make or break time in vioxx drama

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Vol 440|16 March 2006 277 BUSINESS In a trial that opened on 6 March in Atlantic City, New Jersey, lawyers led by a charismatic Texan are trying to convince a jury that Merck’s blockbuster painkiller caused heart attacks in two allegedly long-term users. It is the first time that the company has con- fronted plaintiffs who have taken the drug for more than 18 months — the period after which, according to the study that led Merck to pull the drug in September 2004, Vioxx boosts the risk of heart attacks and strokes. That makes the stakes in the current trial arguably the highest yet. “A win for Merck may deflate the entire plaintiff case,” says Anthony Butler, an analyst who is following the litiga- tion for the investment bank Lehman Brothers in New York. The withdrawal of Vioxx, a leading arthritis treatment that earned Merck $2.5 billion in 2003, has so far led to nearly 10,000 lawsuits against the company. In the first of those, last summer, a jury in the Texas town of Angleton awarded $253 million to the widow of a man who had a fatal heart attack after taking Vioxx for eight months (see Nature 436, 1070; 2005). The award is likely to be cut to $26.1 million under a Texas law capping punitive damages. But Merck bounced back, winning the sec- ond and third cases. The second, in which a jury found that Vioxx was not responsible for the heart attack of a 60-year-old postal worker who took the drug intermittently for two months, was heard in the same New Jersey state court as the current cases. In the third, a jury in a federal court in New Orleans last month took just three hours to clear Merck of responsibility for the death of a Florida man who suffered a fatal heart attack after taking Vioxx for less than a month. These verdicts have helped Merck to recover a half of the steep drop in its share price that accompanied Vioxx’s withdrawal (see graph). In combination with the performance of other parts of its business, some observers can see light at the end of the tunnel for the belea- guered drug maker. “At the end of the day you need to separate Vioxx from the fundamentals of the company,” says Butler. “It’s about the ability to pay dividends, the ability to fund your R&D and to fund your new launches. And Merck seems to be funding its pro- grammes regardless of the outcome of this case in Atlantic City or any in the future.” Others are less sanguine. Late last month, the Arlington, Virginia, stock-research com- pany Friedman Billings Ramsey lowered its rating of Merck’s stock, citing Vioxx litigation risk among its reasons. Moving targets Published estimates of the company’s probable total liability vary wildly, from $4 billion to $50 billion. This uncertainty is reflected in Merck’s share price, says Richard Evans, an analyst who follows Merck for Sanford Bernstein, a stock- research firm in New York. “Merck’s ultimate liability remains very hard to pin down,” he says. In the latest trial, sometime Baptist preacher Mark Lanier, the folksy Houston lawyer who won the Texas award last year, is repre- senting Thomas Cona, the owner of a vascular Make or break time in Vioxx drama Cases involving long-term users of Vioxx will, as Meredith Wadman reports, determine the true cost to Merck and the drug industry of the painkiller’s withdrawal. ultrasound company, who was 57 when he had a heart attack after taking Vioxx for, he says, 22 months. But Lanier is in Merck’s home state this time. And both Cona and the other plaintiff, retired insurance agent John McDarby, sur- vived their heart attacks, potentially limiting jury sympathy. McDarby was 75, and had been taking Vioxx for four years when he suffered a heart attack after hip surgery. Both men were former smokers with high blood pressure, high cholesterol and other cardiac risk factors. Lanier acknowledges Cona’s poor heart health, but argues that this is precisely why he should never have been prescribed Vioxx. “Of course they were at risk,” he says. “Vioxx shoves you toward a heart attack. And it is those at risk who can least afford a shove.” Whether juries will buy that argument remains to be seen. The issues will broaden out in June, when an Alabama court hears the first case concerning Celebrex, a Pfizer painkiller from the same family as Vioxx and the only drug of its type still on the market. In the meantime, two victories for Merck in Atlantic City could mark a turning point in the Vioxx saga. Even one loss, however, will boost the growth of a pool of plaintiffs that could ulti- mately number in the tens of thousands. Away match: Mark Lanier hopes to repeat his Texan victory over Merck in the company’s home state. MERCK STOCK 24 30 36 42 48 2004 2005 Price (US$) 2006 J. F. MORENO/AP Nature Publishing Group ©2006

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Page 1: Make or break time in Vioxx drama

© 2006 Nature Publishing Group

Vol 440|16 March 2006

277

BUSINESS

In a trial that opened on 6 March in AtlanticCity, New Jersey, lawyers led by a charismaticTexan are trying to convince a jury thatMerck’s blockbuster painkiller caused heartattacks in two allegedly long-term users.

