And so the jury decides the drugmaker must pay $27.5 million in punitive damages on top of the $20 million in compensatory damages awarded this morning to Mike Humeston, who suffered a heart attack after taking Vioxx.

Merck’s track record in federal and state courts is 9 and 5. But this number is big, very big. And it’s the sort of defeat that makes its legal strategy appear vulnerable. Sure, the company is going to appeal, and maybe it will win on appeal, or reduce the award. And it’s just one loss.

But the momentum may now be shifting. Plaintiffs’ lawyers will be rejuvenated and willing to recommit their resources to more trials. And this loss occurs just as Merck’s Dick Clark seems to have convinced Wall Street that Vioxx litigation - all 27,000 or so lawsuits - was manageable, and that each one could be fought.

Part of Clark’s mantra has been that the plaintiffs’ bar was getting worn out funding too many losing battles that dragged on and on. Instead, you can hear analysts tapping the keys on their calcuators, reworking liability forecasts all over again.

Merck continues to avoid the dreaded ‘S’ word - settlement. In fact, the company has yet to set aside reserves. But lose a few more like this over the next several months and Merck’s general counsel, Ken Frazier, may have to rethink. Meanwhile, Clark had better hope someone persuades his insurers to pay some legal bills, which are rising faster every day. Pharmloat hears that the Dechert law firm, which regularly defends Merck in Atlantic City, just raised its rates.

[tags]Merck, Vioxx[/tags]