« What Falls In Between | Main | Women Fall Through the Cracks in Iraq »

August 20, 2005

Hitting Where It Hurts

By Ezra

So how about that Merck case?

Jurors deliberated more than 10 hours in Angleton, Texas, before awarding $24.4 million in actual damages and $229 million in punitive damages to the family of Robert Ernst. Shares of Merck, the third-largest U.S. drugmaker, fell to a six-month low, erasing $5.2 billion from the company's market value.

$229 million in punitive? As my girlfriend noted, this was a white male jury in Texas, for them to side so harshly against the company means bad things a-brewing for the drug industry. The damages aware were almost unquestionably excessive which makes them seem more like an expression of anger at Big Pharma (and maybe Big Business in general, particularly post-Enron) than anything else. And while it'll be reduced on appeal, if the environment has shifted in such a way that juries simply want to stick it to corporations, the slew of suits in the offing will give them plenty of chances to do so.

August 20, 2005 in Big Business | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c572d53ef00d83458de9a69e2

Listed below are links to weblogs that reference Hitting Where It Hurts:

» everything is bigger in texas from cinematic::rain
except the possibility of having a jury that is eager to hand out big payouts, so i don't know how much bigger the $253 million lawsuit would have been elsewhere. Merck is of course appealing the ruling, because they might end up paying close to $2... [Read More]

Tracked on Aug 21, 2005 2:03:17 AM

Comments

if the environment has shifted in such a way that juries simply want to stick it to corporations, the slew of suits in the offing will give them plenty of chances to do so.

Should be interesting to see what happens, there are something like 4,000 pending cases similar to this one.

I think this does show that people want to punish corporations who behave like Merck did. This case was supposed to be one of the weaker ones, since what actually killed the man wasn't a condition directly linked to taking Vioxx, though it is still likely that the drug bears at least some of the blame. Seems like the jury was trying to make a point. Merck must be pretty scared now.

Posted by: Matt F | Aug 20, 2005 8:26:41 PM

Yes, everybody's angry atBig Pharma. Clearly they haven't been listening to The Creature From the Blog Lagoon and his paens to the drug companies, their wonders to perform.

Posted by: David Ehrenstein | Aug 20, 2005 8:58:17 PM

If Merck ends up paying more than 10% of this award, it would be shocking, shocking.

Coming soon to a session of Congress near you (this fall, before the election season is fully in play), Congress will pass a law hidden in the budget reconciliation act (where it can't be amended) that limits punitive damage awards against drug companies 'because they will cripple important research' and damage the country.

BushCo: cash, credit or 'loans', the best government money can buy.

Posted by: JimPortlandOR | Aug 20, 2005 9:09:12 PM

I should have qualified my comment above:

...the best government that lobbyist or contributor money can buy.

Posted by: JimPortlandOR | Aug 20, 2005 9:11:18 PM

Three thoughts ...

Won't this contribute to the high cost of health care?

Why should Merck be punished for things that have nothing to do with their drugs? This isn't justice, it's deep sympathetic pockets.

If you are a patient suffering chronic pain and Vioxx provided relief, which would you prefer -- constant chronic pain to the point where you can't function or a potential heart attack two years down the road?

m

Posted by: m | Aug 21, 2005 12:33:36 AM

Ezra, with your offhand judgment that the punitive damages were "unquestionably excessive" and based on "anger", you're glossing over the issue of what exactly the punitive damages were meant to punish. It looks to me like the jury basically accepted the argument we've been hearing for years, that Merck had a pretty good idea of Vioxx's potential dangers but refused to back away from the gold mine of Cox-2 drugs, choosing instead to plow money into direct-to-consumer advertising and - the real punishable behavior as far as I'm concerned - lean on researchers and friends at the FDA to suppress unwelcome findings. Were you unaware of that side of the story, or do you think it's irrelevant to the trial?

Posted by: EliB | Aug 21, 2005 1:18:20 AM

The part that interested me was that there was apparently no evidence of a heart attack or congestive heart failure so death could have been due to an arrythmia which is not associated with NSAIDs.

Posted by: J Bean | Aug 21, 2005 1:56:29 AM

If you are a patient suffering chronic pain and Vioxx provided relief,

M, if that is your real name... do you realize that legalized marijuana would take give people the ability to take care of their own chronic pain?

of course that would preclude Vioxx and friends from making some ungodly billions of dollars, so i guess that makes it unconstitutional or something right?

