IN QUESTION

 

The questions considered by the jury that awarded $9 million in punitive damages to a plaintiff in the latest Vioxx case:

Question: Has the plaintiff proved by clear and convincing evidence that Merck knowingly withheld or misrepresented information required to be submitted to the FDA under the FDA regulations which information was material and relevant to the harm in question?
Answer: Yes.

Question: Has the plaintiff proven by clear and convincing evidence that Merck's actions show a wanton and willful disregard of another's rights so as to justify an award of punitive damages?
Answer: Yes.

Question: What amount, if any, of punitive damages should be awarded?
Answer: $9 million.

Source: Associated Press

Merck lawyers said the company would appeal both the punitive-damages verdict as well as last week's verdict on compensatory damages. "We think the jury was not allowed to see and hear all the evidence," said Chuck Harrell, spokesman for Merck's legal-defense team. (Read Merck's statement¹.)

He added that Merck would continue its strategy of evaluating and defending itself against cases individually, rather than seek a broad settlement. Merck has been hit with about 9,650 lawsuits alleging harm from Vioxx.

"A jury here deduced Merck needs to clean up their act," said plaintiffs' attorney W. Mark Lanier, who with Jerry Kristal argued the punitive damages phase of the trial.

Following the verdict, the jury foreman read a statement saying the jury members believed they rendered a fair and honest verdict.

Punitive damages against drug companies are difficult to win in New Jersey, where many are headquartered. In the past, a New Jersey tort-reform law has shielded drug companies. The law requires a finding that a drug company intentionally misled the FDA about a medicine in order to award punitive damages. Merck, based in Whitehouse Station, N.J., previously said in court that, since the law was revised in 1995, no New Jersey-based pharmaceutical company has paid punitive damages in the state.

This is the second time a jury has hit Merck with punitive damages, but the first time in New Jersey, where Merck faces nearly 5,000 cases alleging harm from Vioxx. The verdict suggests New Jersey juries won't shrink from punishing a home-state company like Merck. Merck has also won two trials nationally.

Over the long term, "consistent awarding of punitive damages stands to meaningfully inflate -- almost double -- Merck's liability," said Richard Evans, a drug-company analyst with Sanford C. Bernstein.

A note from Jami Rubin, an analyst at Morgan Stanley & Co., said Merck has "strong grounds for appeal" in both phases of the trial. "The initial jury verdicts in these cases don't necessarily tell us anything about the ultimate financial liability to Merck," the note said.

Merck defense attorney Christy Jones told the jury in her closing arguments Monday, "This was not a company that was hiding data or ignoring red flags." She said that while Vioxx was on the market, the FDA never said that Merck failed to properly submit data and the agency never required the drug be withdrawn.

One point of contention in the case was whether Merck fully disclosed to the FDA what it knew about heart attack risks. In one instance, the company disclosed data on heart attacks to the FDA, but not the results of its analysis. Raymond Gilmartin, former Merck chairman and chief executive, testified in the trial that the company properly disclosed Vioxx clinical data to the FDA.

Merck withdrew Vioxx from the market in 2004 after a study concluded that use of the drug for 18 months or longer increased the risk of heart attacks and strokes.

The company has said it will fight every case, but a string of punitive damage awards could pressure the company into settlement talks. Fear of punitive damages was a driver in Wyeth's settlement of litigation over fen-phen, a diet drug.

In the first Vioxx trial in a Texas state court, the jury hit Merck with $229 million in punitive damages, saying it chose the figure for its symbolic value. An internal Merck document showed that the company had estimated it would lose $229 million if the Vioxx label was changed to reflect cardiovascular warnings.

Irma McDarby, Mr. McDarby's wife, said outside the Atlantic City courthouse that the award is "a door to hope for us." She said her husband, who uses a wheelchair, wasn't at the courthouse because he wasn't feeling well, though he attended previous court sessions. "We've had very little to work with. Now he can get care for everything he needs."

Write to Heather Won Tesoriero at heather.tesoriero@wsj.com⁷