By ALEX BERENSON
http://topics.nytimes.com/top/reference/timestopics/people/b/alex_berenson/index.html?inline=nyt-per
KEENE, Tex. - In Carol Ernst's eyes, two years ago she won a measure of justice.
On Aug. 19, 2005, a Texas jury awarded Mrs. Ernst $253.5 million after concluding that Merck & Company and its painkiller Vioxx had caused the death of her husband, Robert, in 2001. At a news conference after the verdict, Mrs. Ernst said she was pleased that jurors had punished Merck for hiding Vioxx's heart risks. "This has been a long road," she said. "I just know that it was a road that I had to run and I had to finish."
But her comfort was premature. Merck, the third-largest American drug maker, appealed the verdict - which Texas laws on punitive damages automatically reduced to $26.1 million. Until higher courts rule on the appeal, Merck is not obligated to pay. So Mrs. Ernst, 62, has yet to receive any money.
In fact, none of the 45,000 people who have sued Merck, contending that they or their loved ones suffered heart attacks or strokes after taking Vioxx, have received payments from the company. The lawsuits continue, for now in a state of legal limbo, with little prospect of resolution.
In combating the litigation, Merck has made an aggressive, and so far successful, bet that forcing plaintiffs to trial will reduce the number of Vioxx lawsuits and, ultimately, its liability.
Promising to contest every case, Merck has spent more than $1 billion over the last three years in legal fees. It has refused, at least publicly, to consider even the possibility of an overall settlement to resolve all the lawsuits at once.
The strategy's successes, from the view of Merck and its shareholders, are clear. In the last year, the company has won most of Vioxx cases that have reached juries. Though its stock plunged immediately after the Robert Ernst verdict, it has since risen 80 percent, easily outpacing those of other big drug makers. And estimates of Merck's ultimate liability, once as high as $25 billion, are now closer to $5 billion, said C. Anthony Butler of Lehman Brothers .
The Merck executive most closely associated with the company's strategy, Kenneth Frazier, its general counsel, has prospered. In July, Mr. Frazier was promoted to president of the global human health division, where he oversees the marketing and sales forces, half of Merck's 60,000 employees.
When Merck withdrew Vioxx from the market in 2004, after a clinical trial found that the drug increased the risk of heart attacks when taken for 18 months or more, some predicted the company's doom. More than 20 million people in the United States had taken Vioxx, and some scientists estimated that as many as 100,000 might have suffered heart attacks. Merck said it had adequately warned patients and doctors of Vioxx's heart risks and that it never knowingly endangered patients.
The pace of Vioxx-related lawsuits, after soaring in 2005 and 2006, has fallen slightly this year, as plaintiffs' lawyers shy away from cases where they lack strong evidence that their clients took Vioxx for several months before having a heart attack. Lawyers have withdrawn several cases as they were about to go to trial.
"It seems to have worked quite well," Peter Schuck, a professor at Yale Law School who specializes in complex litigation, said of Merck's strategy. "They have discouraged the plaintiffs' bar from litigating these cases." The legal system is not set up to try thousands of cases at once, and nearly all Vioxx lawsuits are caught up in the pretrial process.
Plaintiffs' lawyers have tried to get the courts to combine all the potential suits into a single class action. But judges have rejected that tactic. Because the facts of individual cases can vary greatly, each case must be tried separately, courts have ruled.
So far, fewer than 20 Vioxx suits have reached juries, an average of 9 in each of the last two years. At this rate, the backlog of Vioxx cases will take years to work through and many plaintiffs may die before they get their day in court.
Even if they win, it will take years for plaintiffs to be compensated. Merck has appealed every case it has lost. In the case of Mrs.
Ernst, if her award is upheld, she will not be paid before 2010 at the earliest, her lawyer, W. Mark Lanier of Houston, said.
After the 2005 verdict, analysts wondered how Merck would overcome evidence presented in the case, showing that the company had been concerned about Vioxx's potential heart risks as early as 1997, two years before it began selling the drug.
