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Derek Lowe The 2002 Model

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Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« You Can't Win If You Don't Play | Main | A Shot Across the Bow »

April 24, 2006

Merck, So Far

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Posted by Derek

So Merck's now gone 3 and 3 in Vioxx litigation. That's a preliminary count, of course, because they're appealing all the cases they've lost. For the same reason, a total of the damages against them doesn't mean very much, either. Does that leave any way to tell how things are going?

Well, you can be sure that with ten thousand or so suits that have been filed against the company so far, that the eventual record is not going to be five thousand up and five thousand down. These things don't take place independently, and there's eventually going to be a run to one side or the other. If Merck starts knocking down some more cases, that'll gradually increase the pressure for settlements in many of the remaining cases (and many others will just evaporate). But if they hit a big losing streak, not only will the existing plaintiffs and their lawyers be more motivated to hang in there, but even more cases will condense out of the vapor phase.

This last loss wasn't a good one to take, since the late defendant was overweight, smoked, had had bypass surgery and took Vioxx (at least as far as his medical records show) for all of seven days. Merck says that this verdict was an aberration which will be reversed. They'd better hope so.

So far, unless I'm quite mistaken, they haven't settled with anyone yet, and they're vowing to take on everyone in court. For that to work, I think that they're going to have to do better than 0.500. If they don't the problem will be keeping the tide from coming in while the appeals process goes on, a process which will start to resemble the Red Queen's race from Lewis Carroll. Even people who think that Merck will come out of this (and I'm one, most days) see the cost to them being around ten billion.

Which is certainly a fine use of the money, isn't it? You could probably discover a drug or two with ten billion dollars, wouldn't you think? But why do that, when you can give it to the lawyers?

Update: a similar analysis from John Simons at Fortune, who says that Merck's only choice is to fight every case.

Comments (23) + TrackBacks (0) | Category: Cardiovascular Disease


1. MolecularGeek on April 24, 2006 9:25 PM writes...

"If you pay the danegeld, you will never be free of the Dane" (my apologies to my glottal-stopping friends)

Never let it be said that I am particulary fond of lawyers, but I see exactly why Merck is taking this approach. As a poster said in the feedback to "You Can't Win If You Don't Play", the world is full of people who feel that they are entitled to perfect results and that someone must be responsible and pay damages if something doesn't work quite as well as they would hope.

I will concede that Merck made some decisions during the application process that were not in the best interests of the company, and that even if they were not criminally fraud, they LOOK really bad to a jury. But if they start trying to settle the Vioxx cases, it becomes open season for everyone who ever thought about asking for a scrip for it to put in for damages. And I don't even want to think about the collateral damage that could cause for the prescribers.

Having said all that, I think Merck needs to take a look at their legal team. These cases turn on technical evidence and statistical concepts, and I am sure that the plaintiff's counsel is being careful to screen out as many people as possible from the jury that might understand false correlation, If Merck's lawyers aren't getting the technical facts of the case across to the jury, or they are not effectively challenging the claims that the statistics were willfully cooked, maybe a new firm is in order.

My personal belief is that Merck has to fight this. We live in a society where people are in-numerate enough that they think that buying $50 in lottery tickets gives one a real edge in winning the jackpot that they see as their retirement goal. The chance of a nice settlement check from a big faceless corporation is almost as good to many. If people can't deal with that level of statistics (either for the lottery or the risks of any medication when one is in such bad shape), the only feasable option is a ferocious defence. If they roll over and offer settlements, it just becomes harder for the next company trying to survive bringing the next compound to market with the $10**9 "saved" in the settlements.

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2. secret milkshake on April 24, 2006 10:12 PM writes...

Well, few years back there were clinical results suggesting that there seems to be a serious dose-related increase in cardiovascular events with Vioxx - and Merck was not quite upfront about it. In fact, they tried to doctor the published data and hoped for "more evidence". What they got was more plaintifs....

We have a couple of colleagues here from Merck and some of them were saying that even before the Vioxx fiasco, Meck was a different (= less wonderful) place than it used to be in the glory days.

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3. Tot. Syn. on April 25, 2006 3:33 AM writes...

It certainly was for those that worked at Harlow in the UK...

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4. tom bartlett on April 25, 2006 7:52 AM writes...

"I think Merck needs to take a look at their legal team." I hope they can ultimately get the cases "kicked up" to a higher court-- maybe the Supreme Court where they can get bench trials instead of facing uneducated juries. There are a few losers on the SCOTUS these days, but anybody with a little schooling can see how utterly frivolous these cases are.

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5. Palo on April 25, 2006 9:23 AM writes...

From what I read, the 50% winning for Merck is not really good news: the wins were cases in which the plaintiffs couldn't prove they took Vioxx for more than a couple weeks...

