Fallout Over Vioxx

This is a partial transcript from "Your World with Neil Cavuto," September 30, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: Let the lawsuits begin. No sooner does drug giant Merck (search) pull its arthritis drug off the market, then the lawyers take off after Merck.

A lawsuit filed just hours ago in Oklahoma City on behalf of an Oklahoma County resident, alleging Merck failed to warn that taking Vioxx (search) could increase users' risk of a heart attack. The suit is the first since Merck pulled the drug worldwide today. An unusual move, but it likely won't be the last.

The news was enough to knock the stuffing out of Merck's stock. It crashed nearly 29 percent today alone. And since it is a Dow Jones Industrials component, it sent that average careening, as well.

Not a good day for Merck boss Ray Gilmartin, who told me earlier, he's confident the company can come back.

(BEGIN VIDEOTAPE)

RAYMOND GILMARTIN, CEO, MERCK PHARMACEUTICALS (MRK): I think that patients and physicians and caregivers will look upon this action as being highly responsible. And the fact that we are shows our first priority is for patients' safety.

And as you say, this is a highly unusual move for a pharmaceutical company. We could have kept the drug on the market, we believe. We would have added the precaution or some additional information, prescribing information, that described this.

But we felt, since there are alternative therapies, this study raises important questions that people have been on the drug more than 18 months.  And, therefore, it was in the best interest of patient safety to withdraw this drug.

And this is the image that Merck has in terms of ethics and values, and the decision is totally consistent with that.

CAVUTO: The only reason why I mention it, though, sir -- and I don't want to sound like Oliver Stone -- but methinks that maybe you were suspecting there were bigger problems here than meet the eye, that maybe there could be substantial litigation facing Merck.

There's been a great deal of questions as to your own future at the company, Mr. Gilmartin, exactly who would succeed you. Not the best of times for you.

GILMARTIN: Well, I would say that it is not the best of times for Merck and as a company and all of its employees, because this is a very big decision.

But I think that what's important here is that, you know, everyone at Merck and the people involved in this decision, including our board of directors, see this as the responsible course of action.

CAVUTO: But sorry sir. Here is what I'm not clear on, sir. I guess now the question is going to be asked, post-Vioxx, the future of Merck.  You have some partnerships with Schering-Plough. Many people say it's just a matter of time before you're forced to merge with somebody.

Do these developments today make that much more likely?

GILMARTIN: Not at all. I mean, the thing is, is that we're a very financially strong company. We were strong before this decision. We're strong after this decision. We've got very strong cash flow. We've got a strengthening pipeline.

We've expanded our external relationships for new drugs, both early- stage compounds as drugs and development later stage. And so, therefore, we've got a pretty strong line-up going forward of new product introductions.

So, therefore, our strategy of pursuing novel medicines is very much intact.

(END VIDEOTAPE)

CAVUTO: All right, Ray Gilmartin of Merck.

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