Posted by: almostinfamous | Aug 21, 2005 2:07:49 AM

take give? that's the alcohol speaking. must. resist.delicious.margaritas.

i meant give btw

Posted by: almostinfamous | Aug 21, 2005 2:09:01 AM

Funnily enough, Vioxx and its family of drugs have been proven to work no better than ibuprofen. Their whole claim to fame was that they were easier on the stomach but, well, turns out that ain't true neither. They are for the first two years, but not after that. So, in essence, they're a bit useless. And they fuck up your heart.

Nuts.

Posted by: Ezra Klein | Aug 21, 2005 3:42:32 AM

According to the television report in Houston, (abc13, I believe,) the 229 million was directly related to an in house Merc memo addressing the cost of delaying the release of the drug to change the labelling to include a warning about the heart attack dangers. The memo cited 229 million.

Posted by: EZSmirkzz | Aug 21, 2005 10:18:48 AM

Unfortunately, ibuprofen and naprosyn have the same cardiac effects. It's a problem for the whole class. Even acetaminophen increases risk a bit.

I haven't talked to that many people who've tried marijuana for pain, but not many people seem to have had any pain relief from marijuana. A lot of people, believe it or not, find the side effects intolerable. The narcotics seem to be the most tolerable.

I had an elderly dog with cardiomyopathy due to a bad mitral valve. She got started on etodolac (old, generic, non-selective NSAID) and promptly developed atrial fibrillation and went into nice juicy failure. She wound up taking a pile of drugs every day, but at least the pain medication helped keep her comfortable for about a year. Then, being as she was a dog, there was another option....

Posted by: J Bean | Aug 21, 2005 11:20:22 AM

What justice can possibly be savored by taking the money of corporations and putting it in the pocket of attorneys?

Lawsuits have lost the little sanity they ever had. They are now just as much as a business, in the eyes of lawyers, as the companies they leech their money from.

Posted by: Adam | Aug 21, 2005 12:08:04 PM

it seems to me the issue here is not about the safety or potential risks of the drug, but the malfeasance of the company selling the drug. Both the administration and Congress have proven themselves to be easily influenced by corporate money. The only incentive left to place public health above corporate profit is the risk of punitive damages. If the government will not effectively regulate the behavior of corporations, the threat of lawsuits, and the possibility of losing liability insurance coverage are the only forces left to encourage money-minded corporate directors to consider the COST of hiding known risks of their products.

Posted by: Robert Greendreams | Aug 21, 2005 1:37:15 PM

At the risk of feeding the troll...

What justice can possibly be savored by taking the money of corporations and putting it in the pocket of attorneys?

And to the victims, let's not forget. Nice of you to exclude them from your metric. But I'll put that aside and answer the question straight:

A: A whole fucking lot of justice.

The lawyers weren't the ones pushing a drug that killed people. You might have a bad image of lawyers, but the fact is that, no matter what you might think of them, they didn't hide info that caused people to die.

Posted by: J.C. | Aug 21, 2005 8:34:36 PM

J bean, looks like someone needs to talk to Kevorkian.

macabre aside, the only reason i mentioned the wacky tabacky was not because of its wonderful pain-alleviating abilities, but to provide an alternate to the hobson's choice m offered. not to mention margaritas make me act like an even bigger dolt than i generally am.

but i just cant stop thinking about them, damnit!

Posted by: almostinfamous | Aug 21, 2005 9:12:02 PM

I tend to thing of high punitive damages as ridiculous, but if EZSmirkzz is right above, that sends a rather power signal to the American public, I think.

There are two questions that I see for the future.

1.) Will this change anything from the side of the FDA? They're sole purpose is to make sure this doesn't happen in the first place.

2.) Will the large punitive award take away from the substance of the ruling? This might make it all too easily to jump abroad the lined-pocket-lawyers argument, making it too easy to pass legislation. Thats the reverse effect than what we're looking for. Not that, as some a-holes will likely take it, we're looking for more punitive damages, but that we are looking for more accountibility and we believe rewards like this are a great way to accomplish that. After all, if there was no problem with VIOXX in the first place, there would be no reason for a trial with large punitive awards against its maker.