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6. George Laszlo on April 25, 2006 9:47 AM writes...

When I was in High School, my friends and I used to sneak out in the middle of the night and take off to that hedonistic place called New York City.

On one of these occasions, I came home at about 7 a.m. with my mother waiting for me at the front door. She asked me where I had been. After answering with some lame story, I was at the receiving end of a really stinging slap in the face.

Later, she told me that the slap was not for sneaking out at night but for lying about it. This is a lesson I have never forgotten.

And so it will go with Merck. If it is determined that they lied, there will be no mercy in court. It will matter not whether Vioxx was or was not the cause of any medical problems.

The real question should be whether the punishment fits the crime.

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7. Insider on April 25, 2006 9:55 AM writes...

The Merck staff who have to give evidence at these trials again and again and again must feel like they are in some kind of "Groundhog Day Hell".

What a way to end a career!

Some might say "how appropriate".....but that's just being unkind, isn't it?

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8. Jim Hu on April 25, 2006 10:14 AM writes...

As far as I can tell, the main predictor of outcome is whether the jury is sympathetic to the victim. The split decision in NJ was bizarre, and in this case it sure looks like locals found an opportunity for wealth redistribution across state lines.

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9. MolecularGeek on April 25, 2006 11:21 AM writes...

I agree that a bench trial would probably get to something approximating the facts of the case and something resembling justice a lot faster. Sadly, all parties in civil litigation must agree to waive a jury trial, and no plaintiff's attorney is going to put the outcome of the trial (and his 35% cut) in the hands of someone who has been trained to attempt to be objective and focus on facts, especially one who they would never allow near the jury box of a case they were arguing.
The other problem is that (if I remember correctly) in most states, appeals require a basis and "we didn't like the results" doesn't cut it. Usually this takes the form of the judge or one of the lawyers involved did something against the rules of the court or there was a clear violation of law in the proceedings. Also, most appeals courts don't involve themselves in matters of fact arising from the evidence. they limit themselves to the conduct of the trial and the appropriateness of the trial court's actions. If there is a question about the appropriateness of the evidence or legitimate new facts have arisen, the usual action is to remand the case to the trial court for rehearing. In short, Merck is stuck with juries. I think they need to find better external expert witnesses, myself.

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10. tgibbs on April 25, 2006 4:15 PM writes...

I haven't seen any indication that Merck tried to "doctor the data." They reported a significantly higher incidence of cardiovascular complications in the Vioxx group. Despite some quibbling about the termination date of the study, nobody has been able to identify any unreported data that would have made a statistical difference in the reported results. And it is still unclear whether people taking Vioxx for arthritis were really at overall greater risk than people taking alternative medications.

If there is criticism to be laid at Merck's feet, it is probably that they were overoptimistic in thinking that the worse cardiovascular outcomes in the Vioxx group reflected a protective effect of naproxen. It's not an unreasonable hypothesis, but the protective effect would have had to be at the upper range of what the literature supports.

Aside from possible bad judgement, Merck's only real problem seems to be the aggressive marketing of Vioxx. While I think that it is clearly false that Merck knew of and concealed dangers of Vioxx, and it is hard to find any genuine fault with what they reported in the scientific literature (and even less so with what they reported to the FDA), there has been evidence that Merck's reps were pooh-poohing concerns about cardiovascular effects.

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11. srp on April 25, 2006 4:16 PM writes...

The key is to get an appellate ruling that there is no scientific basis (i.e. cases are inadmissable) for blaming Vioxx in any patient who took it for less than six months (or whatever the studies have shown). Then a large fraction of cases can be dismissed and the problem reduced to the smaller population of long-time users who died of heart attacks.

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12. S Silverstein on April 25, 2006 5:58 PM writes...

My opinion on this is here.

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13. Jim Hu on April 25, 2006 7:34 PM writes...

Via Volokh: Ted Frank at Point of Law makes some pretty astonishing claims about the latest Vioxx case. Commenters at Volokh are saying "consider the source", but whether or not Frank is part of the pharma-apologist choir is independent of the question of whether the picture he paints of the trial is accurate. I don't know (I'm not going to read the trial transcript). There are links in Frank's post to local news coverage, but they don't quite go so far as to argue that the deceased might not have had a prescription for Vioxx at all...but they do suggest that the usage was murky at best.

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14. secret milkshake on April 25, 2006 8:02 PM writes...

How about the missing "cardiovascular events" table that was cut out from the manuscript just before the submission to Science?

To be upfront means backward-bending honesty in presenting all available data (even if it may hurt the sales). This was not the case here.

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15. Chris on April 25, 2006 11:58 PM writes...

You mean the 3 cardiovasular events that were removed from the table of that name in the submission to NJEM, because they occured after the (predetermined) cutoff date of the CV events portion of the study?

