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Merck wins N.J. Vioxx ruling on class-action suit

Judges reject a bid for health insurers to sue as a group. An adverse outcome could have cost the firm $18 billion.

September 07, 2007|From the Associated Press

TRENTON, N.J — In a major legal victory for Merck & Co. in its massive Vioxx litigation, New Jersey's Supreme Court on Thursday rejected a potential class-action lawsuit that could have cost the drug maker as much as $18 billion.

New Jersey's highest court, reversing two lower-court decisions, ruled that a nationwide class-action suit was not appropriate. The lawsuit had been brought by a union health plan on behalf of all insurance plans that paid for prescriptions for the withdrawn painkiller -- about 80% of all Vioxx sold.

"We were thrilled with the decision," Merck lawyer John Beisner said.

The plaintiffs' lead lawyer, Chris Seeger, said he would proceed with individual lawsuits seeking to recoup what insurance plans paid for the widely used arthritis treatment, which Merck pulled from the market three years ago after research showed it doubled the risk of heart attacks and strokes.

Vioxx was then Merck's No. 2 drug, with about $2.5 billion in annual sales.

Had the class action proceeded, it would have been a setback to the company's strategy of fighting each Vioxx suit individually.

Whitehouse Station, N.J.-based Merck faces nearly 27,000 individual lawsuits from people claiming Vioxx caused heart attacks and strokes, but more than 1,170 cases have been dismissed permanently.

Of cases that have reached verdicts, Merck has won nine and lost five; a new trial was ordered in another case.

Merck shares rose $1.07, or 2.2%, to $50.47.

"This is a big win for Merck," said Jane Thorpe, a national class-action defense lawyer specializing in product liability cases.

Lawyers have been watching the case closely since New Jersey Superior Court Judge Carol Higbee certified the class action using what Thorpe called "a very liberal standard."

Thorpe thought it unlikely that it would be upheld because national class actions are so rare.

Benedict Morelli, a lawyer representing about 1,200 Vioxx plaintiffs, said he didn't see the ruling as a great victory for Merck because insurance companies, HMOs and union health plans could still sue individually.

"I don't think this is anything Wall Street or Merck should be celebrating," Morelli said, noting that Merck has spent more than $1 billion to defend itself in a handful of trials.

Merck has about $810 million left in its Vioxx defense fund. It has not paid any jury awards because it is appealing each loss.

Seeger, lead attorney for the West Caldwell, N.J.-based International Union of Operating Engineers Local 68, estimated that a loss could have cost Merck $15 billion to $18 billion; its revenue last year was $22.6 billion.

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