Posted by: Adrock | Aug 22, 2005 12:52:10 PM

Ezra and several commenters on this thread make the mistake that many non-lawyers do, and that is to confuse a verdict (what the jury returns) with the judgment (what the court orders). A verdict actually has no legal effect on the parties to a lawsuit. Only the judgment, where the judge applies the law to the jury's factual determinations, does.

Texas has fairly stringent caps on punitive damages. The damages awarded in the judgment cannot be greater than two times the amount of economic damages (lost wages, back pay, medical expenses, etc.) plus between $200,000 and $750,000, depending on the amount of noneconomic damages (pain and suffering, loss of consortium, etc.). In this case, that means the maximum amount of punitive damages that can be awarded is apparently $1.65 million, far less than the jury's verdict of $229 million in punitive damages.

Thus, if the judge were to award the full amount of the verdict that Texas law allows, the plaintiff would be awarded $27.1 million. Assuming that the attorneys had a standard 1/3 contingency fee on the case, they would be entitled to a little over $9 million. Depending on how the fee agreements are arranged, this amount is probably spread over a number of attorneys as well.

Punitive damages awards give attorneys incentives to take cases they might not otherwise take, especially ones like this that are guaranteed to be lengthy and expensive, and where success is not likely. Keep in mind that the plaintiff's attorneys in this case have almost certainly committed hundreds of thousands, if not millions, of dollars worth of time and out-of-pocket expenses to this case before they ever set foot in the courtroom. Also, many contingent-fee cases don’t pan out like this one.

Let’s now look at why the plaintiff and her attorneys may not receive $27.1 million. Merck has a number of post-trial motions that it can make, depending on the course of the trial and whether the judge thinks the verdict is supported by sufficient evidence under the law. Merck can ask the court to ignore the verdict and enter a more favorable judgment, including one that awards the plaintiff nothing. It can ask the court to throw out the verdict and grant a new trial. It can ask the court for a remittitur, an order that forces the plaintiff to choose between having a new trial or accepting a lesser sum of money. (I would not be at all surprised to see a remittitur for part of the $24 million award in noneconomic damages.) Any of these motions can reduce or even eliminate the amount the plaintiff is actually awarded.

All of this is before Merck files an appeal, which it has already said it will do. Cases in Brazoria County are appealed to either the First or Fourteenth Court of Appeals in Houston. Both courts are 100% Republican and defense-friendly. A decision by those courts may be appealed to the Texas Supreme Court (although the supreme court does not have to hear the appeal), which is also 100% Republican and defense-friendly. Either the intermediate appellate court or the supreme court can affirm the judgment, reverse it and remand the case for a new trial, or reverse and render the case for a lower (down to zero) amount. Remember, too, that even if the plaintiff is successful on appeal, she receives nothing until the appeals are finally concluded, which could be two to five years from now.

It is not unusual for cases like this to be settled on appeal, perhaps for 1/3 of their nominal value ($9 million). That may not happen in this case, however, given that it’s the first such case to go to trial. Merck will undoubtedly fight this one tooth and nail, to stave off the thousands of other cases already pending. And this is where the real financial damage to Merck arises—not from the outcome of one lawsuit, but from the potential payout for thousands of similar cases. On the other hand, the message is sent: Don’t rush inadequately tested and potentially unsafe drugs to market. But one thing is clear—the plaintiff and her attorneys will not receive $253 million.

Posted by: Kenneth Fair | Aug 22, 2005 8:45:26 PM

I should also mention that Brazoria County is one of the few counties in Texas that lawyers think of as being plaintiff-friendly, given the large concentration of unionized refinery workers living there. I'm sure it's no accident that the first case to go to trial was in Brazoria County.

Posted by: Kenneth Fair | Aug 22, 2005 8:56:37 PM

My math sucks. The maximum judgment is $26.1 million, not $27.1 million. Carried the one twice.

Posted by: Kenneth Fair | Aug 24, 2005 3:33:24 PM

http://principal.descom.es/photos/teeny.html clothinggamessickening

Posted by: responses | Nov 16, 2005 4:38:58 AM

I've basically been doing nothing to speak of. Basically nothing seems worth thinking about. I feel like a void, but that's how it is. I've just been hanging out doing nothing.

Posted by: media | Oct 16, 2007 1:31:47 PM

The comments to this entry are closed.