Merck & Co.'s stock sank $2.35, or 7.7 percent, to close at $28.06. The jury awarded $253.4 million in damages to Carol Ernst, a widow of a man who died in 2001 of heart arrhythmia, or irregular heart beat, after taking Vioxx for around eight months. The company plans to appeal.
Merck yanked the popular pain reliever from the market last September after a study found it doubled patients' risks of heart attacks and strokes after 18 months.
The loss is especially damaging because Merck initially had been expected to win what was considered a weak case because no studies have linked Vioxx to arrhythmia.
Some of the other cases are presumably stronger than Ernst's case. Now lawyers and analysts expect a flood of new suits. Merck has set aside $675 million to fight them, but analysts think it may have also need to reserve funds to pay verdicts.
CBS News Legal Analyst Andrew Cohen says Merck now has to figure out how it will defend itself in all these other lawsuits.
"Clearly, the legal strategy it had used in this case was a catastrophe," Cohen says. "Whether that means we'll see more settlements, or a completely different legal defense, or something even more dramatic like bankruptcy is the question going forward."
David A. Logan, the dean of Roger Williams University School of Law, was more succinct: "Plaintiff lawyers are sharks and they smell blood."
A seven-man, five-woman jury deliberated for 10½ hours over two days before returning the verdict in a 10-2 vote. The damage award will likely be cut drastically to no more than $26.1 million because Texas law caps the punitive damages that made up the bulk of the total.
U.S. Food and Drug Administration researcher David Graham published an article last year in the British medical journal, The Lancet, that said between 88,000 and 140,000 people suffered serious cardiovascular events related to Vioxx. Plaintiff lawyer Mark Lanier said the verdict has emboldened more of those people or their families to file suits.
CBS News Correspondent Anthony Mason reports that Lanier admitted the fight is far from over.
"But we got justice and we got the verdict we wanted whether we see a penny or not. The truth is out there," said Lanier.
Lanier added, "My message to Merck is that I'm just warming up."
If this verdict marks the beginning of a losing streak, Merck may back away from its pledge to try each case individually and not settle any, experts said. But they said a rash of verdicts would be necessary before the company changes its strategy.
"Merck says there will be no surrender, but you have to wonder about that," said Anthony Sebok, a professor at Brooklyn Law School.
But Merck lawyer Ted Mayer reiterated the company's position that it intends to try each case. He said that even in cases where the patient suffered a heart attack or stroke, plaintiffs face a "high burden" in proving Vioxx was a cause.
Lanier convinced the jury that Vioxx contributed to the death of the plaintiff's husband, Bob Ernst. Lanier flew Dr. Maria Araneta, who performed Ernst's autopsy, in from the United Arab Emirates, where she had moved since performing the autopsy in 2001. She testified that although her report said Ernst died of an arrhythmia, it was likely he had a heart attack.
"I'm not changing my opinion, I'm just explaining it further," Araneta testified. "That's the autopsy report, but it's not the end of the story."
She said Ernst probably had a heart attack because a clot blocked the blood flow in an artery that was already clogged with plaque. She also said CPR conducted on Ernst probably dislodged the clot.
Jurors said they felt Araneta's testimony was compelling and didn't dwell on the technical differences between heart attacks and arrhythmias.
"We felt there was a reason he had a heart attack," said juror John Ostrom, a 49-year old contractor. "We felt Vioxx was a reason."
Lanier's case provided other plaintiff lawyers with a blueprint for how to prove Merck behaved irresponsibly in promoting Vioxx, said Zipursky.
"A Merck loss means the jury believes the plaintiff story about the company's wrongful conduct," said Zipursky. "That carries into the future."
Jurors said there was abundant evidence that Merck put profits over patient safety. Among the most damaging was a 1997 e-mail from a Merck researcher who discussed Vioxx's cardiovascular side effects two years before the drug was launched and a document that outlined the company's determination to beat Pfizer Inc.'s competing drug Celebrex to the market.
Merck would be foolish to dismiss Lanier's win as a fluke resulting from a talented Texas lawyer using his abundant Southern charm in what is considered a plaintiff-friendly venue, attorneys warned.
"Mark Lanier is an extraordinarily gifted attorney. But there are a lot of other gifted plaintiff attorneys and other favorable venues," said Charles Rhodes, a law professor at South Texas College of Law in Houston. "Maybe Merck will get less damages outside of Southeast Texas, but there will still be damages."
Next month, Merck faces a trial in Atlantic City, N.J., brought by Michael Humeston, a former postal worker, who had a heart attack in 2001. Humeston's lawyer, Chris Seeger, said Humeston still has lingering effects from the heart attack. Vioxx has been directly linked to heart attacks.
In November, the first of 1,800 federal cases will be heard in New Orleans. The case concerns Richard Irvin, a Florida man who was taking Vioxx for a month before his 2001 death from a blood clot in his heart. Scientists have speculated that Vioxx causes cardiovascular problems because it blocks a substance that keeps blood from clotting.