AfterShoxx - Pharmaceutical Executive


Merck's withdrawal of blockbuster Vioxx blew a $2.5 billion hole in its revenues and stirred up a storm of suspicion and speculation accompanied by a chorus of wild laments. Some perspective, anyone?

Pharmaceutical Executive

For FDA, there's a lesson: independent of who the company is, their reputation, or size, they have to look more carefully and communicate more forcefully. Albert Wertheimer, PhD, Temple University School of Pharmacy
Some say the Vioxx recall makes Merck an acquisition target, or at least narrows its options. More likely, it just makes Merck's existing strategy more urgent. Says Hall: "They're going to have to pump a fair amount of money into R&D, either into the discovery end, which probably won't pay off for a while, or into licensing products. The problem is that to fill the gap in their pipeline, they're going to have to license-in Stage III products, and those are very expensive." While the precipitous drop in their market capitalization may make them more attractive to a buyer, Hall says the downside is that they come with a rather large legal liability.

Courting Trouble With all the uncertainties surrounding the Vioxx recall, "One thing's for sure," Ryan says. "There will be enormous litigation." But the heart of that affirmation is hollow. The big question is how much will it cost, and that, Ryan says, "won't be known for some time." Stuart Talley, an attorney with Kershaw, Cutter, Ratinoff York in Sacramento, California, has a notion about that. If there were 27,000 serious cardiovascular events—the number projected by one FDA-sponsored study—"they're probably looking at somewhere between 5,000 and 10,000 cases," he says. A lot of people are comparing Vioxx to fen-phen, which has cost Wyeth $16 billion so far. But fen-phen, Talley says, "was about people with leaky heart valves but no symptoms. In this case the damages are going to be much worse—a lot of wrongful death cases, people with strokes—a lot of serious damages." The final price tag? Few would be surprised if it surpassed $10 billion.

Talley says plaintiffs' attorneys are competing to get cases because "the firms with the most cases have more control over what happens, and more juice with the defendant." At the same time, Merck will jockey with plaintiffs' attorneys over jurisdiction. "A lot of case law has come down on the side of drug manufacturers," Talley explains. "The premise is because the drug was approved by the FDA, plaintiffs who were injured can't sue on the grounds it is unsafe or had inadequate warnings. The theory is if the FDA approved the drug, they've made the decision it is safe and the label is adequate. So a lot of cases have had problems on the state and federal level." But it varies from place to place. "In some jurisdictions these rulings have no effect," says Talley. "In others, you're completely out of court." That's why there's destined to be a battle over where the cases are heard. Talley believes most "will gravitate to where cases are now filed—Los Angeles and New Jersey."


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