The Marketplace Report: Merck's Vioxx Strategy

Alex Chadwick talks to John Dimsdale of Marketplace about a new legal strategy for drug maker Merck, which faces thousands of lawsuits over its pain drug Vioxx. Merck is considering settling a few cases with patients who say they were harmed by the drug, and who fit a very narrow medical profile.

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ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

The pharmaceutical company Merck says it will consider settling out of court with some of the people who claim to have suffered heart problems after taking the company's drug Vioxx. Merck took Vioxx off the market about a year ago after studies showed people taking the painkiller over a long time could double their risk of heart attack or stroke. We're joined by "Marketplace's" Washington bureau chief, John Dimsdale.

John, this is a big deal for Merck.

JOHN DIMSDALE ("Marketplace"): It is. The stakes for Merck and really the whole pharmaceutical industry are pretty high. Last week's jury decision that Merck pay $250 million to the widow of a man who died after taking Vioxx for only eight months was pretty sobering. There are already 5,000 other Vioxx lawsuits and, potentially, tens of thousand more. Until now, Merck's been saying it will aggressively defend itself in each case, but the company's general counsel is now saying it'll consider settling some of those cases without a trial.

CHADWICK: And why do you think there's this change in strategy?

DIMSDALE: Well, in most injury cases, the burden of proof is on the plaintiff to show that they suffered a heart attack or got heart disease because they took the drug. Just think of all the many factors that contribute to cardiovascular problems. There's diet and exercise, lifestyle, even the genes that you inherit. So Merck probably figured that it would be hard for people to prove that Vioxx was the definitive cause. But in last week's court case, the jury decided there was enough evidence, the company should have known Vioxx is a danger for the heart, and they held the company responsible. Industry analyst Hemant Shah says if juries feel Merck disregarded the dangers or even tried to cover up the evidence while at the same time aggressively advertising Vioxx to the public, then the company's going to have a hard time defending itself case by case.

Mr. HEMANT SHAH (Industry Analyst): With the ferocity Merck has defended Vioxx, Merck has basically lost credibility among juries--at least the Texas jury. And if that becomes the case throughout the country in future cases, then Merck's in trouble.

CHADWICK: Well, John, what happens now with the lawsuits against Merck?

DIMSDALE: They are piling up. There are reports of a flurry of new ones just since last week's case in Texas. The next one is in New Jersey, and it's brought by the family of a man who suffered a fatal heart attack after taking Vioxx only two months. Still, Merck says it will not consider any sort of global settlement with all of the 5,000 lawsuits pending so far. The company's trying to shift lawsuits into federal courts, where judges limit some of the evidence that plaintiffs' lawyers can introduce.

Coming up later today on "Marketplace," we take a look at why lenders are offering home loans without proof of income. These low-documentation arrangements are sometimes called liar loans.

CHADWICK: Thank you, John. John Dimsdale of public radio's daily business show, "Marketplace," from American Public Media.

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