The News for Baxter Just Got Worse

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As if getting sued by Dennis Quaid wasn't enough, the FDA is providing fodder for the lawsuits that are likely to come as a result of Baxter's (NYSE: BAX) contaminated heparin.

Earlier this week, the FDA reported that it had received more reports of heparin user deaths associated with allergic reactions or low blood pressure, as were those caused by Baxter's contaminated heparin. It's not clear if any of these additional cases were caused by contaminated heparin or just had similar symptoms. Baxter claims that only four deaths are linked to its heparin. APP Pharmaceuticals (Nasdaq: APPX), the other major heparin supplier, said none of the deaths were due to its heparin, a blood thinner.

In a previous article, I surmised that the heparin recall wouldn't have much effect on health-care giant Baxter, since heparin sales are a tiny fraction of the $11.3 billion in revenue that the company racked up last year. But with the report of additional deaths, it seems that Baxter's legal department could receive quite a few more lawsuits.

If Baxter loses in court, I'd imagine it could sue its U.S. supplier, which could sue its Chinese supplier, where the contamination is believed to have originated. But I'd bet that Baxter has the deepest pockets of the three and will likely end up with the brunt of the financial pain.

I doubt we're talking about anything on the scale of the billions of dollars paid in settlements by Wyeth (NYSE: WYE) over its fen-phen or Merck (NYSE: MRK) over its Vioxx, but when you add up all the people who had an allergic reaction, but didn't die from the tainted heparin, the settlement probably won't be pocket change either.