UPDATE: Merck May Shift Legal Strategy After Vioxx Loss

By Greg Groeller
Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Merck & Co. (MRK) may alter its strategy of taking every Vioxx-related lawsuit to trial after losing its first courtroom battle last week.

The jury's decision to award a total of $253 million to the family of a man who died after taking the painkiller means that Merck may need to re-evaluate its hardline position, analysts and legal experts said.

Merck faces roughly 4,100 lawsuits related to Vioxx, which the company withdrew from the market last year after a study linked it to increased risk of strokes and heart attacks.

The drug maker needs to get a better understanding of what type of cases it can win and which ones it's more likely to lose before it starts settlement negotiations with any plaintiffs, said David Webster, president of Webster Consulting Group, which works with pharmaceutical companies.

"Merck needs to understand what types of litigants will be successful," Webster said. "Once they understand that better, they can better quantify the cost and benefits of settling with a certain class of patients."

Guy Bizzoco, a Merck spokesperson, said the company has no plans to settle any Vioxx cases. But he declined to comment on whether there were scenarios in which Merck would ever consider settling.

"We believe we have meritorious defenses and intend to defend Vioxx cases one by one," Bizzoco said.

Kim Schmid, a defense attorney for Bowman & Brooke in Minneapolis, who specializes in product-liability cases, said Merck must present a hard public stance against settlements to avoid a flood of frivolous lawsuits.

"They don't want the plaintiffs bar to believe they will tuck their tails and start settling," Schmid said. "They can't afford to send that signal now."

At some point in the future, however, Merck might need to consider settlements, particularly when lawsuits are filed in states or cities where juries are often sympathetic to plaintiffs, she said.

Ellen Wertheimer, a professor at Villanova University School of Law, said the verdict against Merck likely will be reduced by the trial judge or by an appellate court, so Merck shouldn't make any hasty decisions on settling other cases.

"In response to a jury verdict, you don't change your strategy," Wertheimer said.

However, Jon LeCroy, an analyst at Natexis Bleichroeder, said the size of Friday's verdict against Merck casts some doubt on the company's try-every-case strategy.

"We do think that settling individual, high-risk cases may make sense," LeCroy said in a research note. LeCroy doesn't own Merck shares and Natexis Bleichroeder doesn't have an investment-banking relationship with the company.