Merck wins big in Vioxx lawsuits

May 29, 2008, 8:38 PM UTC
Fortune

Merck, the giant pharmaceutical maker, scored two major victories Thursday in its ongoing defense of lawsuits stemming from its Vioxx painkiller. A Texas appeals court overturned one verdict and a New Jersey appeals court partially overturned another. In all, more than $35 million in damages was lifted from Merck’s shoulders. Here’s the AP story.

The court triumphs could help Merck end its Vioxx headache, more than three years after it withdrew the medication after a study showed it increased the risks of heart attack and stroke. Hit with thousands of lawsuits, Merck agreed last year to a $4.85 billion settlement, which is not yet final. Some Vioxx litigants have opted out of the settlement in the hopes of taking their case to trial. Thursday’s decisions suggest that they might be better off accepting a piece of the settlement pie.

The Texas case was the one that kicked it all off in August 2005 – a $253 million verdict that standout plaintiffs attorney Mark Lanier won for Carol Ernst, whose husband had died from a heart arrhythmia while taking Vioxx. That award had already been reduced to about $26 million, under a Texas tort reform law limiting punitive damage awards, but now it’s been thrown out altogether. It’s important to note that the court didn’t order a new trial. Instead, it found the evidence was insufficient to show that Vioxx caused Mr. Ernst’s death, period. Lanier plans to appeal the ruling to the Texas Supreme Court.

In the New Jersey case, an appeals court found the $9 million punitive-damages portion of a $15.7 million verdict awarded to John McDarby in 2006 was preempted by federal law. The court also threw out more than $2 million in attorneys fees that had been awarded to McDarby under New Jersey’s consumer fraud law.

I’m still digesting the 126-page New Jersey ruling, but the preemption part appears to stem from a 2001 U.S. Supreme Court ruling barring state claims based on alleged frauds upon the U.S. Food and Drug Administration. The court also appears to have held that the case was, for all intents and purposes a products liability case, in which the plaintiff can’t typically force the defendant to pay for attorneys fees. The ruling is here. Because the court also rejected many of Merck’s arguments concerning the compensatory portion of the award, Merck has already vowed to appeal those portions of the ruling.

The Texas ruling is not one that automatically spells doom for many other Vioxx plaintiffs. Ernst’s husband died of an arrhythmia, and proof that Vioxx can cause arrhythmias is weaker than proof that it can cause clot-induced heart attacks. Nevertheless, the case does suggest that this Texas appeals court, like the different Texas appeals panel that threw out another large Vioxx verdict two weeks ago, is imposing very high standards for proof of ‘specific causation’ — i.e., proof that a plaintiff’s particular heart-related death was actually caused by Vioxx, as opposed to other cardiac risk factors. (The verdict tossed two weeks ago was that of Felicia Garza case, whom the jury awarded $32 million. That had been reduced to about $8 million under the tort reform law, before the appellate court threw the rest out.)

Most Vioxx plaintiffs with cases still outstanding against Merck (MRK) have already indicated a willingness to accept the terms of the $4.85 billion global settlement. But Thursday’s rulings may spur the opt-outs to reconsider.