Or was there a second and very similar instance that I am unaware of?

If the first, one could ask why Merck set an early cutoff date for that portion of the study . . .

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16. tgibbs on April 26, 2006 11:40 AM writes...

The so-called "missing" cardiovascular events (and the missing gastrointestinal event that nobody seems to mention) occurred after the pre-specified cut-off date. For statistical validity, is necessary to prespecify a cutoff date before the results are available, and for this to be an absolute deadline, because if there is any possibility for the results themselves to influence the decision of when the data collection is finished, it introduces a bias into the conclusions.

Of course, in a well-designed study, the exact timing of the cut-off should not have a big statistical impact on the conclusions, and that was true here--inclusion of the events that missed the deadline does not alter the statistical significance of the conclusions.

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17. Matt on April 27, 2006 9:02 AM writes...

"The split decision in NJ was bizarre, and in this case it sure looks like locals found an opportunity for wealth redistribution across state lines."

Actually, the NJ split decision made perfect sense if you look closely at the ruling. They found Merck failed to adequately disclose the dangers of Vioxx in both cases, yet found it was only responsible for one man's injuries - the one who took it the longest.

That appears to be a very well considered opinion.

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18. Matt on April 27, 2006 2:29 PM writes...

"Even people who think that Merck will come out of this (and I'm one, most days) see the cost to them being around ten billion."

Considering Merck's net profit was $1.5 billion last quarter alone, they'll probably easily be able to absorb $10 billion over the next decade or so.

"Which is certainly a fine use of the money, isn't it? You could probably discover a drug or two with ten billion dollars, wouldn't you think? But why do that, when you can give it to the lawyers?"

Or more accurately, you can give it to the victims, who then turn around and give it to their medical providers and health insurers, which enables them to purchase more Merck products. But don't let logic get in the way of a lawyer attack.

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19. Derek Lowe on April 27, 2006 3:08 PM writes...

Matt, if Merck does end up paying out 10 billion, how much of it do you figure that the victims will see, compared to their lawyers?

And if they're spending this money, over the next decade, on legal fees rather than on their business, what are the chances that they're still going to be pulling in the same amount of profit at the end of it all?

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20. Matt on April 27, 2006 4:20 PM writes...

60-70% will go to the victims. Of which much of the compensatory part of that award will be paid back to medical providers and health insurers. Why, do you not think the lawyers should be paid? Or would you charge less to take on a multibillion dollar company, spend literally thousands of hours of your time, and hundreds of thousands of your dollars, on a case with no guarantee of winning? And that's just one case.

Merck will probably be pulling in less profit, which means less paid out in dividends to shareholders. It doesn't mean less for R&D. Their profit margin last quarter was AFTER operating expense, which presumably includes R&D, doesn't it? So if they continue at the same profit margin, let's say of $6 billion a year, for the 5 years these cases take to try, that means R&D remains funded at exactly the same levels and they still net $20 billion. Still a fine day for the shareholders.

Of course, that assumes Merck doesn't have insurance coverage picking up some of the tab. That I don't know.

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21. weirdo on April 29, 2006 1:06 PM writes...

"It doesn't mean less for R&D".

Oh, yes it does. Ask all those scientists in Terlings Park and San Diego how they're doing -- either unemployed or working somewhere else. Or the hundreds of other (now former) Merck scientists from other sites.

There is no evidence -- none, mind you -- that taking Vioxx for a few days or even a few weeks can cause any cardiovascular harm. And yet those lawsuits are going forward and must be defended against. Clearly you can agree that those lawsuits, in the grand scheme of things, are wasteful of resources?

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22. CJD on April 29, 2006 4:43 PM writes...

"Oh, yes it does. Ask all those scientists in Terlings Park and San Diego how they're doing -- either unemployed or working somewhere else. Or the hundreds of other (now former) Merck scientists from other sites."

Merck still would have $20 billion to spend on R&D that it instead chooses to dicharge to the shareholders using our hypothetical $10 billion cost over 5 years (it would likely be a longer period). So no, the payouts to the victims don't mean less for R&D. And, considering the company itself said it planned to close those plants regardless of lawsuits as part of a global restructuring plan, I doubt that claim holds much water.

"There is no evidence -- none, mind you -- that taking Vioxx for a few days or even a few weeks can cause any cardiovascular harm."

I'm not qualified to debate the science. I have not reviewed the original reports, nor have I reviewed any of the testimony. So really, I can't agree or disagree with you. Presuming you are correct for the sake of argument, then yes, they would be a waste of resources.

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23. on August 10, 2007 10:14 PM writes...

it seems that most of you are quite bias to any type of shame merck may have commited. you talk of equal but there is not much here. more like pandering to the company.this is why they are where they are now.people are affraid to be free and are happier being drones in a nice safe line.

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