FOOD AND DRUG ADMINISTRATION

Merck Settles Vioxx Lawsuits

The FOOD AND DRUG ADMINISTRATION (FDA) is charged with regulating prescription medications, assessing the effectiveness of new drugs and their safety. The FDA has come under fire after heavily-marketed drugs by large pharmaceutical companies were taken off the market because of dangerous side effects. Vioxx, a drug developed and marketed by Merck & Co., promised arthritis-sufferers relief from joint inflammation and pain without the side-effects of stomach problems which can be triggered by aspirin and other types of painkillers.

In May 1999, the FDA approved rofecoxib, the actual name of the drug, as safe and effective. In September 2004, Merck withdrew Vioxx because of concerns about increased risk of heart attack and stroke associated with long-term, high-dosage use. The FDA estimated that Vioxx might have caused over 27,000 heart attacks, 30 to 40 percent of which were probably fatal, in the five years it was on the market. The withdrawal of the drug did not end matters; individual and class action lawsuits were filed against Merck by individuals who claimed personal injury. In addition 29 states and the District of Columbia began investigations of Merck's advertising of Vioxx. In November 2007 Merck reached a $4.85 billion agreement that would allow the company to settle more than 95 percent of Vioxx lawsuits. In May 2008 the company entered into a $58 million multi-state agreement over alleged deceptive advertising.

Merck withdrew Vioxx in September 2004 after it discovered that taking the drug for 18 months or longer could double the risk of patients suffering a heart attack or stroke. An FDA study issued a few weeks later confirmed these findings. Withdrawing the drug was a financial blow to Merck, as annual sales of Vioxx totaled over $2.5 billion annually. The financial exposure from lawsuits soon became apparent. The first trial took place in 2005 in a Texas state courtroom, where Carol Ernst sued Merck for the heart attack and death of her husband Robert, a Vioxx user. Ernst's lawyers alleged that Vioxx caused the fatal cardiac arrhythmia and that Merck had suppressed information about the dangers of the drug. Merck denied that Vioxx caused deaths, on the grounds that these charges have never been proven. The company also denied allegations that it concealed information, pointing out that it voluntarily withdrew Vioxx from the market. Ernst prevailed, with the jury awarding her $24.5 million for mental anguish and economic losses and $229 million in punitive damages after finding that Merck acted recklessly in selling Vioxx despite having knowledge of the drug's heart risks.

At the time of the Ernst verdict, 4,000 Vioxx lawsuits had been filed. By late 2007 over 27,000 lawsuits were pending. Merck had vowed to fight all Vioxx lawsuits and had won some favorable verdicts. Jurors had decided in favor of the company 12 times and for plaintiffs five times, with five mistrials. In a major reversal, Merck announced on November 8, 2007 that it had reached a $4.85 billion deal to settle most of the Vioxx lawsuits. The company agreed to set up two funds. The first fund of $4 billon would cover claims for hear problems and the second fund of $850 million would cover stroke claims. Amounts to individuals will vary and all claims would be reviewed on an individual basis. The settlement was reached after securing approval from three of the four federal judges overseeing the coordination of more than 95 per cent of the litigation. Merck also said that it would continue to fight those individuals who do not agree to a settlement. The change in thinking by Merck reflected financial realties. The company had reserved $1.9 billion since 2004 to defend itself and it appeared litigation would go on for many years. Plaintiffs lawyers and their clients agreed to file their claims by early 2008, with the expectation that interim awards would be issued by August 2008.

The investigation of Merck's advertising of Vioxx by over half the states was triggered by the massive amounts of money Merck spent to promote the new drug and by its alleged concealment of health risks in its print and television ads. Merck spent hundreds of millions of dollars during the five years Vioxx was on market, focusing on direct-to-consumer televisions ads. This led to hundreds of thousands of consumers demanding prescriptions before Vioxx's side effects could be fully assessed. In May 2008 Vioxx entered into settlement with the states, paying $58 million. In addition, it agreed to submit all new television commercials for its drugs to the FDA for review and revision. In both settlements Merck did not admit to any wrongdoing.