The New York Times
February 15, 2005
By BARNABY J. FEDER
The spotlight is likely to be on Pfizer tomorrow when federal drug regulators begin hearings on cox-2 drugs, the class of arthritis and pain medicines that include the company's Celebrex and Bextra brands. After all, Merck, which made the other drug in that class, Vioxx, pulled it off the market last fall, citing its safety risks.
But Wall Street analysts and battalions of lawyers will be intently watching testimony by and about Merck because the company faces hundreds of lawsuits over Vioxx, some of them scheduled to go to trial as early as May in Alabama and Texas. Consolidated groups of cases are headed for trial in California and New Jersey this summer.
The three days of hearings by an advisory panel to the Food and Drug Administration are expected to include extensive testimony about how Merck and the federal agency dealt with safety concerns about Vioxx in the years and months before the company withdrew the drug.
"Anything short of an outright condemnation of how Merck handled this drug will disappoint me," said Christopher A. Seeger, a New York lawyer whose firm began filing lawsuits in New Jersey against Merck on behalf of Vioxx users in 2001.
But a Merck lawyer said that he expected the hearings to underscore the lack of conclusive data - until last fall - that Vioxx was more hazardous than Merck had believed.
"If they are looking for a blockbuster in terms of new data from the past or how Merck analyzed it, they are going to be disappointed," Theodore V. H. Mayer said of regulators looking for evidence. "The company's done an excellent job of disclosing the history."
The company's critics warned for years that Vioxx posed cardiac risks. But Merck said it had no clear evidence until it received interim results last September from a clinical trial of Vioxx's potential as an anticancer drug. That data indicated long-term users of the drug had an increased risk of heart attacks and strokes.
For its part, Pfizer, despite slumping sales in recent months for Celebrex and Bextra, has kept both drugs on the market, saying there is no statistical evidence that either poses cardiac risks at normal dosages. A few lawsuits have been filed against Pfizer in recent months that echo many of the claims against Vioxx, but many plaintiffs' lawyers with the Vioxx cases say Pfizer appears to be on firmer legal ground than Merck.
Pfizer's defenses could erode if the F.D.A. decides after this week's hearings that Celebrex and Bextra are more dangerous than Pfizer has said.
In an indication of the pressures on Pfizer, The Associated Press and Bloomberg News reported yesterday that WellPoint, the nation's largest health insurer, sent a letter last week to the F.D.A. saying an analysis of its records suggested that Pfizer's two drugs raised the incidence of heart attack and stroke among patients covered by WellPoint.
In Merck's case, although some of the oldest Vioxx suits were filed several years ago, hundreds more have come in the wake of the drug's withdrawal last fall. As many as 140,000 Vioxx users may have experienced serious heart problems with the drug after it went on the market in 1999, according to some health officials.
Still, the number of patients or their survivors with potentially strong cases is far smaller because many Vioxx users had heart ailments or other health problems that make it difficult to link their attacks to Vioxx.
Analysts estimate that Merck's total liabilities could run as high as $30 billion, which is why both the company and its accusers are monitoring the F.D.A. hearings for any development that could strengthen their legal positions.
Merck's shares plummeted to $33, from $45.07, the day it announced plans to withdraw Vioxx, which ranks fourth among its best-selling drugs. The shares have traded in a narrow range since then, ending trading yesterday at $29.41.
Merck reported on Jan. 25 that it earned $1.1 billion on revenue of $5.75 billion in the last quarter of 2004 despite the lost Vioxx revenue and despite adding $604 million to its reserves for Vioxx litigation. The total reserved is now $675 million.
Pfizer's shares initially crept higher after Vioxx's withdrawal but have since drifted down by nearly 17 percent, as negative data about Bextra and Celebrex have emerged. The stock closed yesterday at $25.48.
Merck said last month that 575 lawsuits involving 1,400 plaintiffs had been filed against it by the end of last year, along with 70 class-action suits and numerous lawsuits on behalf of shareholders and pension plans. But Merck's estimates are out of date, according to plaintiffs' lawyers, who say the pace of new filings has accelerated.
