Merck got hammered twice yesterday, first in New Orleans and then in New Jersey.
In New Orleans, a federal court jury ordered Merck to pay $51 M to a retired FBI agent who suffered a heart attack after taking Vioxx for three years. The case was a "must win" for the plaintiffs in the Vioxx litigation, who lost the first Vioxx trial in the federal court case track several months ago.
In New Jersey, Judge Higbee granted a motion for new trial in a case lost by a Vioxx plaintiff several months ago, a case tried before it became public knowledge that Merck had played games with the data underlying a published study on the "safety" of Vioxx. The Judge "said that jurors should not have had to consider the [New England Journal of Medicine] article without knowing that its editors believed that Merck had misrepresented the results of the trial." Judge Higbee is presiding over 7100 suits in New Jersey.
Then, the cigarette manufacturers got hammered in federal court by Judge Kessler. She "agreed with the government that leading tobacco companies conspired to break anti-racketeering laws and deceive the public about the health risks of smoking for about 50 years." She said the companies "suppressed research, they destroyed documents, they manipulated the use of nicotine so as to increase and perpetuate addiction … and they abused the legal system in order to achieve their goal — to make money with little if any regard for individual illness and suffering, soaring health costs or the integrity of the legal system." Hamstrung by federal court rulings that limited her ability to award damages, she ordered the companies to make corrective statements to the public about its conduct and "to stop making false statements about the health effect of cigarettes, to stop stating that cigarettes advertised with descriptions such as "light," "low-tar" and "mild," are less hazardous than other types." She also ordered injunctive relief concerning future violations of the RICO laws – a real potential hammer. Read a story about the ruling here. The ruling itself is here but I would recommend that you pour yourself another cup of coffee before you read it – it is 1653 pages long, plus exhibits. Read the table of contents to get a flavor for the opinion.
I paged through it a saw a couple things that were make me want to read the whole thing:
* "Despite their internal acknowledgment of the hazards of secondhand smoke, Defendants have fraudulently denied that ETS causes disease. That public position and Defendants’ efforts to deny and distort the scientific evidence of the harmfulness of ETS are evidenced not only in decades of press releases, reports, booklets, newsletters, television and radio appearances, and scientific symposia and publications, but in evidence of concerted, multifaceted public relations strategies designed to counter mainstream scientific publications." Page 1523
* "Throughout the past fifty years, Defendants have engaged in parallel efforts to suppress, conceal, and destroy documents and information in furtherance of the Enterprise’s goals of (1) preventing the public from learning the truth about smoking’s adverse impact on health; (2) preventing the public from learning the truth about the addictiveness of nicotine; and (3) avoiding or, at a minimum, limiting liability for smoking and health related claims in litigation. These activities occurred despite declarations by Defendants that (a) they did not conceal, suppress or destroy evidence, and that (b) they shared with the American people all pertinent information regarding the true health effects of smoking, including research findings related to smoking and health. Page 1526
* "The Findings of Fact overwhelmingly demonstrate that Defendants took deliberate steps to protect,execute, and further the fraudulent scheme by making statements that they knew were not true. Again, to give but one example, the members of the Tobacco Institute Executive Committee, comprised of cigarette company Defendants’ executives, approved TI communications directed to the public that promoted the fraudulent position that there was an “open question” regarding whether smoking or nicotine is addictive. At the same time, each of those executives’ companies had knowledge both that smoking and nicotine are addictive and that smoking causes disease." Page 1582
* "As Defendants’ senior executives took the witness stand at trial, one after another, it became exceedingly clear that these Defendants have not, as they claim, ceased their wrongdoing or, as they
argued throughout the trial, undertaken fundamental or permanent institutional change." Page 1634
I am willing to bet that this opinion will be bound and available for purchase in book stores within one month.
You can read the Final Judgment and Remedial Order here. Take a look at the provisions enjoining the companies from violating the RICO laws and think what that means to the future of the industry.