Lawsuits Start for Merck After Vioxx Withdrawal

An Oklahoma lawsuit filed Thursday charging that Merck & Co. (MRK) misled patients about the safety of its arthritis drug may signal many more such suits against the drugmaker following its recall of Vioxx (search), legal experts said.

The company said earlier Thursday the drug, used by 2 million people worldwide, increases the risk of heart attack and stroke.

"Clearly, if they could have kept it on the market they would have," said William Federman, a lawyer at Federman & Sherwood, one of the firms that filed suit in federal court in Oklahoma City charging Merck with failing to warn that its drug was defective.

The lawyer said comments from Merck executives indicate that the company thought it could continue to sell Vioxx by adding label warnings.

The suit — filed on behalf of an Oklahoma County resident but likely to become a class-action effort — alleges Vioxx raises the risk of heart attack, blood clots and other serious cardiovascular events, which can lead to injuries and death.

Lawsuits by Merck shareholders are also expected.

"In America we sue," said Anthony Sabino, associate professor of law at St. John's University in New York. "This is very much a visceral reaction by the market, but I have to say it is an overreaction."

He said Merck is likely to set aside a huge reserve fund to pay for legal costs, but plaintiffs will face an uphill battle to prove liability and injury.

"Merck took proactive action.... There was not an ounce of cover-up," he said of the voluntary recall.

Consumer group Public Citizen (search), however, said Vioxx has a "checkered history," with regulators warning Merck three years ago that promotional material for the drug minimized the potential for serious cardiovascular events.

The Vioxx withdrawal mirrors similar health-related drug recalls such as Bayer AG's 2001 decision to pull cholesterol drug Baycol (search) off the market after it was linked to severe muscle weakness and Wyeth's 1997 recall of diet drug fen-phen, which was tied to heart-valve damage and a deadly lung condition.

The Baycol recall has cost Bayer more than $1 billion so far while Wyeth has taken more than $16 billion in charges to pay for fen-phen medical claims and legal expenses.

"Sure, this is a legal risk," said Jon Fisher, a fund manager at Fifth Third Bank, which owns Merck shares. "It's the society we live in. There are lawyers sharpening their pencils right now."

He said the market is pricing in the long-term ramifications to Merck's profitability. The company's shares fell nearly 27 percent to close at $33.00 on the New York Stock Exchange (search).

Merck said patients in a recent trial who took Vioxx for three years faced twice the risk of cardiovascular events, such as heart attack and stroke, as patients taking a placebo.

"We have substantial defenses in these cases and will defend them vigorously," said Kenneth Frazier, Merck's general counsel.

He said two class-action cases are already pending, one of which is slated for trial in the first half of 2005.

Concerns over the drug's side effects have been building in recent years after several studies showed risks attached to it. Other drugs in the same class, including Pfizer Inc.'s (PFE) Celebrex and Bextra and Novartis AG's Prexige, have so far not shown the same dangers.

Worldwide sales of Vioxx totaled $2.55 billion last year. Since its introduction in 1999, 84 million people have used the medication. In the United States alone, 91 million Vioxx prescriptions have been written.

Vioxx and the two Pfizer arthritis drugs are designed to block inflammation and pain as effectively as standard nonsteroidal anti-inflammatory drugs such as aspirin and ibuprofen, while causing far fewer ulcers and gastrointestinal problems than the older treatments.