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Legal experts play Monday-morning quarterback with Merck's first Vioxx loss. The lessons, they say: learn to present science better, pay attention to jury emotion and, oh yes, worry about shareholder lawsuits.
After a day and a half of deliberations, a Texas jury found Merck & Co. liable in the 2001 death of 59-year-old Robert Ernst on August 19. His widow, Carol, was awarded $253 million, which will be reduced to $26 million in accordance with Texas law.
Merck recently stated that it is willing to consider settling in specific cases, where the plaintiff took Vioxx for more than 18 months and had no additional risk of heart disease.
In the aftermath of the verdict, experts on both sides are saying that the presentation of scientific information was the key to Merck’s loss.
“I thought this was a case where, because of causation issues, Merck actually had a pretty good shot at winning,” said Stephen Bainbridge, a professor of corporate law at the University of California Los Angeles.
The heart of the issue is that Ernst took the drug for less than the 18 months that clinical studies identified as dangerous. In addition, his official cause of death was arrhythmia, which is not listed as one of the risks associated with Vioxx.
“The most important part of that case is that the science seemed to have very little impact on the jurors,” said John Calfee, resident scholar at the American Enterprise Institute.
Tom Dewey, partner at Dewey Pegno & Kramarsky LLP, suggested that the jurors either rejected or failed to understand all of the scientific defenses presented by Merck’s laywers.
But Evan Schaeffer, a partner at Schaeffer and Lamere PC who is involved in prosecuting Vioxx cases on the Illinois and Missouri border, said that both sides presented valid science. The jury heard expert testimony backing both sides and decided that the plaintiff’s proof of causation was more powerful than the evidence presented by Merck scientists.
For example, Schaeffer pointed to the testimony of the doctor who performed Ernst’s autopsy. She indicated that the arrhythmia could have been caused by a heart attack, which in turn was caused by a blood clot. Blood clots and heart attacks are associated with Vioxx’s risk profile.
According to Schaeffer, the plaintiff’s lawyer, Mark Lanier, “presented a theory about causation that held together better.”
“I’m sure Merck lawyers had reasons for presenting the way that they did,” Schaeffer said. “But definitely one of the conclusions that could be reached is that the plaintiff had a better way of presenting evidence.”
In future trials, Merck will have to break the science down into more simple components, suggested Dewey.
“The science here was very good for Merck. If you are Merck you need to be able to communicate that very clearly, very simply and repeatedly,” Dewey said. “That’s a very hard thing to do, but it’s do-able.”
The Internal Documents:
Another problem in Merck’s defense, Dewey noted, was that witnesses for the company seemed unprepared to respond to internal documents that were used by the plaintiff in cross examination.
“You have to have a playbook for dealing with unhelpful internal documents,” he said.
Calfee indicated that for Merck to win future cases, it would have to prove that internal documents addressing risks are a normal part of day-to-day communications at a pharma company. He suggested Merck should have two witnesses who testify that expressing doubt in internal communication is standard – one from inside the company and one external expert in corporate culture.
Merck lost the suit because the jurors were angry with the company, according to Calfee.
“The jury seemed to be working backwards,” he said, explaining his belief that they used their anger to arrive at the verdict rather than causation.
Lanier managed to shift the focus from causation to the fact that Merck aggressively market a product that was at some point associated with increased risks, Bainbridge explained. The jury bought into the idea that the company knew of Vioxx’s risks and failed to disclose them, he said.
Schaeffer indicated that although causation will vary from trial to trial, the case against Merck’s marketing tactics and the argument that the company knew of risks long before it warned the public would be similar.
In order to win in the future, Bainbridge believes the company needs to confront this tactic and convince the jury to look past it in order to focus on causation, he said.
Merck needs to create thematic development throughout the next trial, Dewey suggested. The company should present a strong case for what they stand for and the commitment to science and integrity that once brought then the nickname St. Merck, he continued.
“None of that story seemed to come out,” he said
The Bigger Picture:
Dewey believes that the results of the Texas trial will have an impact on the way other pharma companies handle product liability trials.
“You have to be troubled by this verdict,” he said.
Bainbridge predicted that the verdict could discourage pharma companies from developing new drugs.
“We may see an effect here of pharma companies becoming even more risk averse in terms of developing new drugs,” he said. “This may create an incentive to focus on one or two new drugs.”
But Schaeffer disagreed. Fen Phen litigation cost Wyeth a lot of money but that company still has a healthy pipeline, he claimed.
Bainbridge also expressed concern that Merck shareholders could file lawsuits.
“It wouldn’t surprise me if somebody sued,” he said.
Dewey indicated that shareholder suits related to the drop in stock price after Merck pulled Vioxx from the market are already out there. He said it is possible that more could be filed on the basis of an allegedly unsatisfactory defense, but he thought it unlikely.
Bill Lerach, partner at Lerach, Coughlin, Stoia, Geller, Rudman and Robbins LLP, is representing a pending derivative suit against Merck alleging directors and officers’ misconduct. He predicted that the results of suits like the Ernst trial could impact the results of shareholder and derivative suits.
Shareholder suits have already impacted Merck’s insurance premiums, according to industry experts. An underwriter at a multinational insurance company said that a $25 million dollar claim resulted in Merck having to change its policy with his company to cover only non-indemnifiable claims against directors and officers. Continuing its previous plan would have increased Merck’s premiums by almost 100 percent. He indicated that premiums for other Cox-2 manufacturers have also gone up as a result of this type of liability.
But University of Connecticut law professor, Tom Baker, said that this increase was unlikely to influence the impact premiums for the industry as a whole.