Merck faces punitive phase of Vioxx trial
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The punitive phase of a trial involving Merck & Co.‘s drug Vioxx was set to start on Thursday after a jury found the drugmaker failed to warn Vioxx users of heart risks and ordered it to pay a 77-year-old plaintiff at least $4.5 million in damages.
Merck shares fell 4.2 percent to $34.48 in premarket trade Thursday after the jury in Atlantic City, New Jersey, found that Vioxx had been a substantial contributing cause of a heart attack suffered by John McDarby. The jury determined the drug was not a significant cause of a heart attack suffered by a second plaintiff, Thomas Cona.
Credit Suisse analyst Catherine Arnold said Wednesday’s split verdict should lead to weakness in Merck shares.
“Most investors told us that they expected Merck would win this case, largely because both plaintiffs had multiple risks for heart attack beyond consumption of Vioxx,” Arnold wrote in a research note.
Former Merck Chief Executive Raymond Gilmartin will appear at Thursday’s hearing to explain the company’s actions over Vioxx, the company said on Wednesday.
Punitive damages can reach up to five times compensatory damages.
“The compensatory damages amount by itself is already large, in our opinion,” Prudential analyst Tim Anderson said in a research note.
Deutsche Bank Securities analyst Barbara Ryan said Merck must stick with its strategy of trying every case in court or risk following in the steps of Wyeth, which has taken more than $21 billion in charges to cover financial liability related to its recalled diet drugs.
“To settle now would open them to an unending line of plaintiffs ... Each case must be litigated on its merits—i.e. cause and effect—as was confirmed with this split verdict,” Ryan said.
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