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Last Updated: Monday, 22 August 2005, 21:51 GMT 22:51 UK
Vioxx case shakes the drug market
By Gavin Stamp
BBC News business reporter

Vioxx tablets
Merck is facing a number of other lawsuits related to Vioxx
The decision of a Texas jury to find Merck guilty of negligence over its handling of Vioxx could have huge implications for the global drug industry.

By awarding the widow of a Vioxx user $253m (141m) in damages, jurors accepted that the arthiritis drug - which was withdrawn from sale in September - had contributed to his death.

They also accepted that its manufacturer, US pharmaceutical firm Merck, was guilty of negligence in its

response to safety concerns about the painkilling drug.

Merck disputes the verdict, claiming there was no 'reliable scientific evidence' proving Vioxx was responsible for the death.

The company, which is appealing the verdict, also maintains that it acted properly at every stage of the drug's development.

But observers now expect Merck to face a deluge of similar lawsuits from Vioxx users on both sides of the Atlantic.

It has been and will always be a high risk business
Ben Hayes, British Association of Pharmaceutical Industry

While leaving Merck with a potentially multibillion dollar legal bill, the court's surprise decision has already had an impact on other leading pharmaceutical companies.

Wider impact

Shares in top drugs firms such as Pfizer and GlaxoSmithKline have fallen as investors have weighed up the possibility of other drugs companies facing similar liabilities in the future.

Analysts believe the verdict may persuade firms not to contest product liability cases, choosing to settle disputes out of court.

"It wouldn't surprise me if pharma stocks fell back to the lows seen at the beginning of the year as people are reminded again just what the risks are," said Anne Marieke Ezendam, a fund manager at Threadneadle Investments.

In Pfizer's case, lawyers are already preparing cases relating to its drug Bextra which was withdrawn in April.

Glaxo's antidepressant treatment Seroxat has also attracted controversy after a study found the risk of a modest increase in suicidal thoughts among users could not be ruled out.

Public safety

More fundamentally, the Vioxx case has placed the entire business model of financial risk and reward that underpins the global pharmaceutical industry under the spotlight.

Critics have accused Merck of putting profit before public safety in its response to concerns raised about Vioxx, which was taken by 20 million people worldwide.

Industry bodies insist that public safety has always been and will remain the industry's main priority.

The general assumption was once a product was on the market it wouldn't get withdrawn
Dr Jonathan de Pass, Evaluate

They argue that while all drugs have side-effects, the huge cost of developing new drugs means firms simply cannot afford to ignore safety concerns.

"It has been and will always be a high risk business," says Ben Hayes, director of public affairs for the Association of British Pharmaceutical Industry.

"That is the balance and the challenge that the industry and regulators face every day.

"Companies do not lightly spend that kind of money without rigorously checking on whether they should go down the full route of product development."

Public disclosure

The industry has bowed to public unease over recent high-profile safety scares by urging its members to publish full details of all clinical trials undertaken before a drug is licensed.

Pfizer's Bextra drug
Bextra has come under scrutiny after being withdrawn in April

From October, all European drug companies will also be required to provide more information about how they will monitor potential side-effects at the time a drug is licensed.

Some experts believe a tighter regulatory regime and the shadow cast by potential lawsuits will affect companies' strategies, potentially resulting in fewer drugs going into production.

"It must mean that companies will have to look clearly at what R&D projects they go after and what profiles of drugs they are trying to market," says Dr Jonathan de Pass, director of pharmaceutical research firm Evaluate Pharma.

Dr de Pass says the recent trend for companies aggressively developing 'blockbuster drugs' - mass market treatments with a long lifespan - might be stopped in its tracks.

This could be replaced by a more cautious, risk-averse approach.

"The general assumption was once a product was on the market it wouldn't get withdrawn but we have seen quite a few drugs withdrawn recently."

"The constant stream of 100% income can no longer be relied upon and that is going to have a big impact."

Legal step for Vioxx case Britons
22 Aug 05 |  Business
'Taking painkiller ruined my life'
24 Feb 05 |  Lancashire
Thousands may seek Vioxx damages
20 Aug 05 |  Business
US giant punished for faulty drug
20 Aug 05 |  Business
Q&A: Vioxx lawsuit
20 Aug 05 |  Business

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