Day on Torts
I watched some of the news coverage on the Vioxx verdict and have some more thoughts….
First, Merck lost $5B in market cap in a few hours. I am not sure the losses are over. It is clear that the jury did not believe Merck. The jurors I saw interviewed seemed intelligent. They were just outraged that Merck knew about a problem and tell not warn about it. Any investor who saw juror interviews would be more concerned about the value of the company than he or she was before seeing the interviews.
Second, we all know now that thanks to the lobbyists and the Texas legislature the punitive verdict will be cut down below $2,000,000. My guess is that the compensatory verdict will be cut, too – it certainly would be cut in Tennessee.
Third, I was shocked at some of the commentators who talked about the need of consumers to be more aware of the risks of the drugs they consume. This is generally true, but the point here was that consumers could not be aware because Merck did not disclose the risks. All of this drug advertising lures people in to a false sense of security about drugs, and simply putting information in fine print in a package insert is an inadequate method of warning of the risk.
Fourth, I did not see any interview where the jurors were asked about the perceived value of Vioxx vs. NSAIDs. My information is that Vioxx had little additional value, especially when compared with the risk, unless the patient had GI problems that ruled out the used of NSAIDs. If the jurors came to believe that, then Merck is in big trouble – they sold an unreasonably dangerous product without value.
Of course, Merck thinks the drugs have value, as indicated by this NYT story. And, as I indicated above, for some patients they undoubtedly do. But for all patients with arthritic pain?
As I said yesterday the next few trials are huge. If Merck racks up two or three losses in a row – whatever the size, they are going to be in a deep hole.
Congradulations to Mark Lanier and his trial team. I am a part of the Vioxx litigation group and will get the opportunity to read the trial transcripts. I can’t wait.