Incredible story about the huge sums of $$$ at stake in the Merck debacle. A few material highlights:
* Merck has reserved $685 Million bucks to cover legal fees. This covers all the Gucci-loafer wearin', ambulance chasin' vultures that Merck has to hire to defend itself. This fixed cost is independent of whether or not Merck wins or loses. Ouch.
* Merck has tied up another $300 million in adverse judgments in various unending appeals. This figure, to date, will likely be reduced to $48 or so million, so speculate some of the experts. But, unless Merck somehow shoots the moon, expect more big-ass plaintiff's verdicts coming down the pike.
*Merck also faces class actions, filed on behalf of prescription drug plans and insurance carriers seeking treble damages, that experts say could expose Merck to multi-billion dollar verdicts. Yikes!
* Then, you have the states joining the fun with another round of lawsuits, arguing that their pension funds have been damaged by Merck's skulldudgery. 31 States have already initiated civil investigations. Texas Attorney General, Gregg Abbott, is seeking $168 million and says he can prove total damages in excess of $250 million over five years in payments for Vioxx.
New York's Controller, Alan Hevesi, claims his state's retirement fund lost $171 million when Merck's stock value dropped and that teachers, policemen, and firefighters have lost $287 million all total from their retirement funds.
Moreover, our hero, Dr. David Graham, of FDA fame, adds to the Merck misery. Last March, Merck lost a major legal battle that had the company's attorneys kicking and screaming, when US District Judge Eldon Fallon ordered Dr. Graham to testify in a deposition in response to a subpoena from attorneys for Vioxx plaintiffs. Nobody can touch Doc Graham on FDA incompetence and Big Pharma influence.
Finally, and most notably, you wanna hear a large, public, joyous "Ouch"? Check this out:
When Vioxx was pulled off the market in September 2004, the drug's $2.5 billion in annual sales equaled 11% of Merck's revenues. When news of the recall broke, Merck shares plunged $12 to $33, wiping out $28 billion of stock value in one day for investors, pension funds and mutual funds.
$28 Billion? Thatsa lotta sheckels!
Hmmm. I know there's a lesson in here somewhere for pharmaceutical companies, shareholders, lawyers, pension fund managers, ambitious attorneys general.........