"We have four cases filed and five ready to go," said T. Robert Hill, a plaintiffs' lawyer in Jackson, Tenn., who said that more than 80 cases were in various stages of preparation. "We're filing about one a day and will do so for the next three or four months based on what we have in our office."
Some of the newer cases are on behalf of Vioxx users who say they were injured by taking it for much shorter periods than Merck's own reported data had identified as potentially dangerous. In a lawsuit filed in Palm Beach County Circuit Court in Florida last Thursday, for example, Dr. Robert Plasko claimed that his heart was damaged by use of Vioxx for nine months in 2003. In withdrawing the drug, Merck said that the clinical data it relied on did not show any heart problems for patients using Vioxx for less than 18 months.
Whatever is said at this week's hearings, the more important near-term development could come within the next few weeks, when a decision is expected by a seven-judge administrative panel determining which court will be the site for consolidating federal lawsuits filed around the nation.
Legal handicappers are interested not only in whether the judge chosen is perceived to be sympathetic to one side or the other but also whether the cases go to a court with a reputation for moving rapidly on major product liability cases. The administrative panel heard arguments on the consolidation issues in Fort Myers, Fla., last month.
Several states with lawsuits accumulating in their courts, including California and New Jersey, have been moving to consolidate those cases as well.
Merck is also facing an investigation by the Department of Justice and said last month that the Securities and Exchange Commission had notified the company that it had begun a formal inquiry into whether Merck's public filings and disclosures to shareholders about Vioxx were adequate. Those inquiries could produce more ammunition for plaintiffs' lawyers than the F.D.A. advisory panel's proceedings.
"We're going to watch every minute of the F.D.A. hearings but the action that will or won't help plaintiffs is taking place inside the D.O.J. and the S.E.C.," said Richard Evans, a financial analyst who follows Merck for Sanford C. Bernstein. "The F.D.A. isn't going to be cross-examining any Merck executives, so I don't expect any Perry Mason moment."
Merck's critics have argued that the company should never have begun selling Vioxx without performing more extensive safety testing or should have stopped selling it sooner. At the very least, they say, Merck should have adopted much stronger warning language on its label and used less aggressive advertising to consumers.
Merck, based in Whitehouse Station, N.J., has said that it acted responsibly based on the evidence available to it at every stage of Vioxx's development.
Merck has also claimed that its position is supported by the F.D.A.'s approval in 1999 to market Vioxx and the agency's subsequent agreement on issues like labeling changes.
Plaintiffs' lawyers argue that the F.D.A. actions merely reflected its reliance on Merck to provide safety and performance data and should not affect Merck's liability for selling what they describe as an unreasonably dangerous drug. But, they conceded, a few states, including Colorado, Michigan, New Jersey and Oregon, have laws allowing Merck to use F.D.A. approval as a shield. And with proposals in Congress to turn that shield into federal law, this week's hearings could help Merck in court.
"If they aren't criticized, Merck will stand up in court and say the F.D.A. looked at this again and said it did nothing wrong," Mr. Seeger said.
He and other plaintiffs' lawyers will also be watching the hearings to see if Merck provides the agency with any significant documents that have not already been made public or provided to them privately during pretrial discovery.
That is highly unlikely, according to Merck, which said that the only new data it would be presenting covers the last month of the patient trial that led it to the decision to quit selling Vioxx.
The previously disclosed data from that trial ran through August, but another month elapsed before the company received the analysis from the independent investigators that led it to end the trial, according to Mr. Mayer, the company's lawyer.
The new data and the analyses Merck will present this week are not expected to alter significantly either side's assessments of the risks of using Vioxx. But Mr. Mayer said the hearings could end up highlighting significant gaps and inconsistencies in the available scientific evidence about Vioxx's effects.
Merck's defense lawyers could try to use such results to bolster their contention that Merck had reason to believe it was justified in continuing to market Vioxx up until September.