"The possibility of increased C.V. events is of great concern," a Merck scientist, Dr. Alise Reicin, wrote in a 1997 e-mail message." "C.V. events" is medical shorthand for cardiovascular incidents like heart attacks. "I just can't wait to be the one to present those results to senior management," Dr. Reicin's message continued.
Other documents offered at the trial showed that in March 2000, Dr. Edward M. Scolnick, then Merck's top scientist, said a clinical trial had confirmed Vioxx's risks. Documents also showed that Merck resisted efforts at the Food and Drug Administration to add clear warnings to Vioxx's label.
Even after losing the Ernst case, Merck did not back down from its strategy of fighting every case. The company may have felt it had little choice, said Benjamin Zipursky, a law professor at Fordham University, who has followed the Vioxx litigation. Heart attacks are the most common cause of death in the United States, and more than 105 million Vioxx prescriptions were written in the five years before Merck stopped selling the drug. If it had not taken a hard line, Mr. Zipursky said, Merck would have faced an essentially unlimited pool of plaintiffs.
Merck has said it could not be certain that Vioxx caused heart attacks before seeing the results of a clinical trial in 2004. The company has also focused on making plaintiffs prove, with prescription records, that they took Vioxx continuously for months or years before a heart attack. It has also pointed out at trial that patients had other risk factors, like obesity or high cholesterol.
"We're continuing our strategy of looking at each case on the individual facts," said Theodore V. H. Mayer, a partner at Hughes Hubbard & Reed, the law firm coordinating Merck's defense. "Did they really have a heart attack? Did they really take the medicine? Did they take the medicine in proximity to the heart attack?"
Mr. Mayer said Merck was trying to clear the backlog of 45,000 cases. The company is moving through pretrial discovery - the process of learning the basic facts in a case - in 500 lawsuits in New Jersey alone, he said. The company faces 16,000 lawsuits in New Jersey.
Mr. Mayer said Merck had not yet found a single case where it believed that Vioxx caused a heart attack. Heart attacks are "a very, very common injury that occurs with or without medicine in many people," he said.
It is that attitude that infuriates the plaintiffs' lawyers. They say that since Merck has acknowledged that Vioxx can cause heart attacks in people who take it for more than 18 months, the company should be moving to settle some cases.
"Merck's goal is to manipulate the legal system to deprive justice to tens of thousands of people whose cases can never be heard," said Mr. Lanier, the lawyer who represented Mrs. Ernst. "Justice delayed is justice denied." He and other leading plaintiffs' lawyers say they will continue to pursue cases against Merck.
Robert J. Gordon, a partner at the law firm of Weitz & Luxenberg in New York, which represents about 3,300 Vioxx plaintiffs, maintains that pressure on Merck to reach a broad settlement may increase in 2008.
Judge Eldon E. Fallon in New Orleans, who is overseeing the 8,000 federal lawsuits filed against Merck, and Judge Carol E. Higbee in Atlantic City, who is overseeing state court suits in New Jersey, may be tiring of Merck's refusal to settle, Mr. Gordon said. "The courts are in the business of removing cases from their dockets," he noted.
But Mr. Schuck, the Yale law professor, said that plaintiffs might be disappointed if they think that pressure from judges will get Merck to settle. A faster trial calendar might actually benefit the company, which can coordinate its defense experts and trial teams more easily than the plaintiffs can, he said. And Merck's recent run of successes - it has won five of the last six cases and seven of the last nine, including one mistrial - has given it the upper hand, Mr. Schuck said. "Nobody can make them settle," he said.
Of course, the case against Vioxx is not settled either, and Merck's exposure continues. In the cases the company has lost, it has faced large damage awards. And it still faces the possibility of a class-action lawsuit from the insurers, states and other third-party groups that provided insurance coverage. The New Jersey Supreme Court, for instance, is considering whether a lawsuit should be allowed to proceed as a class action or whether different insurers should be forced to bring separate suits.
Several state attorneys general have sued the company, and federal prosecutors continue to investigate.
That leaves plaintiffs like Carol Ernst with little to do but wait."They could have all of their money and everything I own if they would just give him back to me," she said of her husband. "But they can't do that."
Copyright 2007
