Merck: Case Closed?

You knew it couldn't last forever. Every time I heard a Merck (NYSE: MRK  ) lawyer say that the company would fight each and every one of the 60,000 Vioxx lawsuits, I just laughed at the posturing. A settlement was the only way to get the looming unknown off its back; the only question was when and for how much.

Now we know the answers -- last Friday and $4.85 billion. That number may sound large, but given the $1.2 billion the company has already spent on legal fees, it looks like Merck is getting off pretty easy.

Patients will be able to get a piece of that settlement if 85% of the plaintiffs agree to the deal. My guess is that plaintiffs will jump at the guaranteed money, given that Merck has so far won 10 out of 15 Vioxx-case rulings.

Merck claims to have covered its basis and protected itself from ballooning settlement costs. It certainly doesn't want to follow in Wyeth's (NYSE: WYE  ) footsteps with its fen-phen settlement, which has increased five times above the original $3.75 billion after repeated revisions. Only time will tell whether the settlement is really as ironclad as the high-paid lawyers say it is.

Now that the Vioxx issue is mostly behind it, Merck can continue to concentrate on its growth. It has reported double-digit year-over-year EPS growth for the first nine months of the year, thanks to the cholesterol drugs it markets with Schering-Plough (NYSE: SGP  ) , the addition of diabetes drug JANUVIA, and cervical cancer vaccine GARDASIL.

While GARDASIL will start receiving competition from GlaxoSmithKline's (NYSE: GSK  ) Cervarix soon, coming quarters will see the addition of sales from HIV drug ISENTRESS and hopefully cholesterol drug CORDAPTIVE, if it receives FDA approval. Merck has a ways to go before it will reach its pre-Vioxx lawsuit highs, but removing the great unknown cost of the Vioxx threat is a step in the right direction.

Here's some lawsuit-free Foolishness about Merck:


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  • Report this Comment On June 14, 2008, at 11:11 PM, badbonehealing wrote:

    Do you think the Merck proposed – “settlement” was par excellence of anyone except the mean spirited MASS TORT REFORM LITIGATION hawks that have so blithely confused the public by comparing “hot coffee spill” lawsuits WITH (allegedly…) calculated murder by concealment….(and also maiming – and we are talking more than heart – stroke – you will hear more about bone and spines that have not healed because surgeons, physicians, and consumers were (allegedly) not even provided a fair caution, let alone warning – rather Merck prefers to keep the water muddy so it can mix it around and conveniently pull out whatever it wants in the form it wants…..oh, yes – there was a public debate on that….where? – on the bottom of those muddy waters were Merck covered overed over what it new, and conveniently left it to the interpretation of others…

    …..

    Mass Tort reform “hawks”, as well as many trial attorneys appear hopeful that the MSA is a “model”. Rather than perform their jobs as they were trained, they can convert much of it to mere paper pushing and administration; with interests of their clients being secondary to their own – there has been much written about that. However, surely their intellectual capacity ought to recognize that a rigorous, or at least a reasonable and fair set of standards should be the rule.

    ……

    Mass TORT REFORM is being done in a reckless manner, unbefitting of the legal field, and certainly a shameful part of American history. As one with executive experience who was trained to think things through, I remain in awe at the lack of thought in fairness – and startled as to how not enough (yet?) legal scholars and brave legal figures are letting this happen. There are many out there who know the score and want to bestow fairness onto defendant AND litigant, possibly they will arise in numbers sufficient numbers.

    …..

    Note that when the “business” people gained too much “power” in the drug industries; the decisions then become much less about safety, and much too slanted towards profit. This is NOT to say that the drug companies should not make money – certainly or why bother? HOWEVER, the key point is that the business people almost always end up being aggressive out of balance with whatever – short term profits, promotions, moving onto other companies DOMINATE their thinking. A proper check/balance of these business people WITH decent R&D and other caring people IS just plainly needed. Businesses need to exist without excessive government regulation; but they CANNOT exist without a reasonable amount of governance. Witness all the other problems in the economy with pollution, energy profits not properly invested nor strategies conceived that should have been on the drawing board 30 years ago, and on and on…..

