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Troubles Just Beginning For Merck

Vioxx trial, Plaintiff Carol Ernst, center, and her attorneys Randy Moore and Ben Morelli react to the jury's verdict in her favor in her case against Vioxx maker Merck Co. Friday, Aug. 19, 2005, in Angleton, Texas.
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The huge jury award to a plaintiff in the nation's first Vioxx case is likely to inspire thousands more suits on top of the 4,200 already filed against the drug's maker, Merck & Co., and push liability estimates that reach $18 billion even higher, analysts said.

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.