As of September 30, 2006, Merck had been hit with 23,800 suits on behalf of 41,750 “plaintiff groups.” (A plaintiff group might include the spouse or dependents of a victim, who might be alleging “loss of consortium” or other damages related to the loss of a loved one or breadwinner.) In addition, the company now faces 275 class actions, either for personal injury or economic damages (including consumer fraud suits, seeking reimbursement for patients’ costs of buying a drug that was allegedly misrepresented as being safer than it really was, even if nothing bad ever happened to the purchaser as a result.)

The September 30 date is important for another reason. Because most of the filing is complete, Merck can realistically begin to consider moving toward a settlement strategy without worrying that its willingness to settle would entice a deluge of suits by lawyers and clients seeking quick and easy money. Though the company is still pledging to fight every one, that might be a posture it can begin relaxing. Says Lanier in an email: “Merck is going to have to come up with another strategy than to try every case. Aside from the fact it abuses the court system (the corporate version of lawsuit abuse), the next 12 months Merck will sustain some real significant losses.”

Merck also announced today that it would increase its reserves for Vioxx-related legal defense costs from $685 million to $958 million, and said it had spent $325 million on defense costs during the first nine months of 2006. The company has not yet allocated any reserves toward paying Vioxx-related judgments or settlements.

MERCK REPLY: I solicited a received a comment from Kent Jarrell, a spokesperson for Merck’s outside law firm, Hughes Hubbard & Reed. Here his comment in its entirety:

“You are correct that in most states the statute of limitatations has now run. But by our count when it comes to personal injury lawsuits, there are still 28 states with longer limits and in death cases, there are 16 more states.

“The last minute increase of filings just before Sept. 30th 2006 is not unexpected. Generally this tide of ‘deadline beater’ cases turn out to be comprised of weaker cases. Plaintiff lawyers faced with a filing deadline want to avoid malpractice claims from their clients for failing to follow through and actually filing their cases.

“As we examine cases, we are finding, time after time, that the allegations are not backed up by facts. The claims of over 3,000 plaintiff groups have been dismissed to date. More specifically, there have been over 1,100 plaintiff groups whose claims were dismissed with prejudice either by plaintiffs themselves or by the courts. Over 2,000 additional plaintiff groups have had their claims dismissed without prejudice. Almost 800 plaintiff groups had their claims dismissed by courts because plaintiffs did not submit fact sheets or were dismissed by plaintiffs themselves after Merck noted their failure to submit fact sheets.

“From the beginning, Merck has said it would look at this litigation on a case by case basis. That is exactly what we have been doing. It takes resources to back up our ongoing strategy and that is what this reserve increase is all about. We face a rigorous trial schedule for the rest of this year and into next year. We have the legal infrastructure in place across the country to ensure that we continue engaging in a vigorous defense of this litigation.

“Remember, it is the plaintiffs who are responsible for filing cases. They
now seem to be frustrated by the very fact that Merck is closely examining each one on an individual basis and is prepared to go to court to defend the cases.”