Widow Awarded $253 Million In First Vioxx Trial

Widow awarded $253 million in first Vioxx trial

http://today.reuters.com/investing/f...14_N19402601:1

Fri Aug 19, 2005 4:50 PM ET
By Matt Daily

ANGLETON, Texas, Aug 19 (Reuters) - A Texas jury in the first Vioxx case to go to trial on Friday found pharmaceutical giant Merck & Co. (MRK.N: Quote, Profile, Research) negligent in the death of man taking the drug and awarded his widow $253 million in damages.

The stunning verdict was certain to be greatly reduced under Texas law, but it sent Merck's stock sharply down as investors feared it could set a precedent for more than 4,200 lawsuits charging the company hid the heart attack and stroke risks of the big-selling painkiller.

Merck pulled the drug off the market in September last year after it said it became clear its long-term usage could double users' risk of heart attack or stroke.

It shares fell $2.35, or 7.73 percent, to $28.06 and exerted the largest drag on the Dow, although the average rose 4.3 to 10559.23.

The case filed by widow Carol Ernst charged that Vioxx had caused her husband, Robert Ernst, a 59-year-old marathoner, to die of a heart attack in 2001.

Merck disputed the accusation, saying Ernst died of irregular heartbeat, but the 12-member jury in Texas state court awarded $24 million to Carol Ernst for mental anguish and loss of companionship and $229 million in punitive damages.

The courtroom erupted in an uproar at the reading of the verdict and Ernst broke into tears. Her lawyer, Mark Lanier, leaped up and shouted "Amen."

"They knew and could see what the truth was," she told reporters.

Lanier said Texas law would reduce the $229 million punitive award, but said Merck should settle the Vioxx lawsuits, not fight them.

"Merck sure ought to come to the table and accept its responsibility," he said. Lanier vowed to file more lawsuits against Merck and "pound them again."

Merck immediately said it would appeal the decision.

"There is no reliable scientific evidence that shows Vioxx causes cardiac arrhythmia, which an autopsy showed was the cause of Mr. Ernst's death," Merck attorney Jonathan Skidmore said.

He estimated that Merck ultimately would be liable for only about $2 million in punitive damages.

Juror Derick Chizer, 43, said the jury, which deliberated almost two days, knew their award would probably be cut, but felt that Merck needed a jolt to change its ways.

"That ($229 million award) was a message to them," he said.

The arthritis drug had been taken by about 20 million people at the time of its recall and contributed more than $2.5 billion in sales for Merck in 2003, about 10 percent of the company's total revenue.

Vioxx is the trade name for rofecoxib, part of a class of drugs called NSAIDs. A type of painkiller known as a COX-2 inhibitor, it was touted as a pain and inflammation reliever that did not cause ulcers or gastrointestinal bleeding, a side effect of many NSAIDs.

Due to the thousands of lawsuits pending against Merck, the Whitehouse, New Jersey-based company said at the end of last year it had set aside $675 million to help cover legal costs.

Wall Street analysts, who have been closely watching the case in Angleton, a small town about 40 miles (64 km) south of Houston, have estimated Merck's liability in all the cases could run into tens of billions of dollars.

"Everyone knew this was a hard case going in. The jurisdiction in which it was tried is very plaintiff friendly," said Brett Gallagher, a senior portfolio manager. "It probably was the most expected outcome, and now unfortunately the uncertainty drags on."

(Additional reporting by Megan Davies and Herb Lash in New York)

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