint a rosy path where the drugs produced vastly improve your life with no side effects. Having had several friends nearly die of bad drug interactions makes me really question most of the new stuff on the market today. It is not really being tested and often does not work better than the older prescribed medicines. It just costs more with worse side effects.

One of the worst causes of inflammation today is high blood sugar combined with insulin resistance (type II Diabetes).

Posted by: martinelli on August 20, 2005 8:21 AM

While this is certainly a challenge for pharma and innovation, I think on appeal Merck will win out on the scientific portions of the judgement. It would make it very hard for new classes of drugs to come out if there is a fear of this kind of suit. As far as the COX-1/2 debate. There is a bias in most medications towards symptomatic "cures". It is changing, though. For example the new TZD class of medications for Type-2 diabetes helps the body to use insulin more effectively by reducing insulin resistance.

Posted by: Tris Hussey on August 20, 2005 5:02 PM

Great observations Dave. It's not only Merck that locked into its business model 2 decades ago but all of the pharma industry. That model won't work well going forward. The Vioxx case is another in a long string of cases telling the INDUSTRY it must change it's business model. Otherwise everyone (investors, suppliers, employees and customers) are going to feel a lot more pain.

Posted by: adam hartung on August 21, 2005 11:29 AM

I thing there is a real 'plague on both your houses' in this case. From what I read, it is clear that Merck acted in a deceptive manner, and suppressed evidence about the drug's side effects.

However, according to the WSJ article that I skimmed on this, the jury *did not listen* to the scientific content to the Merck case, which certainly seemed persuasive to me.

I cannot fathom how effective justice can be rendered by a jury which does not listen [and perhaps cannot understand] key issues of the case.

To paraphrase the Duke of Wellington: "I don't know if this scares you, sir, but it certainly scares me".

PS: The addition questions are getting too hard for my little brain -- I just failed one!

Posted by: John Howard Oxley on August 22, 2005 7:09 AM

The pharmaceutical industry makes billions of dollars drugging school children and this is a form of genocide: condemning millions of young lives to a drug addicted future. They employ “experts” and lobbyist and hire ex FDA personnel and retired congressman to get pro-drug legislation passed. Newspapers and magazines receive billions of dollars a year in advertising, and investment firms make big bucks touting the latest snake oil; so it would be a rare article indeed that went against Big Pharma. The industry is motivated by the bottom line and shareholders not Science. A Google search of Ritalin and Cocaine, Prozac, chemical imbalance, school shootings, will show even the most skeptical that something is horribly wrong when 6 million school children ( plans are in place to increase this by 40% each year) are on anti-depressant drugs prescribed to handle “disorders” created to sell the drugs. Now after the Texas Vioxx decision Big Pharma's stooges are flooding their editorial outlets ( USA Today, the New York Times, Wall Street Journal) with demands that the government protect the drug companies. Michael

PS The decision by the Texas jury was rendered because the defendant couldn’t explain their faulty “science” to the common man. Something that contains lies is very hard to explain as it gets very complicated whereas that which is true is simple and easy to explain.

Posted by: michael hammond on August 24, 2005 8:23 PM

As Michael mentioned handing those shady anti depressant drugs to children, that is a real crime.

For a while I consumed large amounts of MDMA / Ecstacy. Normally the next day I would just feel burnt out, but when you did it too much there were some weird side effects as well, like jaw clenching, whoshing sounds, tracers, electric zaps, and eventually it can sometimes lead to emotional numbness.

I also took 5HTP for a while, which is a way to boost your serotonin intake. I found that if I did it too frequently at too high of doses it too led to that emotional numbness.

Many people are depresses because that is just a natural life curing mechanism. When you feel like crap it is your body telling you to change something.

Some of the people who take those anti depressant drugs are addicted to them, both physically and psychologically. I have posted about 500 feedbacks various people have left about them.

Posted by: aaron wall on August 26, 2005 7:28 PM

People? What part of - "All Drugs are not safe." doesn't anyone understand? Taking any kind of drug - ANY KIND -- poses inherent risks. No drug company can possibly know how a drug will interact with each individuals chemistry. I find it laughable that we as a society have come to demand both new and improved drugs that will cure our ailments AND demand that those same drugs are RISK FREE.

As lawsuits continue to erode both the willingness of companies to make ANYTHING that carries the possiblity of being sued for it, and of consumers who don't think they have a RESPONSIBILITY to understand the inherent risks in taking a drug, using a hair dryer near water or flying a plane while drunk. Don't believe me? One only has to look at this page to see the sad state of our society:

http://www.overlawyered.com/topics/responsib.html

Posted by: Andrew on August 30, 2005 5:22 AM

I go at this issue from a different direction.
How is the interest of the public served by giving a lady from Texas and her lawyers $253M!?
If courts are going access large punitive damage awards, that money should be spent directly addressing the issues of the case. Let's give the money to the CDC for medical research, for example. This nation badly needs tort reform but it will never happen as long as our legislative representitives are predomently lawyers.

Posted by: Fred Aldrich on October 7, 2005 5:32 AM

You are right on the money with this one. Well said!

Posted by: Karen Stephenson on January 20, 2006 11:53 PM

I agree with Andrew-well said. Tort law has given people who take no responsibility for their actions the right to become rich. We sue over every imagined wrong done to us . We need to stop blaming the drug companies, who have produced many life saving and life improving medicines-and reform the testing methods and approval process so that new drugs are as risk free as possible. Nothing however, is totally risk free.

Posted by: Angela on February 2, 2006 8:33 AM

I totally agree with Angela, but...this case isn't solely about unfortunate side effects! It's about a drug company hiding or not revealing important information about their product! Why?? because it was making them lots & lots of money. they didn't give the thousands of people who were prescribed them a fair chance to decide whether they were willing to take the risk! My Partner was 44yrs old when he was wrongly diagnosed with rheumatoid arthritis, he was prescribed dangerous liver damaging drugs for 9 months, only to be told "stop the drugs immediately" you have fibromyalgia! A "mistake" had been made - ok... so to help with the pain of "fibromyalgia" vioxx are prescribed - we were so pleased he wasn't on the dangerous drugs anymore! A month after his 46th birthday he had a triple heart by pass operation! We have only just realised why!! and if we're right, I think we should be compensated for the destruction of our lives...caused by greed! Oh by the way we're not one of the 9,600 American victims of vioxx, No, unfortunately we're English so we have to wait until all the American trials are dealt with before we can be heard! By that time merck will be in our position... broke!

Posted by: wilma on April 1, 2006 4:25 PM

I couldn't agree more Dave. Seems like Merck is getting in more and more lawsuits.

Posted by: Marko on February 9, 2007 11:16 AM

If the company hid facts they should be forced to pay damages to anyone who was harmed. I have less concern for companies who claimed they were harmed, there was a class action suit just thrown out against insurance companies who were trying to be reimbursed for buying the drugs for their clients. I have less sympaythy for these guys, after all, they would have been buying comparibile drugs for thei memebers if prescribed.

Posted by: Pete on September 10, 2007 5:12 AM

I am a Vioxx Survivor, I filed a RICO Complaint on Merck & Co. in June 2007, The case is now in the 5th circuit court of appeals waiting for the panel of Judges to rule on the order for Nihil Dicta Judgment Merck defaulted by not responding to the Interlocutory appeal.The Judgment is triple the damages and not a product liability case. For more information you can contact me.
at radiob3711@embarqmail.com

Posted by: Joan M. Petty on June 9, 2008 12:23 AM
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