"Almost" may be good enough for horseshoes and hand grenades, but in federal court, it's all or nothing. That's why Merck (NYSE:MRK) will face a new trial over its Vioxx painkiller, after a deadlocked jury voted 8-1 to acquit the drugmaker. That kind of jury outcome is usually enough to win in most state courts, but federal court rules require a unanimous verdict.
It was the first time the pharmaceutical giant was in federal court defending itself against charges that Vioxx was actually more deadly than it let on, and that it had not provided patients with enough warnings over possible side effects. Merck faces thousands of lawsuits and so far has one win and one loss at the state level.
At its height, Vioxx was one of the most popular pain relievers prescribed to patients. Some 20 million people took the drug, which generated $2.5 billion in sales for Merck before it was pulled from the shelves over concern that it could double the risk of a heart attack if taken for more than 18 months. Heart problems were found with similar COX-2 inhibitors, including Celebrex from Pfizer (NYSE:PFE) and the over-the-counter pain reliever Aleve from Bayer (NYSE:BAY).
Analysts thought this case would be easy for Merck to win. Federal courts are seen as more business-friendly, and the victim had used Vioxx for just one month. He had received the prescription from his son-in-law, an emergency-room physician, without getting any sort of physical exam.
That Merck, a selection of Motley Fool Income Investor, wasn't able to convince all nine jurors is seen as a problem for the company. Merck has contended that the short-term use of Vioxx is not a health hazard; it's only the extended use of it, for more than 18 months, where the risk rises considerably.
Still, it's always a possibility that you're going to get the lone holdout juror who wants to be Henry Fonda in 12 Angry Men or take a stance against evil corporations rather than look at the facts of the case. And the trial lawyers will undoubtedly try to make much of Merck's purported withholding of data from a published New England Journal of Medicine study to make it seem that Vioxx was less deadly than it really was. The omitted data -- concerning three heart attack patients out of 20 -- showed that Vioxx was likely to cause "only" four rather than five times more heart attacks than the over-the-counter pain reliever naproxen. The deadlocked jury never heard that evidence; the Journal revealed the omission after the jury went into deliberations. You can be sure the new jury will hear it.
Yet the timing of the revelation calls into question the motives of the Journal itself. Merck says the data about the patients came in only after a pre-specified cutoff date for clinical evidence to be included in the study. It also noted that the data was included in the text of the article, but a table containing it was deleted from the manuscript. Vioxx received approval from the Food and Drug Administration based upon the complete data a month before the article appeared in the Journal.
Merck lost the first state trial on Vioxx and was slapped with a $253 million penalty by the Texas jury that heard the case, but that amount will be reduced to about $26 million because of state laws that cap damages. The second trial, which was held in the company's home state of New Jersey, acquitted the company of wrongdoing. The third state trial will also be in New Jersey as well, but it will be considered more difficult for the pharmaceutical to win, because the victim took Vioxx for longer than 18 months.
Investors in Merck can be sure that with more than 6,500 cases to defend against, holding shares of this company will at times feel like sitting on a grenade.
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Fool contributor Rich Duprey owns shares in Merck but holds stock in none of the other companies mentioned in this article. The Motley Fool has a disclosure policy.