    ...

    I recently found a very interesting history of how drug companies evolved form the 30’s to now…..and one can see the same thing happening there. And remember what is behind so much of the Vioxx Settlement – the WILD WEST approach of “private settlements” in which business wishes to tackle and take out, and east significantly impair, judicial influence. I remain more convinced, than ever, and it was more than these few articles, that Merck has used their short term profits to plan on quick to market drugs, not properly tested, no procedures in place for monitoring, etc. and then just makes the planning to handle the longer term issue of lawsuits with the short term profits that just keep rolling in – remember the newer the drug, the higher the profit margin, the more that can be charged, etc – so the extremely high profit of these short term “wonder drugs” simply is used to fund the end of their product life cycle, and no doubt cross subsidize other faulty drugs. Merck seems to have made an absolute science out of it. Add to the fact that they mix in the very short term (in re to discovering long term impact of the drugs) factor of going past the “statute of limitations”, and they have all the elements they need to continue to be rewarded with symptom effective short term drugs which maim and kill in the long run. And the FDA, with all of its known issues, is supposed to be the watchdog\? There are so many obvious pieces to this, that a proper, assumedly honest Senate/House investigation needs to be undertaken – and certainly NOT just for the FDA, which is used to divert attention from the aggressive and arrogant behavior of the rug companies – and voila – a report/recommendations could easily expose this. I would just LOVE to lead an effort of that sort.

    ....

    http://groups.yahoo.com/group/MerckSettlement/

    Are you also one of the disgusted, confused, and worse...litigants who feel that you have been boxed in to the MERCK "settlement" - and there are many ways.... Are you really hoping to find some compassionate individuals to dialogue with, an especially those in a similar or exact situation. then read on....

    Vioxx Settlement - a group to relate to...heart - mi - stroke - bone - spine

    ….

    There is a VIOXX EDUCATION PLAINTIFF EDUCATION GROUP (VPEG) for Vioxx Plaintiffs (now 340 and growing people). Regardless of the “settlement” official position - "things are not as they always appear...", the group REMAINS very, very relative and is gaining increasing “name brand recognition”. VPEG concerns, etc., need to be dealt with, and VPEG is becoming one of the lynchpins in converting a very unfair private settlement to what it should be…

    VIOXX victims - we know you shall gain no comfort with the arrogant anti civil right violation HAWKS, also apparently MANY of your attorneys, and certainly not Merck… but there is a group of individuals in a similar situation and KNOW what you are going through. In some ways they are on the leading edge of knowing what the heck is going on and how Vioxx is being used by the MASS TORT LITIGATION REFORM hawsks who wish to pound the MASS TORT system to the ground, without a care in he world of legal fairness or your legal rights.

    Whether - whether an "opt-in" who was also "boxed-in" -or- and "opt-out" who Merck is trying to "box-out"; if you are a vIOXX Plaintiff and wish to become part of a dialogue of nearly 350 individuals and growing, WHO CERTAINLY HAVE NOT GIVEN UP and are a bunch of decent, compassionate, human beings - all damaged by (allegedly…) Merck, in the VIOXX debacle...if you are a Plainitiff feel free to submit a request to join the VIOXX PLAINTIFF EDUCATION GROUP (VPEG) - at:

    http://groups.yahoo.com/group/MerckSettlement/

    Dennis Harrison

    MBA – BGS

    p.s. – there is another, active litigation case in re to (alleged…) bone and spine healing problems - another group will be set up in June for that specific issue. It is not directly affiliated with this one, but will be started by one of the members (name above) who has been actively involved in the allegations of bone and spine problems (not a lawyer, but a pro se litigant). What is important to note that VPEG is increasingly aware of not only the major unfairness of the private “settlement”, a great place to dialogue and find people in your situation, but also seeks synergies with other (alleged…) shoddiness within Vioxx and across Merck “product” lines – (alleged…) patterns and CONSISTENCIES of MERCK’s behavior are becoming increasingly known and relevant…

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