It is the first time that the company has con-fronted plaintiffs who have taken the drug formore than 18 months — the period after which,according to the study that led Merck to pull thedrug in September 2004, Vioxx boosts the riskof heart attacks and strokes.

That makes the stakes in the current trialarguably the highest yet. “A win for Merck maydeflate the entire plaintiff case,” says AnthonyButler, an analyst who is following the litiga-tion for the investment bank Lehman Brothersin New York.

The withdrawal of Vioxx, a leading arthritistreatment that earned Merck $2.5 billion in2003, has so far led to nearly 10,000 lawsuitsagainst the company. In the first of those, lastsummer, a jury in the Texas town of Angletonawarded $253 million to the widow of a manwho had a fatal heart attack after taking Vioxxfor eight months (see Nature 436, 1070; 2005).The award is likely to be cut to $26.1 millionunder a Texas law capping punitive damages.

But Merck bounced back, winning the sec-ond and third cases. The second, in which ajury found that Vioxx was not responsible forthe heart attack of a 60-year-old postal workerwho took the drug intermittently for twomonths, was heard in the same New Jerseystate court as the current cases. In the third, a jury in a federal court in New Orleans lastmonth took just three hours to clear Merck ofresponsibility for the death of a Florida manwho suffered a fatal heart attack after takingVioxx for less than a month.

These verdicts have helped Merck to recovera half of the steep drop in its share price thataccompanied Vioxx’s withdrawal (see graph).In combination with the performance of otherparts of its business, some observers can seelight at the end of the tunnel for the belea-guered drug maker. “At the end of the day youneed to separate Vioxx from the fundamentalsof the company,” says Butler. “It’s about theability to pay dividends, the ability to fundyour R&D and to fund your new launches.And Merck seems to be funding its pro-grammes regardless of the outcome of thiscase in Atlantic City or any in the future.”

Others are less sanguine. Late last month,the Arlington, Virginia, stock-research com-pany Friedman Billings Ramsey lowered itsrating of Merck’s stock, citing Vioxx litigationrisk among its reasons.

Moving targetsPublished estimates of the company’s probabletotal liability vary wildly, from $4 billion to $50billion. This uncertainty is reflected in Merck’sshare price, says Richard Evans, an analyst whofollows Merck for Sanford Bernstein, a stock-research firm in New York. “Merck’s ultimateliability remains very hard to pin down,” he says.

In the latest trial, sometime Baptist preacherMark Lanier, the folksy Houston lawyer who won the Texas award last year, is repre-senting Thomas Cona, the owner of a vascular

Make or break time in Vioxx dramaCases involving long-term users of Vioxx will, as Meredith Wadman reports, determine the true cost to Merck and the drug industry of the painkiller’s withdrawal.

ultrasound company, who was 57 when he had a heart attack after taking Vioxx for, hesays, 22 months.

But Lanier is in Merck’s home state thistime. And both Cona and the other plaintiff,retired insurance agent John McDarby, sur-vived their heart attacks, potentially limitingjury sympathy. McDarby was 75, and had beentaking Vioxx for four years when he suffered aheart attack after hip surgery. Both men wereformer smokers with high blood pressure,high cholesterol and other cardiac risk factors.

Lanier acknowledges Cona’s poor hearthealth, but argues that this is precisely why heshould never have been prescribed Vioxx. “Ofcourse they were at risk,” he says. “Vioxxshoves you toward a heart attack. And it isthose at risk who can least afford a shove.”

Whether juries will buy that argumentremains to be seen. The issues will broaden outin June, when an Alabama court hears the firstcase concerning Celebrex, a Pfizer painkillerfrom the same family as Vioxx and the onlydrug of its type still on the market.

In the meantime, two victories for Merck inAtlantic City could mark a turning point in theVioxx saga. Even one loss, however, will boostthe growth of a pool of plaintiffs that could ulti-mately number in the tens of thousands. ■

Away match: Mark Lanier hopes to repeat his Texan victory over Merck in the company’s home state.

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